Brazil Gambling Market
And with a population of 210 million with a clear propensity for gambling, a huge sporting culture, and a regulatory rehaul for the local iGaming market on the horizon, many leading industry experts deem Brazil to have all it takes to establish itself as the leading market in the region, and one of the biggest from a global perspective. Brazil’s gambling market could be fully legalised by next year, despite setbacks in the country’s legislature. Gambling regulation has eluded the country since it outright banned almost all forms of gambling in the 1940s. Today, only betting on horse races, state-owned lotteries and poker are permitted.
A ban on gambling has been in place in Brazil since the decade of 1940, according to Decree-Law 3688, known as the Law of Misdemeanours. Since then, setting up or exploiting gambling activities (the so-called “games of chance”) in a public place has been an offense subject to imprisonment and payment of a fine. The latter also applies to the participants of these activities.
The concept of games of chance is broad and encompasses sporting bets. However, in 2018, Law 13756 created the so called Fixed Odd Bets (Apostas de Quota Fixa), a lottery for sports events in which the gambler knows exactly how much they could earn. Private companies that are now allowed to exploit such activity are eager for its regulation, which according to the law, shall be enacted by the Ministry of Economy by December of 2020.
But more ambitious initiatives are on course, and if approved they would decriminalize games of chance in Brazil. In particular, two initiatives are expected to pass in Congress in the first half of 2020: Bill of Law No. 442/1991 and Bill of Law No. 186/2014. The former has the support of the President of the Chamber of Deputies, whereas the latter is ready to be voted in the Senate's plenary meeting.
Not only the private sector is eager to exploit the Brazilian gambling market; also the Government is fostering this move as it foresees tax gains and an increase in employment opportunities. According to the Brazilian National Confederation of Commerce of Goods, Services and Tourism (CNC) in a study of 2016, this market would have an annual turnover of BRL 55.3 bn (currently around US$ 13.6 bn), which would correspond to BRL 16.5 bn (US$ 4.06 bn) in taxes per year.
Conversely, the Federal Prosecutors Office is concerned that gambling establishments could be used to money laundering and that the supervisory bodies would not have the appropriate tools and trained staff to prevent it. In addition, some Congress members are reluctant to the gambling legalization, in particular those that have strong religious constituencies. Some of them support alternatives such as to allow the exploitation of bingos and casinos only inside resorts or to delegate to states the powers to regulate whether, how and when they should operate.
Even before the Law of Misdemeanours is amended, however, there are some legal loopholes that may benefit companies willing to access the Brazilian market offering online gambling services. The law specifies the places considered “of public access” without including “internet” or other language that could encompass online gambling. As criminal law must be construed literally, some companies are offering gambling activities online because they understand it should not be considered a violation of the current law. The same conclusion does not apply to the participants that engage in such activities, since the law was amended in 2015 and the new wording targets expressly them.
This matter will be a hot topic in the next few months and the legislative developments should be followed closely by those willing to expand their businesses in the Brazilian gambling market.
Simone Lahorgue Nunes (OAB-RJ 60.429 / OAB-SP 308.653)
Sócia do Levy & Salomão e Doutora em Direito Econômico e especialista em diversos assuntos relacionados à área de entretenimento, que engloba as áreas de mídia, propriedade intelectual e direito esportivo.
Allan Nascimento Turano (OAB-RJ 205.287)
Advogado do Levy & Salomão Advogados que atua na área societária, com experiência em fusões e aquisições, reorganizações societárias, private equity, venture capital e estruturação de empreendimentos em diversos setores da economia.
Source: GMB
Many Latin American countries are currently toying with the idea of legalizing gambling for the very first time, or regulating their online gambling markets in order to provide better protection and freedoms for their citizens. While the potential for the gambling industry is great across much of Central and South America, Brazil could prove to be a particularly profitable country for the gambling industry.
Currently, gambling is almost completely illegal in the vast country of 207.8 million people, and has been since the 1940s. While Brazilian lawmakers have been trying to bring back casino gambling and other forms of gambling for more than 25 years, the country now finally seems to be on the verge of doing so successfully. As gambling analyst Alexandre Fonseca commented last year:
“If you ask me what are the odds of Brazil becoming a global gaming destination within the next five to 10 years, I would say they are quite high.”
Bill PLS 186/2014
The National Congress, the legislative body in Brazil, has been hard at work proposing legislation to expand gambling in the country. The Senate has drafted one especially promising bill, PLS 186/2014, which would allow for land-based and online casinos to open for business in Brazil under licenses issued by the government. In addition, the law would legalize bingo halls, sports betting parlors and a popular lottery style game called jogo do bicho.
According to the original version of the bill, the government would issue a total of 35 casino licenses with a maximum of 70,000 slot machines throughout the country, with all licensees required to offer restaurants and retail stores, in addition to their gambling facilities. Bingo halls would also be permitted at a ratio of one license per every 150,000 people in any particular city or municipality, while internet gambling would be legalized, regulated, and taxed accordingly.
PLS 186/2014 received plenty of attention during 2016 when lawmakers openly debated it on the floor of the Senate, with the Special Committee for National Development eventually passing the bill. However, it was never brought to a full vote in the Brazilian Senate, and unfortunately, 2016 closed out without the bill becoming law, meaning that Brazil will need to start fresh in 2017.
Considerable Opposition
Those familiar with politics in the country report that while there is major support for legalizing gambling, there is also considerable opposition. Some lawmakers argue that legalizing gambling would only lead to people who are already living in poverty falling deeper into despair and that incidences in gambling addiction would increase to unbearable levels.
“It’s very easy to think about taxes going to the public coffers. It’s forgetting how many families will lose, will be destroyed by those who.. take everything they have and play at the casinos,” warns Congress member Pastor Francisco Eurico da Silva.
These arguments are familiar and have been heard time and time again while other countries have moved forward with gambling regulation laws.
Brazil Gambling Market Size
$17.6 Billion Industry
Brazil Gambling Market Size
Currently, it is believed that Brazilians spend more than $6.4 billion on illegal gambling every year. Legalizing gambling in Brazil would mean that this money was fairly taxed and that national and local governments would have a steady source of revenue to support social programs and fund other line items in their budgets. This would be a major win for the country that has been financially strapped for some time.
Industry analysts believe that once gambling is regulated and legalized, Brazilians could potentially spend $17.6 billion on gambling every year. With Rio de Janeiro being a major vacation destination, tourist dollars would boost that figure even further. With over 200 million people in Brazil, legalization would make it the largest regulated gambling jurisdiction in the world. Sports betting would likely be one of the most popular forms of gambling due to the country’s love for soccer; however, industry analysts think that casinos could also do well in many parts of the country.
The industry would also help provide employment for tens of thousands of Brazilians across the country, as back in 1946 when the industry was shut down around 40,000 Brazilians suddenly found themselves without work. Furthermore, money spent by Brazilians would stay within their own country, rather than in places such as neighboring Argentina which has been a major beneficiary of Brazil’s lack of gambling legislation.