Brazil Betting Decree To Map Out Enforcement Powers, Restrict State Lotteries

May 12, 2023
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Under the cloud of an escalating match-fixing scandal, Brazil’s government is set to finally publish implementing legislation to establish a regulatory regime for sports betting that will be reinforced by payments and website blocking of unlicensed sites.

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Under the cloud of an escalating match-fixing scandal, Brazil’s government is set to finally publish implementing legislation to establish a regulatory regime for sports betting that will be reinforced by payments and website blocking of unlicensed sites.

Brazil’s Ministry of Finance announced on Thursday (May 11) that it had finalised the text of the so-called "medida provisória" emergency decree to regulate fixed-odds sports betting and had presented it to the office of President Lula da Silva.

The measure is expected to be signed by Lula and could be formally published in the Brazilian government’s official gazette as soon as today (May 12), according to sources.

“The federal government is finalising the regulation of fixed-odds betting … in order to legalise an area of public interest, establishing clear rules and guaranteeing a new source of revenue for Brazil,” the finance ministry said on Thursday, adding that its proposed regime was “in line with the most efficient that already exist elsewhere in the world”.

A draft version of the long-awaited emergency measure seen by VIXIO GamblingCompliance is consistent with the various Brazilian media reports on the legislation that have emerged over the past several weeks.

The decree will propose a series of changes to the law from December 2018 that first authorised fixed-odds betting in Brazil, including raising the headline tax rate from just under 5 percent to 16 percent of gross betting revenue.

That rate does not include other business and services taxes, however, which are expected to bring the overall burden to at least 25 percent.

The draft decree specifies that an unlimited number of licences will be available but does not state how much they will cost. Instead, the Ministry of Finance will be empowered to establish that amount, having been widely reported to be considering an upfront fee of R$30m, or approximately US$5m, per licence.

The decree also outlines a range of administrative sanctions that could be applied to authorised operators and other Brazilian entities such as advertisers, along with enforcement mechanisms and penalties to tackle unlicensed betting.

On the enforcement front, regulators will be able to demand that media companies and sports teams stop promotions for illegal operators and that internet service providers block access to offshore sites. Brazil’s National Monetary Council will also develop regulations to stop payments to unlicensed platforms.

The draft decree also includes several provisions related to sports integrity and match-fixing, reflecting an issue that is quickly taking on greater political importance.

On Wednesday, Brazil’s Ministry of Justice announced its own investigation into betting corruption in Brazilian football following allegations of spot-fixing in several games in the top two divisions of the Brasileirão championship that have been brought to light by local prosecutors in Goias state.

Among other things, the decree will expressly prohibit players, officials and other insiders from participating in sports betting, while licensed operators must be members of a national or international integrity monitoring association and sports events must themselves have “mitigating actions” to limit risks of match-fixing or corruption in order to be eligible for betting.

The Ministry of Finance will also be empowered to prohibit bets on specific sporting events, if necessary.

The Road Ahead

Publication of the emergency measure is a critical step toward the introduction of a licensing regime for sports betting in Brazil, but it is by no means the final one.

Once published in the government's official gazette, the decree will then be submitted to Congress to be considered by a joint committee with representatives from both Brazil’s Senate and Chamber of Deputies.

The committee will appoint one member to serve as the rapporteur to take the lead on reviewing and redrafting the decree with potential changes, while committee members will be able to submit their own amendments for consideration following public hearings.

Once approved by a committee, the emergency measure will then have to be voted on and passed by the full Chamber and Senate within a period of no more than 120 days after it was first submitted to Congress.

If any changes are made to the presidential decree, as is highly likely, President Lula will be able to either accept or reject them, but he would not be able to make any further amendments to the legislation once it is returned to his desk.

Various other provisions of the draft decree seen by VIXIO look to address the role of sports teams and leagues in the betting market.

For example, future regulations will directly address how licensed betting companies will be authorised to use the names, images, logos and trademarks of athletes and sports teams, as well as how teams will receive their proposed 1.63 percent cut of gross betting revenue in return for allowing their intellectual property to be used by operators.

Betting operators would also be expressly prohibited from acquiring streaming rights for sports events to promote their brands.

Meanwhile, the draft decree also includes provisions to address Brazilian state and municipal lotteries that are expanding rapidly following a 2020 Supreme Court decision that granted them equal rights as the federal government to operate and regulate approved lottery games, including fixed-odds betting.

The emergency measure is set to clarify that state governments can operate lottery games either directly or through their own licensing or concession systems, provided they comply with federal regulations.

However, any state-authorised online lottery games or online sports-betting platforms would have to be restricted to persons physically located within the borders of the applicable state or municipality.

States would also be prohibited from joining together to create multi-jurisdictional lotteries such as a Brazilian equivalent of Powerball.

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