Brazil Betting Scandal Adds To Urgency For Regulatory Regime

February 21, 2023
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A high-profile football match-fixing scandal in Brazil’s second division is piling pressure on the new Lula government to now swiftly implement a licensing system for sports betting, more than four years after legislation was enacted.

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A high-profile football match-fixing scandal in Brazil’s second division is piling pressure on the new Lula government to now swiftly implement a licensing system for sports betting, more than four years after legislation was enacted.

A series of articles in major Brazilian media publications this past weekend zeroed in on the status of sports-betting regulation following allegations involving at least six teams in the Série B of the Brasileirão football championship.

Public prosecutors in Goiás state in central Brazil last week announced their joint investigation into alleged approaches made by criminal groups to players in three Série B games in November 2022, with the aim of having a penalty awarded in the first half of all three matches.

The approaches were reported to authorities by representatives of Vila Nova, whose game was the only one of the three not to see a penalty awarded. State prosecutors said players were offered up to R$140,000 (approximately US$30,000) to take certain actions in order to manipulate betting outcomes.

While the UOL news outlets reported that officials in Brazil’s Ministry of Finance were now applying the finishing touches to a draft regulatory decree for sports betting, the prominent Folha de S. Paulo newspaper said a decree had already been sent to the office of President Luiz Inácio Lula da Silva for final approval.

The President’s signature could even come before the end of February, following the break for Carnaval, according to Folha.

As has long been expected, a regulatory decree is set to be accompanied by emergency legislation — a so-called Medida Provisória — that would make various changes to the 2018 federal law that recognised fixed-odds sports betting as a lawful form of lottery game in Brazil.

Once filed by the President, an emergency measure would be put on the fast-track through Brazil’s Congress and be voted on by both the Chamber of Deputies and Senate within 60 days.

The respected political journal Jota reported that a draft decree and Medida Provisória prepared by the finance ministry would establish a six-month transition period for offshore betting sites before ensuring that only licensed operators established in Brazil are permitted to advertise in the country.

Licensed operators could also be required to pay an upfront fee of R$25 or R$30m (US$4.8m-US$5.8m), according to Jota, or an amount even higher than under an earlier draft decree that was leaked last year.

UOL quoted Ministry of Finance special advisor José Francisco Manssur as saying that forthcoming regulations would help avert betting-related corruption by requiring that “international technologies” be used to flag suspicious activities and operators obliged to block betting on those events.

The Brazilian Football Confederation is one of various entities being consulted over the regulatory regime, the official said.

If it is the case that a decree and accompanying legislation is already awaiting presidential approval, then technically Brazil would be no closer to regulation than it was a year ago when a draft decree was left to gather dust by former President Jair Bolsonaro for political reasons ahead of his unsuccessful re-election campaign.

Still, the renewed scrutiny on the issue at least makes it more likely that officials with the new Lula administration will move quickly on implementation, rather than starting the rulemaking process entirely anew and causing further months of delay.

The lottery law passed in December 2018 set a four-year deadline for sports-betting regulations to be adopted, an implementation deadline that was ultimately missed to much industry frustration late last year.

Risks of match-fixing are far from the only reason for urgency, according to Brazilian executives speaking at this month’s ICE gambling expo in London.

New betting brands are constantly joining what is a booming offshore market and they are marketing themselves aggressively, said Andre Gelfi, managing partner for Betsson in Brazil.

Regulations are necessary and they should include responsible gambling measures to prevent some of the more inappropriate advertising and marketing activities being seen in the market today, Gelfi told delegates at the ICE World Regulatory Briefing.

“It’s a pre-regulation, crazy market,” Gelfi said.

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