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A leading business association has filed a petition with Brazil’s Supreme Court in an effort to overturn the landmark 2023 law that establishes a licensing regime for sports betting and online gaming.
In its lawsuit filed with the Supreme Court on September 24, the National Confederation of Commerce (CNC) argues that Law 14.790 is unconstitutional because it violates constitutional guarantees of personal dignity, health and economic order.
The CNC claims that online gambling has “considerably damaged the domestic economy, retail trade, and social development”, with consumers choosing to spend their paychecks on online gaming platforms and sports betting, and supposedly costing retailers an estimated US$200m in lost revenue in the first half of 2024 alone.
The group, which represents Brazilian retailers and service providers, has also sponsored a study that found that Brazilians spent about 22 percent of their household’s disposable income on online betting between 2023 and 2024.
The CNC's opposition, however, does not stretch to land-based gaming, which is still illegal in the country. In a statement on the lawsuit, CNC president José Roberto Tadros said: “Unlike online casinos, which have drained families’ income, physical casinos can stimulate tourism and economic development in a more sustainable way.”
The CNC's lawsuit seeks a preliminary injunction to suspend implementation of the law pending a final ruling.
The case has been assigned to Supreme Court Justice Luiz Fux, who on Friday (September 27) scheduled a public hearing for November 11 to include testimony from Brazil's federal government, Senate and Chamber of Deputies, central bank and gambling industry trade associations, among others.
In the past month, media coverage on supposed increases in gambling spending and risks to public health has reached fever pitch, fuelled in part by lobbying by other sectors of the Brazilian economy that are claiming to be harmed by the boom in online betting.
The heightened scrutiny has culminated with President Luiz Inácio Lula da Silva now entering the fray, with Lula's government set to announce new measures this week focused on addiction and advertising restrictions.
Although lawyers do not believe the CNC's legal case is a strong one, Luiz Felipe Maia of Maia Yoshiyasu law firm in Sao Paulo said at the SBC Summit in Lisbon last week that everything that the gambling industry and regulators had worked for over recent months and years is at risk.
“The sports betting and online gaming industry must work to be accepted and to change the perception of the different stakeholders, because right now if we don’t act, I think we are at the brink of maybe losing everything,” Maia warned.
Of the CNC lawsuit, he said: “They have no legal arguments, they just say that it's bad for people. But they may get an injunction. Because now the public perception of gambling in Brazil is so negative that all they need is an evangelical judge or a judge who wants some press.
“If they get an injunction … years of work will go down the drain.”
Amid the heightened media and political scrutiny, a regulatory backlash is already apparent.
Two weeks ago, the Ministry of Finance's Secretariat of Bets and Prizes published an ordinance banning operators who had not applied yet for a licence from operating during the current licensing period, effectively moving up a transition deadline by three months.
The stricter regulations sought by Lula that are expected this week will reportedly include bans on credit cards or "Bolsa Familia" welfare funds for online betting, as well as restrictions on advertising that will include mandatory responsible gambling messages.
Some of the measure have already been preempted by the industry.
Industry trade groups IBJR and ANJL released statements last week announcing that their members have agreed to immediately ban the use of credit cards for payment on operators’ sites.
Additional reporting by James Kilsby.
