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Eight leading Brazilian football clubs have written a public letter demanding to participate in the drafting of the presidential sports-betting decree before it is finalised.
A presidential emergency measure to regulate the 2018 sports-betting law that was signed by former president Michel Temer is due to be published any day now, according to local media reports, but the clubs are demanding to have their say before the text is published.
The letter comes in the aftermath of wide-ranging media reports that any sports-betting operators that do not acquire a licence, requiring an upfront fee of R$30m (US$ 5.6m), will not be allowed to continue their sponsorship and marketing partnerships with football clubs.
The clubs wrote: “It is public knowledge that the companies that operate the services of the so-called fixed odds betting, popularly known as ‘Bets’ or electronic betting, use the brands, symbols, names, images and sports events of the major clubs and are responsible, currently, for important marketing revenues obtained by the football clubs of the country.”
The teams want to be involved specifically in conversations around compensation for the use of trademarks and game data by sports-betting companies.
“It is essential that the football clubs have direct participation in the legislative discussions involving the regulation of the activity of electronic betting companies, allowing them to position themselves in a clear and public way about what they understand to be fair and correct regarding the referred regulation, since no one is authorised to represent them in this debate,” the teams wrote.
The eight signatories of the public letter are: Flamengo; Fluminense; Botafogo; Santos; São Paulo; Palmeiras; Corinthians; and Vasco da Gama.
Flamengo, Corinthians, Vasco da Gama and Santos are all currently sponsored by Pixbet, Botafogo is sponsored by Parimatch, Plameiras by Betfair, São Paulo by Sportsbet.io and Fluminense by Kaizen Gaming’s Betano.
The 2018 law, as amended in 2021, currently provides sports clubs a 1.63 percent share of gross revenue generated by sports betting.
But Udo Seckelmann of Bichara e Motta law firm said that it remains unclear and of concern to the clubs how this 1.63 percent would be divided among federations and different sports.
Likewise, the Brazilian Football Confederation (CBF) is also demanding to be heard by the government and Congress, and is reportedly lobbying for a return of 4 percent of betting turnover through a sports-betting regulatory decree.
Luiz Felipe Maia of Maia Yoshiyasu law firm told VIXIO GamblingCompliance that the public lobbying by football clubs indicates everyone wants their piece of the pie from legal sports betting and what is seen as a highly lucrative industry.
“It's a widespread misconception,” he said of the industry’s often overestimated revenue potential and profitability.
That might be a misconception that spreads to the upper echelons of Brazil’s government, with finance minister Fernando Haddad publicly stating just a few days ago that the government expects to generate between R$12 and R$15bn (US$2.4 and $3bn) in tax revenue.
The newly-created National Association of Games and Lotteries (ANJL), whose members are betting operators, estimated that it is closer to R$6bn (US$1.19bn).
According to VIXIO’s own forecasts, a regulated Brazilian market would generate US$656m (BRL3.3bn) in gross, not tax, revenue in its first year, before reaching US$2.2bn (BR$11.1bn) in year five.
The Ministry of Finance has reportedly advised that the applicable taxation rate in the presidential decree will remain between 18 and 20 percent. At the upper bracket of 20 percent, that would yield tax revenue of only R$2.22bn, according to VIXIO estimates.
Maia said that he does not believe the football teams are so concerned with securing a share of tax revenue as they are with maintaining their sponsorship contracts.
“I think they are concerned about if there will be any kind of restrictions on the current agreements after regulation, whether they are able to enforce the agreements until the end of the contract or if there's going to be a deadline,” he said.
Seckelmann added that for the clubs and government alike it is imperative that the presidential decree sorts out application of the so-called Pelé Law to the issue. The law governs most matters pertaining to sport in Brazil.
“The betting operators want to use at least the name of the clubs like Vasco de Gama and Flamengo etc. And this nomination, for example, and their logos etc. are protected by the Pelé Law in Brazil. So it's a big discussion right now here if this use by the betting operators would be a violation of this protection,” he said.
Meanwhile, the government claims that the input of the teams is more than welcome, and that all they had to do was ask.
“If they had made an appointment they would have already been heard,” said José Francisco Manssur, executive secretary of the Ministry of Finance.
“All they have to do is call here and they will be heard. All they had to do was call or send an email and the meeting would already be scheduled. And now it's just a matter of scheduling.”
The Ministry of Finance, legal operators and Brazil-facing operators have all said that they expect the sports-betting emergency decree to be released no later than the end of this month.
It remains to be seen if the decree will be released before a congressional hearing on the issue of sports-betting regulation that is scheduled to be held on April 12 by the finance commission in the Chamber of Deputies.
