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The statutory deadline to regulate a 2018 law for sports betting in Brazil has come and gone, with no sign of action from President Jair Bolsonaro’s outgoing government.
Four years ago, then-President Michel Temer signed the bill into law in one of the final acts of his presidency, specifically authorising online and retail fixed-odds betting in Brazil.
At the time, the law imposed a two-year period for Brazil's government to implement regulations to establish a competitive betting market, with an option to extend that period for another two years. This put the final deadline for the regulatory window as December 12, 2022.
President Jair Bolsonaro took office just a few weeks after Temer signed the bill and appears to have delayed a regulatory decree due to his evangelical supporters, who are against gambling for what they say are moral reasons.
When a draft decree was leaked earlier this year, following a series of consultations overseen by the Ministry of Economy, it was expected that sports betting would be regulated in time for the FIFA World Cup.
However, Bolsonaro’s administration is widely reported to have backed off the issue, due to his supporters in Congress voicing concern at taking action to regulate gambling during a hotly contested election year.
Legally, missing the deadline does not mean much for the government, according to Luiz Felipe Maia, founding partner at law firm Maia Yoshiyasu in São Paulo.
“I tend to agree with those who say that there is no legal recourse at the moment, other than the potential liability for the minister of economy and for the President,” Maia told VIXIO GamblingCompliance.
Maia was referring to Law 1079 from 1950, which defines so-called crimes of responsibility that are grounds for impeachment for government officials.
Crimes of responsibility are acts by the President which violate the constitution, including the existence of the union, the internal security of the country, the budget law, the use of public funds, compliance with court decisions, probity in administration, the exercise of individual, political and social rights, and the free exercise of judicial and legislative power.
Article 9 of Chapter 5 specifies that “deliberately omitting or delaying the publication of laws and resolutions of the Legislative Power or acts of the Executive Power” is a crime of responsibility, which could, using a broad interpretation, include this situation.
“The point is, whether the omission in signing the regulation can be deemed as a crime of responsibility, by some understandings it can; by some understandings, it doesn't,” Maia told VIXIO. “That's the point. It's a very broad definition. I honestly don't think either the President or the minister will be held liable for this.”
Sports-betting operators, meanwhile, expressed cynicism at Brazil's long road to a regulated market.
Last week, Thomas Carvalhaes, the director of online platform Brazil One Bet, said: “I still stand firm by my prediction that no forms of betting will be regulated in Brazil this year. There is a whole lot at play in the political sphere in Brazil; betting is absolutely not one of their priorities at this stage.”
Representatives of other online operators, who did not wish to be named, called the lack of regulation before the December 12 deadline “disappointing”.
Some also expressed concern about what the delay could mean for the ongoing investigation into advertising of sports betting in Brazil by the Ministry of Justice's consumer protection division, Senacon. The ministry in August demanded that 40 football teams and broadcasters turn over their contracts with online betting operators, although not all complied.
The longer sports betting goes unregulated, the greater the legal limbo for operators who say they want rules that they can follow.
As for any hope of new legal loopholes as a result of the missed deadline, Maia said they are unlikely.
“We have what's called the economic freedom law. That law has some provisions that would allow someone to understand that if the government fails to issue an authorisation or fails to regulate an activity, one could start operating. The point is it's not necessarily applicable to public services like lotteries,” he said.
Today, it remains business as usual for the Brazilian grey market, which has grown significantly over the last four years without paying any local taxes on betting revenues.
