Brazil Betting Probe Prompts Questions Over Government Motives

September 1, 2022
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The day after Brazil’s Ministry of Justice announced an investigation into betting partnerships struck by 54 football teams and championships, and the Rede Globo media network, an industry expert speculates as to why the sudden interest in a crackdown.

The day after Brazil’s Ministry of Justice announced an investigation into betting partnerships struck by 54 football teams and championships, and the Rede Globo media network, an industry expert speculates as to why the sudden interest in a crackdown.

Late on Tuesday (August 30), the justice ministry said it was seeking information about the deals that Brazil's football industry has struck in recent years with online sports-betting operators, which exist in a legal limbo. Although fixed-odds sports betting was legalised by a federal law in 2018, it has yet to be regulated and a four-year deadline for regulations to be adopted will expire in December.  

In the meantime, various Brazilian legal experts have argued that it is legal for teams and football leagues to have sponsorship deals with sports-betting operators based offshore, even though it is not yet legal for these offshore sponsors to base their betting operations in Brazil itself.

The investigation into betting partnerships struck in advance of regulation did not spare any of Brazil’s first league teams, all of whom were named by the Ministry of Justice in its announcement.  

The list of teams required to respond to the probe includes some of the most storied football clubs in South America, such as the Corinthians Paulista, which has a five-year sponsorship deal with Galera.bet reportedly guaranteeing the club at least $7.4m.

Palmeiras, which has won the most Brazilian titles and has a two-year partnership inked with Betfair, was also named. As was Fluminense, the famous Rio de Janeiro team that is now sponsored by Betano through a deal reported to last through to 2025. Betano, Betfair and Galera did not return requests for comment.

What does the justice ministry's investigation mean for the sports teams and their lucrative betting sponsorship deals that have already become a key source of revenue?

According to Udo Seckelmann, a sports and gambling lawyer at Bichara e Motta, no one knows yet.

If a sponsor is found to be running sports betting out of Brazil, they will have committed a misdemeanour under Brazilian law, Seckelmann said.

Still, that is a lesser offence than a criminal violation, and the first step would likely be further investigation that would be unlikely to nullify a valuable contract between a football club and an operator.

Another question is why this would happen now, nearly four years after passage of Brazil's sports-betting law and when the adoption of regulations before the 2022 FIFA World Cup is now out of the question.

Seckelmann suggested three potential scenarios that people in the know think may be true.  

The first and most obvious: “Some people believe that they are trying to discover if there are betting companies that are established in Brazil, which would be prohibited in accordance with Brazilian laws. You can only exploit the Brazilian market right now through the grey market, which is through a foreign company.”

A second common theory is that the Ministry of Justice and its consumer protection secretary Senacon are trying to put pressure on the Ministry of Economy to regulate the sports-betting industry, with the ministry having taking more than three and a half years to adopt regulations in accordance with the 2018 legislation.

“All the consumers in Brazil, all the bettors in Brazil, they are not protected. Not only do they not have any protections, but they cannot file lawsuits and legal claims against betting companies in Brazil,” said Seckelmann.

Finally, the influence of October's looming presidential elections is not out of the question.

“It might be connected, because as you can see, the entities that were notified were clubs [and] federations, but the only broadcaster that was notified was Rede Globo, which is a big critic of Bolsonaro,” Seckelmann said, referring to Brazil's incumbent president who currently trails in the polls behind predecessor Luiz Inacio Lula da Silva.

More will be revealed in the coming weeks, Seckelmann said, when the intentions of the Ministry of Justice will become clearer. In the meantime, football will continue, as it always has, in Brazil.

         

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