Match-Fixing Probe, Politics Delaying Brazil Sports-Betting Regulation

June 9, 2023
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The Brazilian Ministry of Finance is clashing with the government over the best course of action to regulate sports betting, insisting on pushing through with plans for an emergency measure that were abandoned at the 11th hour.

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The Brazilian Ministry of Finance is clashing with the government over the best course of action to regulate sports betting, insisting on pushing through with plans for an emergency measure that were abandoned at the 11th hour.

Led by finance minister Fernando Haddad, the ministry is reportedly concerned that operators waiting for regulation are losing patience, and that those who operate in the grey market continue to not pay taxes while they do business freely in Brazil.

In short, the ministry wants President Luiz Inácio Lula Da Silva to sign a so-called provisional measure for sports betting as soon as possible, so officials can begin issuing relevant ordinances and regulate the market, even though that legislation would still be subject to approval and potential amendment by Brazil's Congress.

Presidential advisors in Brazil's Planalto Palace are understood to be equally determined to not have sports-betting provisional measure right now, in part to maintain relationships with Chamber of Deputies Speaker Arthur Lira, who believes the legislation should be filed as a regular bill.

Lira's objection is the reason that a draft provisional measure was shelved in the first place in mid-May, mere days before it was expected to be published.

According to Brazilian gaming lawyer Luiz Felipe Maia, founding partner at Maia Yoshiyasu, there is more at stake for the Lula administration than the sports-betting policy.

“From the constitutional standpoint, Congress has a lot of power to reject the provisional measure or to negotiate how the legislative procedure should be taken and the government is now struggling with that because the last time Lula was president [from 2003 to 2010], he had much more influence on Congress than he has now; he was not elected with a majority of the Congress.”

Lira and his contingent recognise this, and the Chamber of Deputies is already bearing its influence on the future of Brazilian sports betting through a parliamentary investigation commission (CPI) into a series of high-profile match-fixing allegations. According to the congressional work plan, the CPI is scheduled to finish its work at the end of September.

The match-fixing scandal has exploded across the Brazilian media and sports industry since February. Last week, Brazil's Superior Court of Sports Justice handed down punishments for seven players for their alleged actions in taking payments to give away penalties or yellow cards so that criminal gangs could profit from betting on such outcomes. Of those seven players, two were given lifetime bans from football.

The CPI has already received testimony from local prosecutors in Goiás state who are leading the investigations into betting corruption. The CPI earlier this week approved motions to summon representatives from various betting companies to testify before the commission.

On Thursday (June 8), Deputy Bacelar from Bahia also submitted a summons for former President Jair Bolsonaro’s economy minister Paolo Guedes to appear before lawmakers.

Bacelar said that he wished to question Guedes on the delay to the introduction of a regulated sports-betting market in Brazil. In accordance with a December 2018 law, the finance ministry was required to introduce regulations on fixed-odds betting within a four-year window that expired during Bolsonaro’s last days in office. Bacelar wants to investigate, he says, the real reasons behind the delay.

Despite the growing match-fixing scandal and unprecedented attention on sports betting, there is a school of thought that going through with the sports-betting provisional measure right now could be a political misstep for Lula.

“If they don't negotiate properly with Congress before publishing the provisional measure then Congress may reject it just by saying, ‘Okay, this regulation is pending for over four years. Why is it so urgent right now?’” said Maia.

“The Chief of Staff of the government, he understands that it's better to wait for the conclusion of the congressional investigation, analyse the regulation and then negotiate with Congress,” said Maia.

“So I think it's more likely that we will wait at least until the congressional investigation is more advanced.”

Additional reporting by James Kilsby.

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