Brazil’s Sports-Betting Lobbying Battle May Accelerate Broader Gambling Expansion

August 7, 2023
Back
Sports betting still faces an uncertain path to implementation in Brazil, with one plausible scenario involving the combination of legal amendments with separate legislation to regulate casinos, video-bingo and all forms of online gaming.

Sports betting still faces an uncertain path to implementation in Brazil, with one plausible scenario involving the combination of legal amendments with separate legislation to regulate casinos, video-bingo and all forms of online gaming.

Brazil’s government published a so-called provisional measure for sports betting on July 25, but that emergency legislation will expire in 120 days unless it is ratified by Brazil’s Congress, where lawmakers are also considering a separate bill filed by the government to make technical changes to an initial law on fixed-odds betting that was approved in 2018.

Members of Brazil’s Chamber of Deputies and Senate are also able to make amendments to both pieces of legislation, with significant changes seemingly inevitable based on the more than 240 proposed amendments to the provisional measure that were submitted before a deadline last week.

Amendments proposed by one senator from Bahia state directly raises the prospect – understood to be very much under discussion in Brasilia – that the provisional measure or its accompanying bill could be broadened to include other forms of gambling beyond sports betting.

It is “totally possible” that bingo, casino games, online gaming, jogo do bicho, and other forms of gambling could be wrapped into implementing legislation for sports betting, said Magnho José, a prominent blogger on Brazil’s gambling market and president of the Legal Gaming Institute (IJL), which advocates for regulation.

“But it depends on various factors: the political will of the Chamber and Senate presidents, approval (or support) from the government for this proposal to advance in the legislature, and the identity of the rapporteur chosen by the joint commission that is going to analyse (the provisional measure),” Magnho told VIXIO GamblingCompliance.

There are several reasons to believe that a combination of gambling expansion with sports betting will remain in play as Congress spends the next three to four months concluding the implementation process for Brazil’s 2018 sports-betting law.

With critical support from powerful Chamber Speaker Arthur Lira, the Chamber of Deputies has already passed a bill to authorise dozens of land-based casinos, potentially hundreds of bingo halls with video-bingo machines, plus other forms of online gaming beyond sports betting.

That bill has made slow progress in the Senate over the past 18 months, but Senate President Rodrigo Pacheco spoke positively of gambling expansion just a few weeks ago and recently referred the measure for consideration by a Senate committee.

Attaching language from the Chamber of Deputies’ already-passed gambling bill to emergency sports-betting legislation would enable Lira and the Chamber to pressure the Senate to act on the bill under an accelerated timeline.

There is also ample past precedent of provisional measures related to lottery games being amended and broadened as they are considered by Congress – indeed, that is how fixed-odds sports betting was approved in the first place nearly five years ago.

The broader gambling-expansion bill also undeniably offers far greater tax revenue potential.

Brazil’s Ministry of Finance has stated that it expects to raise R$2bn (around US$400m) annually from legal sports betting, but casinos, bingo, slot-route operations and online gaming could raise that total to more than R$25bn annual, according to Magnho of IJL.

“With the exception of casino-resorts, all those other forms [of gambling] are already in operation in the country and they aren’t being regulated or taxed by the government,” he said.

Two Tracks To Implementation

The broader outlook for sports-betting legislation is far from clear, however, with growing anticipation that Lira and Chamber of Deputies are more likely to let the provisional measure expire and instead seek implementation by incorporating its language into Bill 3626/2023, which was introduced by the government as an accompanying proposal.

In general, a regular bill vests more lawmaking power in Congress and specifically the lower house relative to both the executive branch and Senate, with the Chamber having the ability to approve its own amendments to the bill and then either accept or reject any further changes by senators. Lawmakers can also choose to override the President should he veto any of the provisions of a bill.

Lira was reportedly unimpressed that the government’s provisional measure on sports betting was far more extensive than the accompanying bill, with the congressional leader having previously agreed with the administration that legislation would move forward on both tracks in order to enable both immediate implementation, while still giving leeway to Congress to make amendments.

A clear indication that the provisional measure will not ultimately be the vehicle for sports-betting implementation came last week when Felipe Carreras, the Chamber of Deputies’ point man on gambling and sports-betting matters and a trusted ally of Lira’s, was not one of the 26 deputies and senators appointed to serve on a joint congressional commission formed to review the legislation.

Carreras has already served in the critical position of rapporteur for the broader gambling bill when it was approved by the Chamber last year, and is assuming the same role for an ongoing congressional investigation into betting integrity and match-fixing.

It is inconceivable that Carreras would not be appointed by Lira to serve in a similar capacity regarding any sports-betting legislation that was intended to pass the Chamber, according to sources.  

Looking ahead, a likely scenario involves language from the provisional measure and potentially the broader gambling legislation being added to the narrower Bill 3626/2023 by that bill’s rapporteur, likely to be Carreras, and then put to a vote on the floor of Chamber within the next few weeks.

The Senate would then have 45 days to act on the legislation, before the lower house decides on the final version that would be sent to the desk of President Lula.

In the meantime, away from any prospect of casinos and online gaming being added to the mix, sports-betting interests already have their hands full lobbying to soften the proposed regulatory framework as outlined in the government’s provisional measure.

Industry groups have already voiced deep concern over a headline tax rate of 18 percent of gross sports-betting revenue. When combined with other business and municipal taxes amounting to at least 11.25 percent, the overall effective rate would be in the region of 30 percent – or double that of the UK.

In response to industry concerns, the government is reportedly considering a lower upfront fee – sticking with a planned R$30m upfront for a 10-year authorisation but allowing a lower amount for a five-year term.

Still, industry representatives argue that high taxes and fees would see many existing operators elect to stay in the offshore market, particularly as players would not be subject to taxes on winnings from unregulated sites.

Other lobbying battlegrounds for sports-betting legislation include potential restrictions on bet types being baked into statute rather than being determined by regulators, and whether Brazilian law should adopt express restrictions on advertising and sponsorships, or instead leave marketing to be governed by self-regulatory standards.

Tax and regulatory constraints are expected to be a point of discussion when representatives of two newly formed Brazilian industry associations testify on Tuesday (August 8) at the next scheduled hearing of the Chamber of Deputies’ congressional investigative committee on betting integrity.

         

Our premium content is available to users of our services.

To view articles, please Log-in to your account, or sign up today for full access:

Opt in to hear about webinars, events, industry and product news

To find out more about Vixio, contact us today
No items found.