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Brazil’s surprise ordinance last week to immediately ban companies that had not applied for a licence from operating during a transition period may be unconstitutional, according to at least one local lawyer.
The ordinance was published on September 17, declaring that any company that had not applied for a licence by that date would need to cease operating in the county as of October 1, soon after which the government will begin blocking unregulated sites.
“If you have not applied for a licence yet in Brazil, you cannot exploit the transition period until 31st of December,” said Udo Seckelmann, a gaming lawyer at Bichara e Motta law firm, referencing the original implementation date for Brazil's regulated market for online betting and casino games.
“There's some discussion whether this ordinance is unconstitutional or not, because the federal law establishes the transition period of at least six months, and they did not respect that six months.
“So that's why everybody's saying, 'this is unconstitutional'. People are studying whether they could file a suit against the regulator … but people also think, 'I shouldn't get the regulator angry with me right now if I'm planning to apply'.”
As of the September 16 ordinance, a total of 114 operators had applied for a Brazilian licence. Since the ordinance, that number has now grown to 128, according to the website of Brazil's federal gambling regulator.
Seckelmann concurred that negative coverage around social media influencers promoting illegal betting platforms was largely responsible for the ordinance, along with growing criticism of the gambling sector from other industries within Brazil.
Earlier this week, Brazil vice president Geraldo Alckmin met with industrial and retail associations who reportedly demanded an immediate ban on credit cards as a form of betting payment, even though regulations to that effect will be in place next year.
The associations also insisted that the forthcoming tax rate for sports betting and online casino games was too low at 12 percent of gross gaming revenue, given that other sectors pay upwards of 30 percent on profits.
A manifesto for stricter advertising and sponsorship regulations was also shared with the vice president, who reportedly found their points to be of merit and committed to sharing them with other government ministries.
“The biggest concern right now,” said Seckelmann, “is that because of this negative media attention people are trying to get stricter rules on advertising in Brazil, so eventually it could come to the point where they will try to prohibit influencers from advertising.”
In a panel on influencers at the SBC Summit Lisbon on Tuesday, David Foster, Entain director of international regulatory affairs, told delegates that ultimately it fell to regulators, and not influencers themselves, to control social media advertising.
“Very few influencers are going to understand gambling regulations,” Foster said.
“In many respects it is no different to how we might advertise on television … . In the same way that we want to make sure that we are complying with all the relevant regulations in terms of the codes, messaging around responsible gaming, in many respects that needs to be replicated around influencers.”
Foster emphasised that clear guidelines should alleviate issues such as those that currently plague Brazil.
“If you look at the UK on the other end of the spectrum, that is a very mature market and heavily regulated, we have clear guidelines in place where influencers know that they can’t glamorise gambling, they can’t claim it’s a solution to financial problem ... with regulation you get that clarity.”
