The laws and regulations regarding betting are constantly changing and evolving in Brazil. This week, there have been further developments, with the possibility that they may be repealed. Therefore, inplaySoft analyzes in this article for GMB what happened, the reason for the suspension request, and the current situation of the activity in Brazil.
Suspension Request
Last Tuesday (12), the Attorney General's Office (PGR) presented to the Supreme Federal Court (STF) a Direct Action of Unconstitutionality (ADI) against laws 14.790/2023 and 13.756/2018, which authorized and regulated the operation of betting in Brazil. In addition, the orders issued by the Ministry of Finance that regulate fixed-odds betting are targets of the action.
According to the PGR, fixed odds are bets related to "real or virtual events where it is defined, at the time the bet is placed, how much the bettor can win in case of a correct prediction". If the STF accepts the request, betting houses will be prohibited from operating in Brazil.
"Once the Supreme Court recognizes the unconstitutionality of the provisions that established and regulated the new modality of fixed-odds betting based on sports events and online events, the exercise of the activity will no longer have normative legal support, and its practice will be considered illicit by national legislation", said the PGR.
Why might the suspension occur?
According to the Attorney General's Office, the laws do not meet "minimum requirements for the preservation of goods and values of the Federal Constitution" by allowing "the exploitation and indiscriminate dissemination of virtual betting systems based on sports events (sports betting or bets) and online gaming events (virtual betting houses)".
"This new market emerged without protection criteria for the service users and the national market, a circumstance aggravated by the fact that the sites and operators are often based in other countries, meaning Brazilian legislation does not apply, making control and supervision difficult, as well as the taxation of the activity", stated the PGR.
Paulo Gonet, Attorney General of the Republic, stated that "the legislation is insufficient to protect fundamental consumer rights, given the predatory nature that the virtual betting market exhibits". Moreover, he mentioned that the legislation affects "social rights to health and food, consumer rights, property rights, rights of children and adolescents, the elderly, and people with disabilities".
"It clashes with principles of the economic order and the domestic market and with the state's duty to protect the family unit. Additionally, it disregards the constitutional imposition of granting public services through concession or permission, by means of bidding. It also deviates from constitutional restrictions on advertising high-risk products for health", argued Gonet.
Immediate Adjustment
This Monday (11) marked the first day of a public hearing to discuss betting houses in Brazil, convened from an ADI for which Minister Luiz Fux, of the STF, is the rapporteur.
The next day, Fux stated that “the law regulating bets needs an immediate adjustment” and that “the judgment of the action questioning the constitutionality of the norm must be done urgently”. According to him, a conclusion on the matter should be reached by the first half of 2025.
Bolsa Família
This Tuesday, Fux also decided that the Brazilian government will prevent beneficiaries of social programs from using resources from Bolsa Família and BPC (Continuous Cash Benefit) for sports betting. The decision was published on Wednesday (13), along with the prohibition of advertising and promotions targeting children and adolescents.
"It is evident that the current scenario of insufficient protection, with immediate deleterious effects, especially on children, adolescents, and the family budgets of beneficiaries of assistance programs, constitutes a manifest periculum in mora (danger in delay), which must be immediately removed", said Fux.
A study conducted by the Central Bank showed that beneficiaries of Bolsa Família spent R$ 3 billion on bets via Pix in August. This amount represents 20% of the total transferred by the program in the month. Of the 20 million beneficiaries, 5 million placed bets last month. The amount spent per person was, on average, R$ 100. However, the data does not show how much was received back by the bettors as prizes.
History of bets in Brazil
In 2018, a law approved during the government of President Michel Temer authorized the offer of sports betting sites in Brazil. In 2023, under the government of President Lula, Brazilian legislation changed to regulate bets. In December, Law 14.790/23 was sanctioned and, according to it:
* Private companies can operate both online and in physical establishments: until December 2023, sports betting in Brazil was allowed only in lottery houses and was controlled by the federal government. Starting in January this year, however, any private company can operate sports betting, whether digitally or in a physical space.
* The minimum age to place sports bets has been raised from 18 to 21 years.
* Advertisements or any type of advertising directed at minors were prohibited.
* Bettors must have their identity mandatorily verified and validated;
* Betting houses must implement policies to prevent money laundering schemes and promote responsible gaming.
Regulation of bets in Brazil
It is important to note that, in 2023, Provisional Measure (MP) No. 1.182/2023 was also enacted, which amends Law 13.756/18. Among other changes, this norm allows for greater oversight over the sports betting sector. See below:
* Oversight: betting houses will have to purchase a license to operate in Brazil. With this, a new secretariat was created in the Ministry of Finance to accredit companies, after a process of document analysis. If approved, the government will monitor the volume of bets and the collection of the institutions, which will ensure greater control over this market.
* Legality: companies approved in the above process and with valid licenses will be able to receive bets related to sports events. These events, however, must be official and organized by federations, leagues, or confederations. Betting houses that commit infractions can be fined amounts between 0.1% to 20% of the product of the collection, depending on the severity of the violation.
* Taxes: players with winnings over R$ 2,112 will need to pay 30% on that amount, which is the same rate applied to lottery prizes. Betting houses, on the other hand, must be required to pay a tax of 18% on the Gross Gaming Revenue (GGR), which is the revenue obtained from all games played, subtracted the prizes paid to players and the taxes incident to legal entities. Companies in the sector, like any others, will also need to pay other taxes: PIS, Cofins, Income Tax, CSLL, and ISS.
* Money laundering: betting houses will need to implement strict control and monitoring systems effective in preventing money laundering. They will have to send information about the bettors to the Council for Control of Financial Activities (Coaf).
Betting houses will also need to promote awareness actions regarding pathological gambling disorder, to prevent addiction and ensure the mental health of bettors.
Source: inplaySoft
