Law firm CMS has put together a detailed summary of how legal sports betting in Brazil will take shape following its signature into law last week by outgoing President Michel Temer of the Brasil-MDB party. Bill MP-846 seeks to restructure Brazil’s national frameworks for lottery and gambling provisions. And, while primarily lottery focused in its design, with stakeholders focusing on revamping Brazil Lottery CAIXA distributions and functions, it aims to introduce the nation’s first provisions for a licensed sports betting framework.
Said CMS in its report: “Until now, gambling has been heavily restricted in Brazil; limited to the lottery operated by state financial institution, Caixa Economica Federal, and on/off track and online horse race betting. More recently, there has been a surge in the popularity of international sports betting websites. Their offering of gambling to consumers in Brazil is widely considered to be illegal, but there has been no enforcement action taken against them to date.
“However, with the government seeking new sources of revenue to plug its budget deficit, there have been various initiatives to liberalize different types of gambling. The President’s approval of this law should open up a very promising betting market, which may include physical betting shops and online gambling.”
According to CMS, while the law offers specific details on the fiscal regime, some elements will be left to the Ministry of Finance in determining the most suitable model for Brazil. “It will be interesting to see the approach of the incoming Bolsonaro government to this question, when it takes office on January 1 2019,” said the firm. “Whilst the Ministry of Finance is generally expected to be economically liberal, and the incoming government will face the same budget pressures as the current one, Bolsonaro was elected with strong support from evangelical Christians and other social conservatives, who may resist gambling liberalization.”
CMS suggests that the government might appoint Caixa as the national lottery operator, which would create a sports-betting monopoly. But a government tendency towards privatization would signal a preference for licensed multiple operators, it noted.
In conclusion, the law firm said: “With a fanatical football culture and a population of 200 million, the author of the Law, Senator Flexa Ribeiro has estimated the Brazilian online sports gambling market to be worth R$4.3bn (US$1.1bn) per year. The approval of this law is therefore a significant development for the sector globally. However, much has yet to be determined, which will affect the availability and profitability of investment opportunities. It is therefore advisable for international sports betting companies to seek to engage with the incoming government, to make the case for their investment and revenue-generating capacity and to contribute their international experience in the process of defining the regulations needed to implement this new law.”