The 21st century consolidated the trend of migration of economic activity and a large part of jobs to the tertiary sector, both because of its diversity and the growing automation of industry, mining and agriculture.
Among leisure services, gambling and betting activities are among those with the greatest potential for generating employment, income and taxes, especially when associated with entertainment and hotels. Therefore, casinos are legalized in almost the entire free world (a concept that excludes Islamic and socialist countries). Besides Brazil, only 36 of the 193 countries associated with the UN prohibit the installation of casinos. We are in the unenviable company of Iran, Iraq and Afghanistan, which also restrict press freedom and women's rights. The vanguard of delay.
What differentiates Brazil from such countries is the consistency of the prohibition in force in them with the retrograde morality that guides all their legislation. In the opposite sense, we have a Constitution that broadly supports the legality of private gambling, but we suffer the effects of a moralistic and statist interpretation of the legal system.
The 1988 Constitution establishes free enterprise and free competition as fundamental principles of economic activity, in arts. 1, item IV, 170, caput and item IV. In addition, the sole paragraph hereof assures everyone “the free exercise of any economic activity, regardless of authorization from public bodies, except in the cases provided for by law.”
In the same liberalizing line, art. 173 prohibited the exercise of economic activity by the State in any situation not provided for in the Constitution itself, unless “necessary to the imperatives of national security or relevant collective interest, as defined by law.” This device is complemented by art. 177, which lists the exceptional cases of the State's monopoly of economic activity, not including gambling and betting.
This prohibition is essential to guarantee free competition, as the presence of the State in the business environment brings a great imbalance due to the public source of resources and guarantee of solvency at the expense of society.
Finally, art. 195, item III, of the Constitution includes “revenue from prognostication contests”, one of the kinds of gambling, among the sources of revenue from social security. In other words, it not only emphasizes the legality of the activity, but also elevates it to the level of socially relevant.
The coherent interpretation of the aforementioned constitutional provisions allows the conclusion that gambling and betting activities are already fully legal, at least in any modality that involves predictions about results. As a result, prohibitive laws should be considered revoked, as the space left by the Constitution is only that of regulating forecast competitions and guaranteeing free competition.
Even the text of the single paragraph of art. 170, which provides for the need for authorization in some cases, does not allow the conclusion that there may be arbitrarily established prohibitions or monopolies.
In the opposite sense, however, the three Powers disregard the constitutional text and ratify the validity of norms such as art. 50, of the Criminal Misdemeanor Law (Decree-Law No. 3.688/41), which penalizes the economic activity of gambling, Decree-Law No. 759/69, which establishes the monopoly of Caixa Econômica Federal (CEF) in the exploitation of lotteries, and Law nº 7.291/84, which establishes a private monopoly for betting on horse racing, which was not even supported by the revoked Constitution.
Confirming the maxim that the constituent is usually more advanced than the legislator, even after the 1988 Constitution, laws continued to be promulgated regulating gambling in a monopolistic and statist way.
In 1993, Law No. 8,672 (Zico Law) created bingos with funds partially destined for sports entities, revoked seven years later; in 2006, with similar content, Law nº 11.345; in 2013, Law No. 12,869, regulating CEF lottery permitting agencies. Even the Civil Code of 2002 ratifies the Code of 1916 and keeps the gambling debt in the gray zone of legality, as its art. 814 states that it is not payable and the respective payments are not refundable.
The constitutional provision for the exploitation of economic activity by the State, provided for in art. 173, depends on the legal definition of a relevant collective interest. However, none of the gaming’s features allow for this concept to be framed, as it is not an infrastructure activity or an essential deficient service.
To get around this need to justify the exercise of an economic activity, some laws describe gambling and betting as a public service, although they do not have any characteristic of essentiality and universality. They are just an economic activity of providing leisure services, like dozens of others.
Therefore, they are taxable by the ISS (STF, RE nº 634764), which conflicts with the very concept of public service, protected by constitutional tax immunity, pursuant to art. 150, item VI, subparagraph a.
This conceptual device emerged in art. 1, of Decree-Law No. 204/1967, having been ratified at the time of the judgment of ADI No. 4986, on 10/30/2020. In this ruling, the STF affirmed the public service character of gambling and betting and ratified that the States could also operate lotteries, but not the private initiative directly (without contractual delegation).
The latest laws that regulated gambling, with restrictions on exploitation, were 13,756/18 and 14,183/21, which amended it. They deal with fixed-odd sports betting lotteries (when the amount the player will receive is already known at the time of the bet), providing for social contributions destined to numerous budget funds.
Although it was not expressed in this sense, the interpretation prevailed that Law No. 13,756/18 authorized sports betting only if the operating company was headquartered abroad, as there was no specific authorization for physical establishments in Brazil. As a result, in addition to disrespecting the constitutional principle of free competition, it also violated the provisions of art. 219, of the Constitution, for favoring companies headquartered abroad.
The reaction to the legalization of gambling, which was not overcome by the clarity of the constitutional text, is basically based on two fallacious arguments: gambling would cause addiction and would facilitate money laundering.
Most cannot be prevented from having fun or deprived of the jobs and taxes generated by an activity just because a small group has a compulsion to spend more than they can. This reasoning is valid for other sectors and payment methods, such as shopping centers and the credit card itself. Every year millions of people get into debt for spending way above their budget, which does not justify depriving everyone else of the means and the right to spend their resources as they see fit.
The same argument applies to the consumption of alcohol, which is really addictive for the alcohol-prone minority, but it is a legitimate right for other members of society and, therefore, cannot be prohibited.
Even more inconsistent is the criticism of possible money laundering. This can occur in any activity, from generic consulting companies to hotels, passing through law firms, as we saw in the Operation Lava Jato course. It is enough that there are no reliable external parameters for the gains that that business provides.
To dispel any doubts, it would be enough for the formal legalization of gambling, including casinos, to come associated with requirements such as exclusive revenue through electronic means and external audit to verify the origin and destination of resources.
What really doesn't make sense is to deprive ourselves of the investments, jobs, and taxes that legalized gambling provides only because of ill-founded objections, while resources continue to be drained abroad.
Fernando Lemme Weiss
Lawyer, Master and Doctor in Public Law from UERJ
