On December 12, 2018, Law No. 13,756 was enacted, which instituted the “fixed-odd bets” defined as “betting system related to sports-themed events in which, at the time the bet is made, how much the bettor can win if the prognosis is correct.”
In other words, about two years ago Brazil opened the possibility of exploiting the sports betting market, an industry that generates more than 210 billion dollars and employs more than 220 thousand people.
According to the legislation in question, it would be up to the Ministry of Economy to issue specific regulations on the matter and define the requirements for the operation and granting of authorization to bookmakers.
More than two years have passed since the publication of the standard and, despite the public consultations promoted by the Secretariat for Evaluation, Planning, Energy and Lottery (SECAP) and several initiatives to listen to the players and specialists to edit the specific rules, the pandemic of the COVID-19 ended up postponing SECAP's plans and until now there is no definition of how and when the sports betting industry will start in the country.
Recently, the National Bank for Economic and Social Development (BNDES) was designated, within the privatization program of the federal government, to manage the plan for granting authorizations for the operation of bookmakers in Brazil, observing the rules and guidelines to be edited by SECAP.
In the analysis of ADI 4986 and ADPF's 492 and 493, in which the Brazilian Association of State Lotteries and the Rio de Janeiro State Lottery questioned the legality of Decree-Law No. 204/1967 which imposed limitations on the performance of states in lottery activities, the STF, unanimously, decided to remove the monopoly from the Union, stating that all states and municipalities are authorized to directly operate or bid for lottery services in their territories.
Despite the end of the exploitation monopoly, the STF determined that the legislative competence of the matter remains under the control of the federal government, and the Union is responsible for defining the categories and modalities of lotteries to be explored by the states.
Thus, it will be up to SECAP to standardize the rules, both under the exploitation of lotteries by the states, and by the exploitation of sports betting by individuals.
Regarding lotteries, SECAP has already shown concern with federative loyalty and fair competition, in order to avoid competition between states, however, with advances in technology, especially in the betting market - which has a strong digital appeal - there is still doubt how SECAP will be able to avoid competition between states, respecting their respective territories, and to prevent interested parties from searching for state lotteries that ensure better conditions.
From the decision of the STF, Maranhão was the first state to reinstate the state lottery, having approved Bill 359/2020 by the State Legislative Assembly, pending the sanction of Governor Flávio Dino.
The draft law provides for the exploration by a Mixed Economy Society linked to the State Secretariat of Government, which may delegate - by granting permission or partnerships - exclusively operational activities, respecting the lottery modalities provided for in the Federal Law.
In the same way, the Legislative Assembly of the State of Espírito Santo approved Bill 601/2020, in which the exploration of lotteries is determined directly or indirectly by the State Finance Secretariat, pending sanction by Governor Renato Casagrande.
It is worth remembering that, despite the limitations and difficulties imposed by Decree-Law No. 204/1967, some state lotteries remain in operation - albeit timid due to the legal uncertainty until then - and many supported by judicial decisions, which are Rio de Janeiro, Minas Gerais, Paraíba and Ceará.
These states may even expand the existing lottery modalities, since the STF's pronouncement is clear regarding the permission for exploration by the states of all modalities provided for in federal law (Law No. 13,756, of December 12, 2018).
LOTERJ, the municipality of the State of Rio de Janeiro responsible for the exploitation of games, has already taken the first step towards expansion, having opened a public hearing to bid for new lottery modalities in the state.
As we have seen, the exploitation of the gaming industry in Brazil is only a matter of time, being very welcome in the current scenario in view of its potential revenue and the potential number of jobs to be created.
Under the regulatory aspect, the Union's control, through SECAP, will allow a pacification and uniformity of the rules, reducing the potential for legal uncertainty, however, the search for its own control mechanisms will be essential - including through experienced and specialized companies on the matter - in order to obtain greater control and monitoring, both of sports betting and of state lotteries, to avoid money laundering and market manipulation, in addition to ensuring the State the potential collection of this industry.
Rodrigo Caldas de Carvalho Borges
Specialist lawyer in digital business, partner at CB Associados and founding member of the Oxford Blockchain Foundation.
Bruno Perman
Lawyer specializing in government relations, partner at Perman Advogados Associados and former President of Irelgov - Government Relations Institute.
