A study carried out by Fundação Getulio Vargas (FGV) estimates that the sports betting market in Brazil moves between 4 and 9 billion reais (US$ 695m – US$ 1.56bn) annually. With a significant size and potential, it is expected that the market has well-established legislation. However, the reality is quite different. In Brazil, since the 19th century, the sports betting market has not yet been regulated, and the government is expected to reach a consensus only in 2022.
Currently, there are only two laws that serve as a guide for the performance of market players in the Brazilian territory. The first of them, Law 3,688, known as the Criminal Misdemeanor Law, was created in 1941 and prevents the exploitation or establishment of games of chance in the country. Although they do not depend on luck, but rather on knowledge about the sport, sports betting suffers a series of restrictions due to this law, created 80 years ago.
The second, sanctioned in December 2018, legalized sports betting, provided that it has a fixed quota, that is, with a predefined gain in the event of a successful bet. Despite representing a breakthrough, sports betting sites and apps still need to be hosted on servers abroad to be able to operate in Brazil and cannot have offices here.
This restriction already corresponds to a huge loss for the country. With headquarters in Brazil, these companies would not only generate many jobs, but could pay taxes, which is practically impossible without a CNPJ. The Planalto Palace itself estimates that, with market regulation, it would be possible to raise between 4 and 10 billion reais (US$ 695m – 1.74bn), not counting the taxation on the activity.
However, the good points do not stop there. With well-established legislation, betting houses, websites and apps will have better defined limits on their performance, especially from the point of view of interaction with the user. Investments in marketing and sales initiatives, for example, would inject even more resources into the economy.
Finally, and the most relevant point to be mentioned, is the protection of the gambler himself. An important weight for the delay in creating legislation is the poor reputation of the market, which is still very much associated with addiction. The regulation would remove the market from the obscurity that it finds itself today and would facilitate the breaking of the negative view that alienates users and generates an evil eye for those who see the activity as a form of entertainment - which it is.
In this sense, regulation would represent an achievement for the market and a milestone that has been awaited for many years. The scenario, in fact, is positive.
Bets will never cease to exist, whether they are considered legal or illegal. Regulation would only be the ways to make the activity safer and more beneficial to its different components. Whether they are the government, websites, apps and bookmakers or the gamblers themselves, the process would represent significant gains and the support of each one is the way of accelerating a decision.
Carson Coffman
Founder and CEO of sports betting app Wanna
