Public debt at 90% of the Gross Domestic Product (GDP). Unemployment reaching more than 14 million Brazilians. And hunger surpassing the ceiling of the goal.
These are some of the current portraits of the Brazilian economy, which was growing well until 2019, but was hit by Covid-19 and the lockdowns imposed by city halls and state governments.
The current breach in public accounts is worrying, and will have to be closed in some way. The fiscal crisis is not an ideological issue; it is entirely of an accounting nature. It will have to be corrected in some way: either via monetary inflation or via increased taxes (reducing spending would be ideal, but this was never done, not least because the Constitution does not allow it).
Fortunately, however, there is a "third way". And that would be the good third way.
What is already being discussed
The Federal Senate has been mobilizing to approve a bill to regularize casinos in Brazil. The objective is clear: to raise funds.
However, as it collides with the ethical-moral debate, the idea is viewed with suspicion on the part of the government and Congress.
During the ministerial meeting on April 22, 2020, which was released by decision of the Supreme Federal Court (STF), former Minister of Tourism, Marcelo Álvaro Antônio, said that Brazil should "discuss the resorts integrated with casinos." However, the speech motivated a reaction by the Minister of Women, Family and Human Rights, Damares Alves, who considered the idea a "pact with the devil."
Months after the episode, Álvaro Antônio was succeeded by Gilson Machado in office, but the opinion of the leadership of the Ministry of Tourism has not changed. In an interview with Jovem Pan's Pânico Program, Machado said: "We went to the United States to study the successful case that legalizes casinos over there. In Brazil, it is up to Congress, but I know that, if approved, it can bring a lot of investment."
Bill 2648, of 2019, authored by Senator Roberto Rocha (PSDB / MA), is one of the most advanced texts in the Senate on the regulation of games of chance. It provides for the "exploration of casinos for a specified time and operation of games authorized by the Union only in integrated leisure complexes [resorts]."
The Bill argues that the revenue to be generated from the payment of taxes on legal gambling would strengthen public coffers at a time of scarcity of resources and could be directed to, among other means, social programs.
To Arko Advice, the project's rapporteur Senator Ângelo Coronel (PSD-BA) said it was essential for the country to discuss how to raise new revenues without having to increase taxes. "The current pandemic moment requires greater fundraising, but without increasing taxes. In this way, the project can be a means of leveraging the country's economic recovery."
The bill establishes that only hotels with, at a minimum, high-standard accommodation, places for large-scale social, cultural or artistic meetings and events, restaurants and bars and shopping centers can enjoy the proposed regularization.
According to the text, the authorization to operate and define the tax burden - values and types of taxes - will be the responsibility of the Executive.
In addition, priority will be given to those areas in Brazil that have the worst socioeconomic indicators in cities or regions, such as GDP, per capita income, HDI (which considers security education levels), Gini coefficient (which measures income inequality) or index unemployment.
According to a 2017 survey by the Institute of Applied Economic Research (IPEA), the states of Alagoas, Maranhão, Piauí, Pará and Sergipe are the worst placed in the HDI ranking in the country.
In addition to Bill 2648/19, there are other proposals on the topic in the Senate. For example, Bills 186/2014, by Senator Ciro Nogueira (PP-PI), which authorizes the exploitation of "games of fortune", online or in person, throughout the national territory, including casinos in leisure complexes.
The text, which was unarchived in 2019 and underwent changes in commissions, provides for regulations for jogo do bicho, videobingo and video games, bingos, casinos in integrated leisure complexes, online casinos and sports and non-sports betting.
The accreditation for the exploration of bingo and videobingo will have a term of 20 years, renewable for the same period. Casinos, on the other hand, will be valid for 30 years and may be renewed for successive periods. In this project, rightly, the authorization will fall to the Brazilian states, and not to the Union, as Senator Roberto Rocha proposes.
Hypocrisy
Before approaching, some premises need to be clarified.
1. Gambling in Brazil is not prohibited.
The ban on gambling in the country is directed only at private initiative. The Criminal Misdemeanor Law prohibits gambling managed by the private sector.
Lottery games are allowed, as long as they are under the monopoly of both the federal government (via Caixa Econômica Federal) and state governments (Loterj is the most famous).
As the old liberal slogan says, "the state hates competition".
In other words, in practice, what we have is not a ban on gambling in Brazil, but a state monopoly on gambling.
2. The existence of state lotteries has been repeatedly restricted from Decree Law 204/67 to the - legally questionable - Binding Precedent 2 of the Supreme Court.
In practice, therefore, also in the games sector, the federative model provided for in the Federal Constitution does not apply. Only the Union legislates on "consortia and sweepstakes".
Today, there are only four state lotteries in operation: LOTERJ, LEMG, LOTEP and LOTECE. The other abolished state lotteries were occupied by capitalization bonds, savings bonds or insurance awarded with sweepstakes backed by the Federal Lottery.
In other words, our "federative" system understands that a federal game of chance is lawful and that the same game exploited by state lotteries is illegal. This shows that our federation really is a "front".
3. By a definition of the legislation of the 1930s (Decree No. 21.143, of March 10, 1932), the lottery activity is a "public service" (article 20).
Although the theory of public service does not present any argument for this, the fact is that it is so defined. However, it is a typical economic activity and should be subject to the principles of market economy, free competition, freedom of initiative and private property.
Being repetitive, the government hates competition.
What should be done
Needless to say, projects to "legalize" gambling should not be centralized in the Union. Discussions regarding details that concern the logic of the market should not be defined by extremely detailed legislation, created by the National Congress, to order private gambling.
It does not make sense, for example, to regulate a casino-resort model to be adopted throughout Brazil, with the specification of the minimum number of rooms and places for entertainment and leisure.
This has no chance of working in this huge country.
It would be much more sensible for each state in the federation to choose its regulation formula - generic, quite generic.
The old and good market logic should be applied to an industry that naturally has competition and that will not - and should not be able - to have access to financing with public money. We are talking about private money managed and operated by private entities.
Therefore, a proposal for "regulation" for the private gaming in Brazil must be minimalist: impose the minimum and let the private agents take care of generating income, jobs and taxes. After all, how could it be possible to apply a "capitalism shock" in this regulated, monopoly and state market?
A regulation aimed at freeing the productive forces to work would need only four rules:
a) the repeal of Decree-Law No. 9,215 of April 30, 1946, which supposedly abolished gambling in Brazil for being "degrading" for human beings;
b) the repeal of articles 50 to 58 of Decree-Law nº 3,688 of October 3, 1941 (Law of Criminal Misdemeanors);
c) recognition of the status of economic activity to gambling activity, surpassing the extravagant classification of "public service"; and
d) delegation to the states to regulate the activity within their territories. This is genuine federalism.
Simple. Just that.
This formula will be able to overcome the excess of preciosity that the bills presented until now suffer, and will certainly begin to bear immediate results in terms of income creation, jobs and tax revenues (isn't that what the government wants?), Allowing the companies, subject to the principles of economic activity, adapt much more quickly to the socio-cultural specificities of each region of the country.
In addition, it would even pay for the Citizen Income aid program, which is the new proposal for a social program by the Federal Government that intends to replace the Bolsa Família, increase the number of people served and increase the value of the benefit - which is currently almost R$ 200.
To complete
Gaming is an economic activity like any other: it involves risks and there are both chances of gain and loss. It is no more risky than opening a bakery, a beauty salon (is there any guarantee of success in these ventures?) Or investing money on the stock exchange in the short term.
Above all: absolutely no one is obliged to participate. Only those who want to play.
Prohibiting people from gambling (which means banning them from the possibility of earning money), in addition to being a lowly paternalism, represents an attack on the most basic freedom of the individual.
Daniel Homem de Carvalho
Lawyer, chairman of the Gaming and Entertainment Law Commission of the Brazilian Lawyers Institute (IAB), and secretary of the Sports, Lottery and Entertainment Law Commission of the National OAB.
Pedro Costa
A journalism student, he participated in the founding of CNN in Brazil, working for a year at the station. Currently, directly from the Federal Capital, he covers politics and economics in O Brasilianista and Arko Advice.
Source: Mises Brasil
