Games of chance are ancient, as is backgammon. Popular artistic manifestations reflect the desire of many peoples regarding the betting activity and in Brazil it is no different. As an example we have, in the 19th century, the creation of the “jogo do bicho” by Barão de Drummond, then owner of the zoo in Rio de Janeiro. For a long time, therefore, it has been observed and discussed in Brazil about casinos and their ban, and this discussion is always more intense when the country is going through moments of crisis. As we are in a time of economic difficulties, the issue of liberalizing casinos and gambling is once again on the agenda.
The great novelty on the subject is the recent progress of Bill 442/1991, which seeks to regulate the exploitation of gambling throughout the country. After many years at a standstill, the Bill resumed its progress in 2021, with the creation of a Working Group by the president of the Chamber of Deputies, to improve the project. The result was the presentation of a new draft law and the approval of the emergency regime at the end of December 2021, with this being very likely that the discussion of the project by the plenary of the Chamber of Deputies will take place soon.
The main change in Bill 442 in relation to other existing projects is the provision that gambling constitutes a private economic activity subject to free enterprise and State control. It is no longer a public service, like lotteries. This new characterization of the activity makes the legal regime of gambling more open to innovations and less restricted by archaic ideas. It is an important change to allow a serious and competitive project.
Although gambling is no longer a public service, the government will still maintain intense control and supervision over activities related to the activity. It will be up to the State to formulate a national policy to organize the market, as well as to issue norms to regulate, control and supervise this sector. In the exercise of this function, rules must be issued to, among other matters, prevent and treat disorders and behaviors associated with gambling and betting disorders, protect players against abusive practices and prevent the use of games for criminal practices, such as tax evasion, money laundering and terrorist financing. In addition, the government will license companies that intend to exploit gaming, and will register the people who will be gaming agents and the establishments where the exploitation of this activity will take place.
There will, therefore, be control over companies that wish to explore games of chance, being necessary to prove requirements that demonstrate the suitability and seriousness of the companies. Likewise, the Bill provides for minimum requirements for a person to be able to perform the role of coordinating, conducting or mediating games, such as prior approval in technical and ethical certification exams and proof of not having been convicted of certain crimes, such as money laundering and administrative improbity.
Licenses may be granted on a permanent or provisional basis. They will be limited to a maximum number of operators, which will be conditioned to operating in previously defined gaming zones, and must be preceded by auctions or other forms of disputes for licenses.
As for the types of games, the Bill provides for authorization to explore the following activities: casino games; bingo games; video bingo games; online games; horse racing bets; and jogo do bicho. In its most recent version, the Bill did not deal with sports betting, a lottery modality provided for in Law 13.756/2018 and which can be exploited by both the federal lottery and state lotteries.
The Bill foresees that the casinos will be operated exclusively together with integrated leisure complexes, built specifically for this purpose. It is understood as a leisure complex hotels with at least 100 rooms, places for holding meetings and social events, restaurants and bars, and shopping centers. The casino will occupy, at most, 20% of the total built area of the leisure complex. States with more than 25 million license holders, such as Sao Paulo, will be able to have three casinos. States with more than 15 million inhabitants may have two casinos, and the other states may have only one casino in their territory.
It will be up to the states and the Federal District to indicate the location of the casino, which will later be evaluated by the federal executive branch. The decision regarding the choice of location should favor the location that will increase the tourism industry. The accreditation of the casino will be carried out through a public auction, according to the best offer. Its term will be 30 years, renewable for an equal period.
In turn, bingo houses will be able to explore card bingo or electronic bingo, including video bingo. They can have a maximum of 400 machines. The Bill admits one bingo house for every 150,000 inhabitants in the municipality where the establishment operates. Each house will have an authorization for a period of 20 years, renewable for the same period. Electronic bingo and video bingo may also be explored in stadiums with a capacity of over 15,000 fans or in Jockey Clubs. This is a novelty that will allow an alternative source of revenue for sports clubs and Brazilian Jockey Clubs.
The jogo do bicho, on the other hand, can be explored without limitations of operators, but it will be limited to the territory of the state in which the operator is located. That is, a gambling house in Paraná will not be able to accept bets from other states. The jogo do bicho will be authorized for a period of 20 years, renewable for an equal period. As for online gambling, its exploitation will be regulated by the Secretariat for Evaluation, Planning, Energy and Lottery of the Ministry of Economy. That is, there is not much definition on the topic in the Bill.
The project also provides for a series of obligations for gaming operators to ensure the legality and suitability of exploiting games of chance. Following international standards, intense control and transparency over financial and technical information are required to ensure adequate supervision and prevent crimes. In addition, the text has specific chapters dealing with rules regarding responsible gambling, advertising and the prevention of money laundering and the financing of international terrorism. With this, it seeks to prevent the practice of acts normally associated with the exploitation of games of chance.
With regard to taxation, the Bill provides for the institution of a Cide-Jogos, which is a contribution for intervention in the economic domain, whose value is 17% of the gross revenue earned from the exploitation of gaming. Gross revenue is the result of the difference between the amount collected and the amount paid in prizes.
The amounts collected will be allocated as follows: 10% to Embratur; 10% to finance programs and projects in the area of sport; 6% for funding programs and actions within the scope of the National Policy for the Protection of Players and Bettors; 6% to fund health programs and actions related to gambling; 6% for the National Public Security Fund; 10% for the National Culture Fund; 6% for the National Fund for Children and Adolescents; 20% for the State Participation Fund; and 20% for the Municipal Participation Fund. Bookmakers must also pay a Gaming and Betting Inspection Fee (Tafija), which is a fixed quarterly amount according to the modality explored. For example, bingos will pay R$20,000 and casinos, R$600,000. This amount is intended to finance the inspection of these activities. Prizes whose value exceeds R$ 10 thousand will be taxed with income tax of 20%.
This is the overview of the latest version of Bill 442/1991. From the discussion in Plenary, many changes should be proposed. We understand that the most relevant change that should occur is the change in the limitation of casinos and bingos by states. This is a system that does not favor private initiative and free competition, nor does it solve the problem of illegal gambling. Authorizing few casinos does not generate incentives for the development of the industry, does not serve the consumer market and does not suppress the illegal market, making it an insufficient measure for the purposes of the Bill. Therefore, it is essential that the Bill stop providing a limit for the number of casinos and bets.
Several other changes are needed to improve the Bill and ensure that it effectively regulates gambling in order to ensure the prevention of money laundering and pathological gambling, while providing a suitable environment for the development of this activity. In the coming months, the political debate on the subject will be incandescent and it is up to the public to pay attention to the discussions and contribute to this sensitive and relevant agenda, which can attract investments, generate revenue, innovation and strengthen various sectors of Brazilian industry.
Ricardo de Paula Feijó
Lawyer, Master in State Law and author of “Regulation of Gambling and Lotteries in Brazil”
Daniel Maffessoni Passinato Diniz
Lawyer and professor of business law
Source: Gazeta do Povo
