The year 2023 begins with great expectations for the sports betting market in Brazil. Although the activity has already been legalized, through a Federal Law enacted in 2018, it has not yet been regulated. The period provided for by law for such regulation by the Executive Branch ended in 2022. Today, the scenario is one of legal uncertainty.
The projection of the sports betting market is notorious: in a report presented by fact.MR, the sector was valued worldwide at US$ 84 billion in the year 2022. And the tendency is for it to reach a value greater than US$ 225 billion, with a compound annual growth rate (CAGR) of 10.3% between the years 2022 and 2032. This is booming activity.
In Brazil, betting sites have been acting intensely. In the 2022 Brazilian Championship, for example, the 20 teams participating in series A had, among their sponsors, sports betting sites, which have been presenting themselves as an important means of obtaining revenue for the development of football and economic-financial sanitation of the clubs.
The sports betting branch, until 2018, was part of a list of practices classified as “games of chance”, prohibited by legislation, in particular, Decree-Law no. 3.688/41 (“Criminal Misdemeanors Law”), with the prohibition subsequently ratified by Decree-Law no. 9,215/46 (which “prohibits the practice or exploitation of games of chance throughout the national territory”).
Article 50, caput, of Decree-Law no. 3688/41, defines as a criminal misdemeanor “establishing or exploiting gambling in a public place or accessible to the public, with entry payment or without it.” Paragraph 3 defines as “games of chance” those “in which the gain and loss depend exclusively or especially on luck”, “bets on horse racing outside the racecourse or where they are authorized” and, in particular, “bets on any other sports competition”.
It is in this context that Federal Law No. 13,756/2018 emerges as a relevant legitimizing factor for the sports betting sector in Brazil, removing the stain of illegality that once tinged such activity with a veneer of clandestinity.
The Law provides, in its art. 29, caput, the design of "sports betting" as a "lottery modality" called "fixed-quota betting", characterized, by paragraph 1, as a "betting system related to real sports-themed events, in which it is defined, at the time of placing the bet, how much the bettor can win in case of correct prediction.”
Paragraph 2 of art. 29 establishes that “the fixed-quota lottery will be authorized or granted by the Ministry of Finance and will be operated exclusively in a competitive environment, with the possibility of being sold in any commercial distribution channels, physical and virtual.”
Finally, paragraph 3 of art. 29 of the Law provides that the activity will be regulated within a period of 2 (two) years, extendable for the same period, from the date of its publication, which occurred on December 13, 2018. It turns out that this period ended on the 13th. December 2022.
Today, sports betting is in a scenario of legality with dubious effectiveness. On the one hand, the activity no longer falls within the list of legal prohibitions; on the other hand, the lack of regulation makes its development on Brazilian soil uncertain, generating legal uncertainty for all stakeholders and limiting the sector in all its vast potential.
In view of the regulatory lapse, the activity has been developed by foreign companies, which sign legal transactions with Brazilian gamblers guided by the legislation of their host countries, as art. 9, caput, of LINDB, which provides that “in order to qualify and govern the obligations, the law of the country in which they are constituted shall apply”, with emphasis on paragraph 2, which provides: “the obligation resulting from the contract considered constituted in the place where the proposer resides.”
The lack of regulation gives rise, among other issues: (i) the impossibility of inspection; (ii) the difficulty in protecting sporting integrity and adopting measures against match fixing; (iii) the difficulty in controlling access for minors; (iv) the difficulty in controlling over-indebtedness; (v) the difficulty in controlling money laundering; (vi) limitation on the ability to tax; (vii) restriction on the entry of serious players into the country, due to legal uncertainty, which also affects bettors and third parties who have contracts with bookmakers.
That is to say: regulation is necessary to allow the sector to consolidate itself as a stable, serious market endowed with legal and economic security. The current context, however, reveals a different reality. Doubt is enough to prevent the activity from developing to its fullest.
In any case, the regulatory vacuum does not seem to impose obstacles to the development of the activity by players based outside the country, as is currently the case. The omission of the Executive Power does not represent a safe conduct for the recognition of an open and unlimited field of action, which allows the bookmakers to enter the national territory unrestrictedly, without the already foreseen legal uncertainty. In this respect, the situation of sports betting activity seems to remain unchanged. Some considerations are relevant.
There are news that the regulation of the activity was included in the “Final Report” of the Government Transition Cabinet, for address by the Federal Executive Branch, which is already aware of the urgency. There are three drafts of the Decree that should regulate the activity, prepared in the years 2019, 2020 and 2022, by the Ministry of Economy.
The performance of the Executive Branch, despite being late, still seems to be a good idea. There is no doubt: late and conscious regulation is better than no regulation at all, especially since it is an indispensable act to pave a prosperous path for the sector, which is very relevant for Brazil.
There are also news of measures that may be based on the recent understanding of the Federal Supreme Court that the Union does not have exclusivity to operate lotteries. Thus, States could seek their own and local regulation for the sports betting sector, in order to make the activity viable.
It is possible to note opinions in the sense that perhaps the matter should return to the National Congress, due to the expiration of the deadline for regulation. In another turn, the passage of the legal period without manifestation of the Federal Executive Power seems to be inviting to the filing of lawsuits and/or the filing of constitutional remedies regarding the matter, to prevent the imposition of sanctions on companies that seek to develop the sector in loco.
In conclusion, it is believed that the path of regulation, albeit with delay, or the path of acting before the Judiciary, to obtain a judicial command that protects the activity or to force its regulation, are ways to solve the current situation. uncertainty scenario.
It is hoped that, in 2023, this stir can be overcome, and that the activity can be carried out at full capacity, in a responsible, conscious, properly supervised and regulated manner, complying with the best practices, benefiting all stakeholders, allowing the achievement of valuable revenue for the State and legitimizing this important vehicle for the development of sport, due to the revenue it is capable of generating.
DOUGLAS LEITE
Master's student in Regulatory Law at FGV DIREITO RIO. Associate at Licks Advogados
ERICK REGIS
Attorney at Licks Attorneys.
