The necessary collection and centralized transfer of the consideration paid to the clubs for the use of their image, brand and similar
Article 30, § 1º-A, III, of Law 13,756/2018 - as amended by Provisional Measure (PM) 1,182/2023 - establishes that 1.63% of the proceeds from fixed-odds lotteries must be allocated to entities within the National Sports System and to Brazilian athletes or those affiliated with sports organizations based in the country. This allocation is in return for the use by betting houses of their names, sports nicknames, images, trademarks, emblems, anthems, symbols, and similar elements.
In the system described above and proposed by Law 13,756/2018, the portion of betting proceeds intended as compensation for the use of image-related rights will be collected by the Federal Government in a centralized manner, which will be responsible for disbursing the appropriate amounts to each club and athlete when there is an agreement regarding the exploitation of their rights.
The Brazilian Institute of Responsible Gambling (IBJR) has become aware of a movement that advocates for the removal of the provisions in Article 30, § 1º-A, III, of Law 13,756/2018. This movement suggests that the negotiation of club images, trademarks, and symbols should no longer be under the management of the Federal Government but should become a matter of case-by-case negotiation between private entities, specifically between betting houses and sports clubs.
The proposed change is concerning and could be highly detrimental to consumers, national sports, and the government for the following reasons:
1. Operational Infeasibility: The centralized collection and allocation proposed in the legislation aim to ensure that all clubs interested in authorizing the use of their image, name, and brand can do so and receive a fair compensation. The proposal to remove this rule, as outlined in Law 13,756/2018, practically makes it unworkable to negotiate these rights. To illustrate this point, it's important to note that in Brazilian football, across Serie A, B, C, and D, there are 840 clubs. That's right, 840 football clubs. The Federal Government, as previously stated, expects to have between 70 and 100 licensed operators with the regulation of the betting market.
So, conservatively considering the existence of 80 operators in Brazil after regulation and the existence of 840 football clubs, for the exploitation of image, symbols, trademarks, and similar rights, there could be no fewer than 67,200 contracts just in football. It's worth noting that fixed-odds betting extends to various other sports, such as basketball, volleyball, futsal, combat sports, tennis, and more. This means that hundreds of thousands of contracts would frequently need to be negotiated.
The numbers are staggering and, by themselves, demonstrate the impracticality of the proposal for decentralized negotiations.
2. Restriction of offers to consumers: the suppression of article 30, § 1º-A, III, of Law 13,756/2018, should also drastically impact consumers, who will see their right to free choice restricted. When establishing individual negotiations, there will be the possibility of a club passing on its image and similar rights to an operator and not passing them on to others. In practical terms, this could create a monopoly. Only a certain house will be able to offer bets on a club and the others will be prevented from doing so, even if authorized by the Government to operate in the regulated market.
Exemplifying. If Flamengo closes an agreement only with the Alfa operator, only that house will be able to offer bets on Flamengo games. As a result, consumers who want to bet on this club's games will have to make their investment with the Alfa operator, or they will not have this entertainment option within the regulated market. An eventual monopoly should generate less attractive odds due to the lack of competition, harming consumers who will pay more for the service provided.
3. Reduction in the channeling fee: a likely development resulting from a market restriction promoted by the suppression of article 30, § 1º-A, III, of Law 13,756/2018 and the desire of a club to license its rights to one or a few regulated operators, is that the low supply in the gaming market of a given team can encourage consumers to look for companies in the parallel market, which without supervision by the Brazilian Government, will ignore the desire of national clubs to limit the use of their rights and will offer unrestricted gaming options.
In other words, even if Flamengo wishes to negotiate its image rights, symbols, etc. only with the Alfa operator in Brazil, other betting houses based abroad will continue to offer Flamengo games. Therefore, in practical terms, the bettor interested in the Rio club will bet from abroad if he is not interested in the odds offered by the Alfa operator. The immediate effect of this measure is a larger parallel market (and a smaller regulated market) with less generation of resources and jobs for Brazil.
4. Reduction in sponsorships for clubs: a final result of the suppression of article 30, § 1º-A, III, of Law 13,756/2018 and the restriction on the use of club image and similar rights to one or a few operators, is that the impossibility of certain houses to offer certain games on their platform will generate a reduction in revenue and, consequently, the capital available to invest in football clubs with sponsorship will also be reduced.
As can be seen from the four points exposed, the initiative of some interested parties to try to remove article 30, § 1-A, III from Law 13,756/2018, arises from the most complete misunderstanding of the functioning of the sports betting market and ignores important side effects of this initiative that, above all, will have consumers as the main losers, with the reduction in supply, sports clubs, with the restriction of investments in advertising, and the Brazilian Government, with the reduction in revenue.
In summary, removing from the text of Law 13,758/2018 the proposal to centralize the collection and transfer of revenue owed to clubs for the use of images, symbols and the like in the Federal Government should generate unwanted side effects:
(i) the practical impossibility of individually negotiating more than 67,200 contracts only in football, without counting those that would have to be signed in other sports;
(ii) the risk of limiting the service offerings offered to consumers, as the measure would allow a club to authorize the exploitation of its rights by just one operator or a select group of them, reducing the offer of odds on authorized platforms;
(iii) this restriction on supply, consequently, will generate a flight of bettors to foreign platforms, reducing channeling, strengthening the parallel market and reducing state revenue; and
(iv) the flight of bettors to offshore platforms reduces the revenue of platforms licensed in the national territory and, inevitably, causes them to reduce costs, directly affecting their marketing expenses, which reduces the supply of capital for club sponsorship football in Brazil.
Every action generates a reaction. Removing the centralized collection and transfer mechanism for sports betting resources from the text of Law 13,756/2018 will harm consumers, regulation, the market and the clubs themselves. We need to be clear about each movement so that we do not later regret creating an unviable market.
Brazilian Institute of Responsible Gaming
