After holding a public hearing in the Chamber of Deputies, the IBJR – Brazilian Institute of Responsible Gaming delivered a letter to José Francisco Manssur, special advisor to the Executive Secretary of the Ministry of Finance, disagreeing with the request of football clubs to increase the transfer to title of use of image by sports betting houses.
In the document, the entity makes it clear that it has been fulfilling its role of promoting the regulated sports betting market and is opposed to changes in the text of Law 13,756/2018 regarding the increase in revenue by football clubs.
The IBJR was founded in March by important players in the market, such as bet365, Betfair, Betsson, Betway, Entain, KTO, Netbet, Rei do Pitaco and Yolo Group, who appointed André Gelfi as president of the institute.
For the IBJR, two would be the alternatives to make this increase viable and both would not be adequate. One of them would be the reduction of the budget destined to the Union, and the other the reduction of company revenues.
Resources for the Union
To base its opposition, the institute makes it clear that it would not be feasible to reduce the resources destined to the Union, since they are funds applied to social security, education and the National Public Security Fund.
“The IBJR is of the opinion that both social security and education are areas lacking in resources and that they should be prioritized by the Government so that Brazil can develop and reach minimum levels of excellence in these fields,” it explains.
“As for the resources allocated to the FNSP, the institute also understands the impossibility of giving up this funding source, to the extent that the very sustainability of the regulated betting market depends on this capital to finance the acquisition of equipment and inspection services necessary to control the regular market, as well as to repress the irregular parallel market,” complements the IBJR.
As for the reduction in the turnover of betting companies, in favor of clubs, the institute says that it is an inadequate measure. To support the defense of not increasing the transfer value, the IBJR points out that bookmakers, not only in Brazil, but in all jurisdictions where the activity is regulated, do not use images, logos or other factors that would determine payment for the right of use.
In the document, it points out that companies refer only to the names of clubs and athletes and that this is necessary exclusively for a platform to work and for users to have the appropriate reference to place their bets.
The institute presents two examples of operator pages in the letter, where only the names of the clubs and the odds for each match are indicated. The letter refers to decisions by the Federal Supreme Court on the use of images to support its opposition to the clubs' request.
Platforms do not use club logos
The IBJR points out that Law 13.756/2018 proposes a counterpart. “Today, sports betting operators who do not use the brands, shields or image of clubs, sports organization entities or athletes, would have the right to use them, upon payment of 1.63% of the GGR ( gross gaming revenue)," describes the entity.
“The measure, designed with the purpose of improving the bettor's experience, would benefit operators and clubs. What needs to be clear, however, is that the functioning of betting platforms does not depend on these rights. The operation takes place perfectly – all over the world – without the exploitation of image rights, simply depending on the mention of names, which, as seen, is supported by the constitutional text and by the Brazilian Supreme Court,” the IBJR added.
The institute also reinforces that “increasing the percentage of 1.63% of the collection destined to the clubs, will make the operators give up using the image rights and, if necessary, even go to court, so as not to have to pay this amount owed. to the absence of counterpart. Due to the fact that operators do not use shields, official shirts or images of athletes, the payment of 1.63% is not justified.”
“An imposition of this nature on the operators strangles their profit margin, making the business less competitive. In practical terms, this represents fewer companies seeking authorizations, which implies less channeling of the regulated market, generating a reduction in revenue for the Government, whether with the cost of grants or with taxes, without forgetting to mention the drop in the number of jobs created.”
The institute completes the reasoning with the argument that “the decrease in the margin of operators makes their products (odds) less attractive when compared to others, offered by operators often located in tax havens, promoting the much unwanted parallel market.”
“In order for there to be a high channeling of bets to the regulated market, it is important that licensed operators maintain the ability to offer competitive products. Increasing the allocation of 1.63% that should be allocated to clubs will be a new obstacle for channeling the regulated market, since it will increase operators' costs without bringing any new resources to the State; that is, there will be a compromise in the channeling rate without any benefit to the State or society,” it explains.
Killing the goose that lays the golden eggs
The entity points out that “the clubs, by wishing to have more than the 1.63% of the GGR already allocated to them by Law 13,756/2018, run the risk of ‘killing the goose that lays their golden eggs’. After all, 39 of the 40 clubs in the A and B series of Brazilian football today are sponsored by bookmakers. Furthermore, increasing transfers made to clubs not only makes the sports betting market unfeasible, but can also generate a message contrary to the interests of the Brazilian State, that it would be benefiting from its policy, clubs that today owe BRL 64 million to the Union, this is just considering eight teams from the Rio-São Paulo axis.”
For the institute, “increasing the volume of revenue destined for football clubs may also lead the Federal Government to be questioned about the reason why football would be entitled to participate in the result of the collection with sports betting, when this activity is back to different sports modalities (also involving domestic and international leagues/confederations) and not just for Brazilian football.”
The Brazilian Institute of Responsible Gaming concludes the letter by saying: “For the IBJR it seems that the best path is to maintain the current allocation of funds to the clubs (1.63% of the GGR), as it adequately remunerates such entities for the use of a right which today is not done by the operators, generating an increase in revenue for entities linked to the sport without excessively burdening the operator. Any amount above the level currently provided for in Law 13,756/2018 will impact the channeling rate, generating losses for everyone, operators, the Government and the clubs themselves, after all, the reduction in revenue in the sector impacts everyone involved in a negative way.”
Source: GMB
