From bent referees and inflated stadium contracts to the theft of the old World Cup trophy, Brazilian football is no stranger to scandal.
The latest intrigue has a 21st century digital twist. More than a dozen players are suspected of taking bribes for deliberate acts such as receiving yellow cards or giving away penalties, from a criminal gang who placed online wagers on the incidents.
None of the websites the bets were made through are accused of involvement. Prosecutors are treating them as victims, given they paid out on scams. But the controversy has provoked a debate about the growing role of sports gambling at a moment of critical commercial developments in the domestic game.
With takeovers of teams by foreign capital and proposals afoot to create a new competition backed by big money, the manipulation of at least eight top-flight fixtures has even called into question the integrity of the sport.
“Whether investors in clubs, leagues or media companies that buy the transmission rights, it’s bad for everyone,” says Eduardo Bandeira de Mello, a federal lawmaker and former president of Rio de Janeiro side Flamengo.
Sports betting has exploded in popularity since its 2018 legalisation in the soccer-mad South American nation, with online international brands Bet365, Betano and Sportingbet among hundreds targeting punters.
Nineteen of the 20 top division clubs carry sponsorship from such sites. Consultancy H2 Gambling Capital predicts R$83bn (US$17bn) of wagers in 2023, with R$5.82bn of gross gaming revenue — forecast to roughly double over the coming years.
Yet there is an absence of regulation. As a result, internet bookmakers run from overseas jurisdictions are subject to no Brazilian rules or taxation. Andre Gelfi, president of the Brazilian Institute of Responsible Gambling and a local executive for Swedish group Betsson, reckons this was the main cause behind the fraud. “Without regulation, you cannot level up to international best practice,” he says. “The more formalised the market, the more effective the control of criminal activities.”
The new administration in Brasília was already reworking rules drafted but not passed by its predecessor, so the affair could provide fresh impetus.
However, a worry is that the political attention it has drawn may slow down the process. The government’s support in Congress is weak and some believe ministers will wait until the end of a parliamentary inquiry into the scandal. The continued uncertainty is negative for companies and consumers who have little recourse for complaints in Brazil, says Neil Montgomery, a lawyer specialising in the area.
“It’s very difficult for serious operators to establish any long-term plans because the definitive legal framework isn’t in place,” he adds.
Industry insiders do not expect draconian regulatory measures in reaction to the controversy. Companies will have to apply for licences or face restrictions on advertising and payments processing.
“The concern for international operators for the medium term is less match-fixing, it’s what’s going to happen to the market when the regulations are in place,” says Jon Moss of 34 Consulting and formerly head of international development at Bet365.
In his view, aspects of the proposed rules risk pushing consumers towards unregulated portals. These include a 30 per cent tax on winnings above R$2,112 and the fact that virtual blackjack, roulette and slot machines — a big source of income and popular with gamers — remain illegal when operated within Brazil, so will have to be removed from legitimate sites.
Even if sports betting is not overly tainted by the rigging racket, lobbyists fear setbacks on a wider campaign to fully liberalise gambling and permit casinos in Brazil.
The Senate was expected to vote in coming months on a bill to lift a 1940s general ban on games of chance. Yet the furore has fuelled opposition by evangelical Christian politicians, who say it proves the dangers of addiction.
Operators say it is in their interest to prevent fraud and have pledged greater action to detect and report suspicious activity, along with education for punters. Clubs and sports authorities are under pressure to do the same for athletes. With major changes under way in the business side of o jogo bonito — the beautiful game — a lot is at stake.
“The implications will be extremely serious if we do not treat the matter with the seriousness it deserves. If it’s a weak response, it could generate a crisis of credibility in football,” says Bandeira de Mello.
Source: Michael Pooler - The Financial Times
