Last week there was an avalanche of information (mostly misinformation) about the sports betting and online gaming market in Brazil.
It is frightening how news is spread, even by official bodies, without knowledge of the facts and, especially, without understanding the fundamentals of the market.
We heard shocking things, including from members of parliament.
As Barão de Itararé would say, "where you least expect it, nothing will come of it."
Being against gambling is a legitimate right of any citizen. But misinforming in order to defend your point of view is not.
I've heard things like:
We have to ban it, because these games return 10% of the prizes to the players and the bookmakers get rich by keeping 90%.
And the worst part is that if nonsense like this is not challenged, it becomes true.
The so called ‘Bets’market has only grown because it has an RTP (return to player) that reaches 97% in some cases. The average in Brazil must be between 90 and 92%.
That's right. The truth is this. For every 100 reais bet (US$ 18,4), 90 to 92 reais (US$ 16,5 to 16,9) are returned to the bettors as prizes.
The ordinances recently published by the Government themselves establish a minimum RTP of 85%.
Then someone says that betting shops should be closed because they pay 10% in prizes and "everything is fine".
I heard someone else argue that PIX for betting should be banned because it is putting the population in debt. This person represents the banking system that charges interest on credit cards that exceed 400% per year and that works with the infamous payroll loan that, especially among the retired class, has caused brutal damage.
When I heard this aberration, I immediately remembered Ciro Gomes, who guided his last two presidential campaigns by defending actions to "take 60 million Brazilians off Serasa" (Brazilian credit bureau like Experian)). And there was no mention of the existence of betting. Pepper in other people's eyes is refreshing...
But the greatest violence is to think of prohibiting me from using PIX (my money and available in my bank) so that I can use it wherever I want. The discussion about the use of credit cards is valid and this payment method should have already been banned, despite it having no practical effect, since almost no one in the sector accepts cards.
But will Brazilian Federation of Banks (Febraban) also propose banning the use of cards to pay PIX in installments, as many banks (including the one that claims to be the largest) are doing?
The ‘Bets’ only got to where they are because the RTP is high. The consumer is not stupid.
Some, in astonishment, made a fuss that fixed-odds bets outperformed federal lotteries by a factor of 10 to 1.
How can you compare a product that returns 90 to 92% of what is played to the bettor with another that returns 43% and is completely obsolete, with no launches in the last 2 and a half years?
I also read a statement that even with this 10 to 1 revenue, fixed odds betting revert less taxes than lotteries.
If the person who wrote this knew how the market works and thought about what he wrote for just 30 seconds, he wouldn't have been surprised, because it's a logic that even a child starting to learn math understands.
The official Brazilian lotteries, managed by Caixa, commit the absurd practice of taking slices of the "taxes" on turnover (total bets). This causes the bettor to be "harmed" with a very low return (one of the lowest in the world). Under the pretext that we need resources for social benefits (all of which are certainly very noble and deserving), we practice "swindling" these resources by penalizing the bettor. The result is what it results in. A paltry collection of just over US$4 billion per year.
As for fixed-odds bets, from 2025 onwards, taxation will be done correctly, on GGR, which is the balance between the total bet minus the prizes paid. Now, if the revenue of betting operators is what is bet minus what is paid in prizes, only then can something be taxed. Nothing could be more obvious.
And since the RTP is high, consequently the GGR is low. It's that simple.
That's why I'm doubly surprised by the verbiage of the press, ministries, monetary authorities, professional associations, etc.
Qualified people (some even involved in the drafting of regulatory acts) have been talking so much nonsense that sometimes I feel nauseous when I read it...
We are going through the regulation of the sector. Late regulation that contained successes and many errors.
Criticizing the "criminal delay" of the previous government in regulating is easy and not is completely wrong. We really have been waiting 4 years for a law to be enforced and nothing happened.
But this is not an isolated problem. What Minister Fernando Haddad said about this recently is true. It is also true that the current government was quick to present a provisional measure trying to regulate the market "by force". It was not successful, as it ended up in the black hole of a power struggle with the national congress, which wanted to, and was, the protagonist of the matter.
But where the government went wrong, and has not yet acknowledged it.
It made a serious mistake by not "standing firm" that several measures of the new regulation should take effect immediately, and by not confirming a deadline for adaptation "by the end of the year".
Here are some questions to ask:
Why do serious companies in the segment need a deadline to practice the principles of responsible gaming? What is right is right, the government doesn't need to tell me that...
Why would a company in the segment need time to adapt its communication language to what Conar suggested if what is provided there is so obvious and necessary for a healthy market?
What is the reason for accepting payment by credit card (money from third parties)?
This cannot be attributed to the cursed inheritance as the problems inherited from previous governments were once called. The government made a big mistake.
Of course, the regulatory process is there to separate the wheat from the chaff. It is no wonder that we always hear that there are currently more than 4,000 websites operating in Brazil and only 113 companies have applied for licenses.
The government's delay in issuing important ordinances for the sector also contributed to this. Up until 20 days before the deadline, it was not known what could be done. The ordinance that defined the modalities was only published at the end of July and the deadline for applying for the license expired on August 20. Another negative point for the Government. And the blame lies entirely with the previous government...
Of course, there are currently more people rooting for the market not to be regulated (4,000 X 113) than the other way around.
And the worst part is that it seems that the main actors in this film are falling into this trap.
In response to the title of this article, I say that no, the betting market has not reached exhaustion.
It is a thriving market that, like any other, needs clear rules, legal certainty, predictability and, above all, serenity and knowledge of how it works.
And if the people who write about it do not know how to distinguish between turnover, GGR, Cash in and Cash out, we will continue to be subjected to a public and moral lynching that is bad for Brazil.
A warning. It will be much worse if everything continues as it is or if we think about prohibiting it again. We will go back several spaces in this board game and the one who will take this step back is Brazilian society.
Amilton Noble
CEO of Hebara Distribuidora de Produtos Lotéricos, with more than 30 years working in the gaming market
