Brazil inhibits sports betting market

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Maximilian Deininger March 25, 2020

The Ministry of Secap, responsible for sports betting in Brazil, plans to slow down the rapid development of the sports betting market by law. Since the liberalization of sports betting in the South American country did not record in January, this decision is surprising for many Brazilians. However, a look at the new draft for the licensing system reveals that the government apparently is concerned with facilitating the conditions, especially for Brazilian sports betting providers. But there could also be other reasons.

Football is the most important national sport in Brazil and therefore extremely popular in the sports betting area. ((© Jonono / Pixabay)

A long way to liberalize sports betting

Gambling in Brazil has a very long and dynamic history. For example, casinos have existed in Brazil since the beginning of the 20th century, the first Prohibition of casinos was enforced as early as 1946. Even then, the industry in Brazil was so large that over 50,000 people then lost their workload.

In the recent past, Brazil has been one of the few countries in which the government showed no institutions, something about the lucrative State gambling monopoly To want to change, even if the development has been pushing for liberalization of the global market since digitization at the latest.

“It is economic freedom, freedom of movement. Just like me Mega-Sena [a product of the state lottery, note d. Red.] I should be able to play in casinos. ”

This had only changed a few months ago. Despite the not exactly low annual income for Brazil, these should be Around 15 billion real (approx. 3.2 billion $ ) – were already formulated in January of this year, which revealed that at least some Brazilian politicians are not in the way of fundamental liberalization.

What about gambling regulation in Brazil? “For many years, the Brazilian law was considered to be extremely restrictive, since despite obvious liberal developments in the global gaming market, it continued to try to keep away from their own gaming market in particular. As in other countries, this restriction led to enormous growth in the illegal market. Online casinos and sports betting providers have been represented in Brazil for years, but only horse bets in Brazil were officially allowed until the end of 2019. ”

Dispute on details in the legal text for sports betting regulation

Actually everything could have been going very quickly, ultimately a finished legal text for sports betting regulation was already available in December 2019. In March at the latest, at least the original plan of the Brazilian government, should the final version be adopted. In this case, overall 150 sports betting licenses on Brazilian and also foreign sports betting providers should be output.

So everything was regulated, you might think. As the Brazilian Ministry of Public Order, Planning, Energy and Lottery (SECAP) But now announced that this plan was no longer observing. This assessment does not only refer to the planned adoption of the new legal text in March, but also to the content. It is more likely that the second half of 2020 can be expected to adopt a finished legal text for sports betting regulation at the earliest.

What content is disputed in the planned sports betting regulation in Brazil? “Above all, it is about taxing income from the sports betting providers. According to the SECAP, the originally planned taxes of one percent could be tilted. After the last meeting, a sales tax rate of three percent for online sports betting and six percent for inpatient betting transactions were agreed. It was also known that Brazilian politics wanted to modify the licensing model in such a way that companies from Brazil are preferred in particular. ”

No chance for Brazilian sports betting providers?

It is now also clear that the new Brazilian sports betting law is very likely not to spend the originally intended 150 licenses. How high the number of state licenses should be after the latest decisions has not yet been officially announced, but experts suspect that this Number corrected down considerably down could become.

The few sports betting licenses should then be issued primarily to Brazilian providers that are supposedly Lighter license conditions have to fulfill. At first glance that the state intends to protect national companies, the state turns out to be completely different intentions at second glance.

The assumptions suggest that the International sports betting lobby It is urged to influence the legal framework in such a way that larger providers – including from abroad – should find much more attractive requirements compared to smaller Brazilian sports betting companies in order to be able to dominate the Brazilian sports betting market more easily.

This theory is also underpinned by the fact that larger international names of the industry are already Parts of Brazilian sports betting providers acquired to have. Above all Lawyers like Neil Montgomery The government of the Brazilian law firm Montgomery & Associados therefore criticizes this project of the government and are surprised. How things are going on in the Brazilian sports betting market is therefore completely open again.

“If this decision is actually confirmed as officially confirmed, this will mean a step backwards, since it would have made more sense to regulate as many operators as possible.”