Brazil ready to accept sports betting site sponsors of football teams
Professor Trengrouse explains five changes that come about with the new law
The Brazilian congress approved Law 13756/18, deriving from sports betting (lotteries)) bill PM 846/2018, which is the first step for the legalization of sports betting in Brazil. With this, betting sites will officially be able to sponsor Brazilian teams as it is done now with almost half the clubs that dispute the Championship league in England.
As there is a ban on betting in Brazil, businesses in this sector cannot sponsor clubs and competitions. The coordinator of the Sports Management course of Getúlio Vargas Foundation, Pedro Trengrouse, explains that there are several changes that come about with the new law.
The Ministry of Finance has a two-year term, extendable for another two years, to regulate the activity and will be responsible for the authorization and concession of sports betting, which under the law are called fixed odds lotteries. Revenue from the new sector will be used to pay, apart from winnings by the betting public, contributions to social security, the National Public Security Fund, education and football clubs.
Debates on the legalization of sports betting was revived in Congress based on a proposal by FGV professor Pedro Trengrouse, who presented a memorandum in which he advocated the regulation of sports betting, among other measures that, in his view, could generate more revenue for the federal and state governments, bettors and sports.
In an interview at the end of October, Trengrouse explained that just in Brazilian soccer games the betting sector moves about US$1 billion per year without any regulation on this financial movement and benefit to the country.
“Without regulation we do not have monitoring, we do not have taxation, we only have the risks. Most websites will not change from tax havens, but regulations allow for information exchange and monitoring, and with this we can identify who is playing, how much. Regulation enables charges to sites operating in the country,” said Trengrouse.
According to Trengrouse, there are five points that enable understanding sports betting legalization in Brazil
1 – What changes?
With the approval of bill PM 846/2018 by President Michel Temer, fixed odd betting, popularly known as sports betting (when the amount that the bettor will receive is already known at the time of the bet), has become legal in Brazil.
2 – When does it take effect?
According to the text of the PM, “the fixed odd betting lottery will be authorized or granted by the Ministry of Finance”, which has a two-year term – extendable by two more – to regulate the activity. However, the ministry has not given an estimate or a deadline when regulation would occur. “Considering the complexity of this future operation, which involves physical and virtual commercialization channels, in addition to a large number of national and international stakeholders, the planning of the regulation will allow for the completion of the work in the shortest possible time. This, however, must not compromise the effectiveness of the regulatory and operational model of this new betting modality.”
3- What will be the situation of foreign betting sites that already operate in Brazil?
First, it should be noted that these sites – such as SportingBet and Bet365, for example – can operate in Brazil because their headquarters are not in the country. Thus, they are subject only to the legislation of their respective countries of origin. For Pedro Trengrouse, this scenario should not change. “They will continue doing what they are doing, no one is going to come to Brazil, and the regulation will serve for cooperation with Brazilian authorities, monitoring the betting sites, taxation of winnings and profits and licenses.”
4 – What about other betting modalities, like casino, bingo and jogo do bicho?
All other betting modalities are prohibited. Both the House and the Senate have projects that provide for their regulation. The texts have already gone through commissions and public consultations and are now waiting to be voted on in the plenary only. The expectation of the specialists – considering even the change of legislature next year – is that it will happen soon. “It has to be remembered that the prohibition of these types of betting has never been discussed in Congress, it came from a decree-law of the New State Constitution, it has never been discussed by society, it is up to Congress to vote on legalizing this type of gambling which already has parliamentary support with 260 deputies in favour. There’s no reason for this type of gambling not to be voted (approved),” adds Trengrouse.
5 – What do the experts think?
“The Congress and the government need to discuss the issue with responsibility and should not deal with just one gambling modality while leaving the other aside. The illegal market cannibalizes the legal market,” adds the FGV professor. In a memo delivered to Congress during public hearings to discuss the topic, Trengrouse also lists some problems that the lack of regulation of these other modalities would be bringing to the country. Among them would be the exploitation of organized crime, the lack of assistance for gamblers and, more obviously, the amounts that the government would not be collecting in taxes.
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