Even they approved the fixed odds sports betting regulation in December 2018 under the disguised denomination of lottery, with 2 years’ time to develop the necessary rules to implement the online and retail sports betting at federal level, 4 years and a half after we are still in the limbo of knowing what and when is that going to happened. To make things more bizarre, it now seems that the 2018 sports betting regulation decree 13.756 will be held to be discussed under a more broaden regulation including all gaming segments and verticals. Of course, this is just something published and spread under a very particular official and not official grapevine, so one can’t assure what and how it is going to happen.

During this period, many speculations have been made as to the size of the market and how much would the government collect in taxes from a hypothetical gambling regulation. Figures have been flowing, depending where on, that the government is missing anywhere from 3 to 5 billion US dollars in gambling taxes, as an example of the amount of nonsense that is flowing due to the lack of transparency and not having real facts on which base any kind of projection of the business. In the meantime, the official and unofficial figures of the existing gambling in Brazil which a glimpse of the market value; per example Caixa Federal lottery raised in 2022 over 2,3 billion US dollars of gross revenue, or the “illegal” popular jogo do bicho it is also estimated to double that figure (sic…), with their 25 number animal lottery/betting game.

Due to this regulation vacuum, the bicheiros – jogo do bicho agents – are using their network to take bets on the international offshore based online gaming and betting operators. It is estimated that around half a million of jogo do bicho agents are spread across all the Brazil federal states. Rio de Janeiro alone counts for around 60 thousand jogo do bicho agents. Not to mention the numerous illegal slots and bingo operations spread across all the federal states. A very strange scenario has been laid out in Brazil with the expectations of the regulation during the last few years; most if not all the major online gaming operators have moved on to establish a base in Brazil, signed considerable sponsorship agreements with almost all the football clubs and other sports in the country, showing the brands freely in the player’s shirts, advertising the online brands waiting and without any regulatory framework in place. 

This has meant an extraordinary investment to be added to the costs of keeping these company’s bases in the country awaiting for a regulation which is just not happening. Online Casino Gaming per example, was included in the overall general regulation of the Decree Draft 442/91, which has been approved by the lower chamber in February 2022 and is still in the limbo to be discussed and confirmed by the Senate. The new government and the new composition of the legislative chambers add additional uncertainty to the future of this project of law, despite all the versions that appear in the news every other week, with comments by deputies and senators as well as some government principals from the Ministry of Economy or the Treasure. It is part of these comments that the whole project is under review of the legislative chambers and that means almost like a re start of the process, including the already approved sports betting segment. While this is not happening, numerous if not hundreds of online gaming and betting companies are everyday speculating with their objectives and how great is the Brazilian gambling market and how extraordinary will the business be. To this point, we have to be realistic, because Brazil despite being a +213 million people market, the income per capita is a fifth of the average of the UE and US countries.

Meaning, that the value of the market is between a fourth and a fifth of the size in inhabitants to equal the market value and capacity to the standards we are used to, which means that it can be estimated that will have the size of a 50-60 million European market, per example Italy or France, not getting even close to the UK market value. 

We already have the experience of how some regulated markets are behaving in central and south America, i.e., México with a “sort of” regulated environment, or Colombia a fully regulated market. To have a real picture of what the market can be, we are still missing major factors that impact in the business performance and final operation results, per example: a) if the online casino and betting will be regulated to offer a complete portfolio and suit of products of casino and betting included in websites offer (until now sports betting is being regulated separately and casino still pending included in the overall gambling regulatory draft) b) taxation on the betting and gaming revenue; percentage of the tax and if applied on NGR or turnover; what other collateral taxes are there (this is very typical in central and south America), local taxes, state taxes, other social taxes to be added to the gaming tax c) is there going to be a tax on the player’s wins like it is established for the national lottery (30% on the winnings). These are just 3 areas of concern, because one assumes that licensing costs (for now established in circa 5.5 > 6 million US dollars); to add technical specifications if they will be strict and properly regulated; time frame for the issuing of licenses; and independent and qualified regulatory agency to implement the result of the forth coming gabling regulations. 

Not to mention the responsible gaming, player protection, anti-money laundering rules that shall and must be established and followed for the well-being of the industry. That there will be a reasonable process of licensing and operation approvals, not needing to comply with any other “request”, that those that are to be established in the regulation. I see many incognitos in the process of the Brazilian regulation of the gambling market across all segments and channels, specially that will guarantee the legal security of the stake holders entering the market, so they can establish themselves under the rule of law and that the law will be followed by both the private companies and the government agency that will be responsible to establish and implement the rules. 

With all these in mind, who dares to establish a time frame for anything serious happening in Brazil of a short to medium-term period, I certainly will not. And while this is not happening, is worth to mention that the Brazilian supreme court has ruled allowing the states to set up their our state jurisdiction regulation of lotteries which include sports betting, and that is already happening in may states, starting with Rio de Janeiro, Maranhaos, Pernanbuco, and a few more, which probably will mean that is possible that sports betting will be approved sooner by some states before the federal alw is in place. But, having said that, because of the peculiar way things are done in that part of the world, anything can happen in time and form that can improve my expectations. I sincerely wish I am wrong. 

By Eduardo Morales Hermo