Edgar Lenzi is a lawyer and consultant with more than 15 years of experience in the gaming and entertainment segment; He is founder and CEO of BetConsult, a consulting firm specialized in gambling; He is also founder and member of LenziAdvocacia, a full service law firm specializing in Business Law; He is the founder and President of ABRAGAMING (Brazilian Association of Gaming Companies)
GMB - Do you believe that the decisions of the
Criminal Appeals Classes of Rio Grande do Sul are correct?
Edgar Lenzi - It is possible to
interpret that the Rio Grande so Sul decisions are correct. In a nutshell, the
Jurisprudence that was firmed in that State is based in the way of
understanding that the misdemeanor law – which is prior to the Brazilian
Constitution – has not been received by It because the prohibition of gambling
goes against the individual rights and guarantees that are on the Constitution. In a practical perspective, the consequences
are the same as if the bill was declared unconstitutional. The law becomes not
efficient immediately, and it reaches facts that happened before the law is
declared unconstitutional (retroactivity). In conclusion, the decisions are
correct because they protect rights and individual guarantees, like Free
Initiative and the right of Freedom.
Could you briefly explain what the Judges thought
to allow the game in Rio Grande do Sul?
In a nutshell,
the Rio Grande do Sul decisions are based on the Brazilian Constitution, which
is from 1988. The misdemeanor law is from the 40’s, and in order for a law that
is prior to the Constitution to be effective, it needs to be received by the
Constitution. According to the interpretation of the Rio Grande do Sul judges,
there was no reception, because the misdemeanor law confronts principles and
guarantees established on the Constitution.
Decision of the Federal Supreme Court regarding
receiving the appeal for analysis and give it general repercussion, what does
it mean? That's right?
When the Supreme Court understood that there was general repercussion, the
court understood that this matter represents importance to all the States of
the Federation, in a way of guaranteeing juridical security for the entire
country, avoiding possible divergences of interpretation among different state
courts.
Is the decision of the Court of Santa Catarina to
recognize the general repercussion for gambling processes correct? Could one
also open a bingo or explore gambling in Santa Catarina?
The Santa Catarina Court
has chosen to suspend all law suits which object are misdemeanors of gambling.
When the state did this, it has agreed that this matter has interstate
relevance, so it made a correct choice when decided to wait for an STF
decision. This way, aiming to guarantee juridical security, the SC Court
suspended all law suits on misdemeanors of gambling and recognized the general
repercussion. However, different from what happened in Rio Grande do Sul, the
SC Court did no material analyses of the matter. So it did not emit an opinion
regarding the constitutionality of the misdemeanor law. So, the operation of
gambling is not possible in SC.
To understand better, what does "general
repercussion" mean?
It is one of the
requirements for an extraordinary appeal to be analyzed by the Brazilian Supreme
Court. In order to the STF to judge an extraordinary appeal, the party who
files the appeal must demonstrate the general repercussion. In other words, the
party must prove that the matter that is being taken to the Supreme Court has
probability to happen in many other identical or similar cases. This
requirement is important to make the Supreme Court efficient, like established
under article 37 of the Constitution.
Can entrepreneurs from other states try to exploit
gambling?
If the operation is done in
other states, they will be liable to criminal prosecution, according to the
misdemeanor law. Other States do not have any kind of discussion on the
Constitutionality of this bill, only SC and Rio Grande do Sul. To be able to
operate under the general repercussion argument, the operator must seek legal
resources, based on the Rio Grande do Sul’s judges interpretation.
Do you believe that foreign investors would come to
Brazil from these decisions or only after legislation and regulation of
gambling?
Given that investors are
often caution and follow strict compliance rules, I do not believe that an
unregulated market will attract a considerable amount of investors. The moment
to join the market for them will be after the approval and regulation of the
PLS 186/2014 or PL 442/91.
Can you say that the game is legalized in Rio
Grande do Sul?
There is a difference
between something being legalized or non-criminalized; In the Rio Grande do Sul
State it was understood that the matter is now un-criminalized. However, this
does not mean that it was legalized. The legalization process is much more
complex, and demands a regulation of the market after a bill legalizes the
activity. For example, the regulation comes to establish what duties need to be
completed and also what taxes need to be observed, etc.
Do you believe that many will be encouraged to open
bingos or other games in Rio Grande do Sul or other states?
Many entrepreneurs, which
are already tired of waiting for the legalization, are opening bingo halls and
getting excited about Rio Grande do Sul situation. However, it is necessary to
be careful given the uncertainness of the situation, The Rio Grande do Sul
decisions can be reversed any time by the STF on the Extraordinary appeal
analyses.
For the legalization and regulation of gambling in
Brazil are the decisions of Rio Grande do Sul, Santa Catarina and the Federal
Supreme Court a step forward or backward in the process?
The legalization of
gambling in Brazil is evolving among two main ways. The Projects 186/2014 and
the 442/1991. The ideal form for the legalization and regulation is thru the
approval of any of the bill projects. The discussion on the reception or not
reception of the misdemeanor law in Rio Grande do Sul and SC is important
because they bring more attention to the theme. Then, all mentioned
possibilities are a step ahead for a legalized and regulated way.
If the STF in deciding the merits of the Appeal
regarding the constitutionality or not of the law of criminal contraventions,
deciding by its constitutionality, the bingos should be closed?
The bingo halls that are
opened under the Court decisions in Rio Grande do Sul should be closed, and the
responsible agents shall be conducted to the police station.
There is no legal framework..Do you have an idea of what taxes should be paid to entrepreneurs who are exploring the activities of Bingos or other games of chance?We have been advising our clients to pay taxes based on previous bingo legislation and other modalities, or based on the activity that comes closer to the bingo activity, like public amusements. In all cases municipal and federal taxes will need to be paid.
Would you advise your clients to open bingos or
gambling sites under these conditions?
Given the uncertainness of
the situation, I would not advice the opening of bingo halls. The investment
done by the operator could be lost after a possible negative decision from the
STF. It is important to be careful and control the euphoria, however, there are
no doubts that this discussion is good for the legalization process. As a
matter of fact we approach the situation in a different way. We let the client
know about the risks of doing it, and if they decide to do it we will give them
the legal support. We are already working a lot to advice clients that are
willing to take the risk, aiming to make sure that the risk is the smallest
possible.
