TER 20 DE AGOSTO DE 2019 - 17:09hs.
OPINION - Lawyers Tiago Gomes and Marcel Belfiore

The legalization of sports betting in Brazil

Lawyers Tiago Gomes (specialist in Business Law) and Marcel Belfiore (expert in Sports Law) wrote an analysis column in the newspaper 'Gazeta do Povo'. 'The legalization of sports betting is undeniably positive, but without the proper fiscal structure and especially without effective policies to combat the manipulation of results, the effects sought will never be achieved,' warn the experts.

Last December, Law 13,756 / 2018 was enacted, which created the lottery modality called "fixed-odds betting", which "consists of a betting system related to real sports events, where it is defined, at the time of entry into force of the bet, how much the bettor can win in case of hit of the prognosis". Such lotteries will be authorized or granted by the Ministry of Economy, which will be responsible for regulating the issue within a period of up to two years, extendable by two others.

In Brazil, betting on sporting events through websites lived in a legal limbo. On the one hand, the Criminal Offenses Act, published in 1941, treats as a criminal offense "to establish or exploit a game of chance in a public place or accessible to the public, whether by payment of admission or not" (Article 50) the bets on any sports competition "(§ 3, c). On the other hand, the prohibition did not reach companies based abroad, since Article 5 of the Criminal Code establishes that Brazilian law only applies to acts practiced in the national territory.

In practice, therefore, there were no impediments for sports betting sites hosted in countries where such activities are lawful to operate and offer services to Internet users located in Brazil. Brazilian gamblers could normally access foreign websites, bet on competitions on national or international territory and obtain financial results without any supervision or control. Thus, even before legalization, around 500 sports betting sites already offered Portuguese services and betting possibilities on sporting events in Brazil, or involving Brazilian clubs and athletes.

With the regulation of the activity, companies of foreign bets may obtain licenses to operate directly in the country, which, in addition to enabling the growth of fundraising by the federal government with the granting of licenses, permits and taxation of activities and results, will allow Brazilian sports entities access to new possibilities to obtain financial resources.

Estimates of the Brazilian sports betting market show that it moves between US$1 billion and US$2.5 billion per year. Considering a linear income taxation of 15% on company revenues and 27.5% on betting results, we can imagine a negligible increment of federal revenue ranging from around US$275 million to US$1.05 billion per year, without prejudice to the amounts obtained by granting onerous licenses and authorizations for the operation of these companies in the country, not to mention the increase in bettors from legalization.

But math is not so simple. Without the proper tax policy on sports betting activity, there will be no stimulus for the constitution of new companies on Brazilian territory for this purpose - which compete with others based in countries with more favorable fiscal policies - nor incentives for companies that operate from abroad, they choose to operate in Brazil as well.

On another front, legalization is also beneficial to sports entities. Due to the previous ban on sports betting, there were restrictions on advertising and sports sponsorship by these companies. Such restrictions would arise from the provisions of article 21 of the Brazilian Code of Advertising Self-Regulation, which provides that advertisements must not contain anything that may induce illegal activities or appear to favor, encourage or encourage such activities.

Therefore, to avoid the imposition of sanctions by Conar, the publicity of these sites, as well as sponsored sports sponsored by them, had been disguising their activities as "sporting guesses". With the authorization of fixed-odds betting, a new set of possibilities opens up to the advertising market (and especially to the sports sponsorship market), which in other countries has proved to be an important source of funds for sports.

It is also allowed that Brazilian sports entities benefit from a portion of the proceeds from betting activities through the licensing and authorization of the use of their brands, or even from the provision of official data and statistics of their activities, similar to the which foreign leagues and associations have been doing over the last few years.

Finally, another relevant challenge lies in combating the manipulation of results. The issue is complex because it is necessary to create mechanisms of detection and prevention of manipulation, and it is advisable to centralize data to monitor betting standards, ensuring not only the integrity of the sport, but also transparency and safety for bettors.

It is also recommended that an obligation be imposed on companies that are active in the market to notify authorities of the occurrence of unusual bets on both values and events. In addition, it is advisable that players, coaches and managers are prohibited from betting on results involving their respective sports. Finally, criminal legislation must be updated to include in the list of illicit activities those related to the manipulation of sporting results.

As we can see, the legalization of sports betting is undeniably positive, since it regulates a market that, well or badly, already involved hundreds of thousands of people and moved millions of reais. But without the proper fiscal structure and, especially, without effective policies to combat the manipulation of results, the sought effects will never be achieved.

Tiago Gomes (lawyer and specialist in Business Law)

Marcel Belfiore (lawyer and specialist in Sports Law)

Source: Gazeta do Povo