Law 13.756 / 2018, which authorized sports betting in Brazil, delegated to the Ministry of Economy, through the Secretariat of Fiscal, Energy and Lottery (Sefel), the responsibility for its regulation. The issue raises questions and concerns that must be considered from a regulatory point of view on at least three fronts, of equal relevance: economic, tax and sports. This article aims to offer notes to contribute to the construction of the regulation of sports betting under the perspective of economic regulation from the experience of Comparative Law.
If in Brazil, despite the legal restrictions that existed, the sports betting market has already been a reality for many years, around the world it is a well-established and properly regulated business in about 30 jurisdictions, including from highly-developed countries related to digital innovation, such as Estonia, common law countries such as Canada, United Kingdom and Ireland - in addition to some states of the United States -, and countries with Roman-German juridical traditions such as Germany, Belgium, France, Spain and Portugal .
The regulatory regimes adopted in these countries vary basically between three models: monopoly, limited licensing and free market. The concerns that justified their adoption by such countries, as well as the successes and failures experienced in each of them, can be very useful in defining the regulatory model to be followed in Brazil. Knowing them, therefore, contributes to the discussion of what will be implemented in the country.
The monopoly regime adopted by Austria, Canada, the Philippines, Hungary and Sweden is known to Brazilians because it closely resembles the regime adopted for lotteries operated by Caixa. In this model, only one operator is authorized to provide sports betting services (private operators in Canada and the Philippines, or the state itself in the others). Although this model has the advantage of offering the state great control over the quality and suitability of the operator, it has the disadvantage of the rivalry of operators from the outside. The risk of consumers preferring these agents is high, and this would affect the effects of regulation and the social benefits one might expect.
The second model, for granting a limited number of operating licenses, has Germany as a prime example. In this regime, as the number of licenses is limited, the jurisdiction can charge more for its concession, in addition to imposing more stringent criteria for the selection of operators and more demanding regulation. The model has the same problems as the monopoly regime: if standards and costs are so high as to deter large numbers of competitors, there may be incentives for consumers to seek illegal or foreign operators, reducing the scope of benefits sought implementation of this scheme.
Finally, in the free market model, the licensing of local authorities is not subject to quantitative limitation, but only to the compliance of operators with the requirements imposed by local regulation and, normally, the payment of fees and costs related to the licenses and the monitoring of its operations. Countries such as Belgium, Costa Rica, Denmark, Estonia and the UK adopted this model.
The advantages of this regime are the reduction of the incentive to illegality or the provision of services from abroad, which allows the jurisdiction to benefit from the increase in tax collection, which can be reversed, for example, in the prevention of possible social damages, and the ability to monitor and supervise the activities of operators. It also offers a wide range of regulatory strategies. Belgium and Estonia, for example, while granting unlimited licenses, prohibit the operation of unlicensed agents, even from abroad, even restricting access to the websites of such agents in the national territory. Costa Rica, on the other hand, has adopted extremely permissive regulation, which together with the lack of taxation and good performance of the local economy attracted more than 200 operators to the country.
However, it must be said that the foreign experience indicates that the success of this last regime will depend, in addition to the quality of the regulation that will accompany it, the attractiveness of the local economy and also the tax regime, which must be efficient enough to guarantee the highest collection possible to make attractive the operation in that country.
As you can see, the choice of the local regulatory regime will depend on a series of political, economic and social choices that should be made by the regulator, making the task of Sefel's technical staff complex. International experience, while not guaranteeing a definitive answer, offers alternatives for the definition of the national model and is certainly being considered.
Tiago Gomes is a partner of Ambiel, Manssur, Belfiore & Malta Advogados, Master in Commercial Law and graduated in Law from the University of São Paulo (USP).
Source: GMB/Consultor Jurídico
