Several sponsorship deals have been inked since approval in mid-December of Law 13.756, which will lead to the regulation of both retail and online betting in Brazil for the first time.
Malta-based NetBet fired the first shot in January by signing a shirt sponsorship deal with Série A team Fortaleza. NetBet has since inked a similar agreement with Vasco da Gama, with Curacao- and Malta-based MarjoSports sponsoring Corinthians and Botafogo and Santos among other teams reported to be in discussions with betting partners.
“Regarding the sponsorship of soccer teams, I do believe this is a trend,” said Luiz Felipe Maia, a founding partner of FYMSA Advogados law firm in São Paulo. The deals have come after two significant shifts in policy.
In early January, officials in the new administration of President Jair Bolsonaro said it was no longer appropriate for state-owned bank and national lottery operator Caixa Econômica Federal to spend public money to sponsor Brazilian football teams.
As a result, Caixa has ended its agreements with two-dozen football clubs for the new 2019 football season, leaving them to look for alternative partners. Then there was December’s sports-betting law itself.
Not only did the new law lay the path for a regulated market to take shape over the next couple of years, it also arguably triggered more immediate legal changes regarding sports-betting advertising.
Brazilian law requires advertisers to comply with industry codes that generally prohibit the promotion of illegal activities, such as unlicensed gambling, explained Maia.
That has meant online betting companies have traditionally promoted free-to-play sites or services such as GVC’s Sportingbet.tv, which offer game statistics and information rather than bets themselves.
With the new law now recognizing fixed-odds sports betting as a lawful lottery activity in Brazil, there are arguments that the advertising restrictions no longer apply.
“We understand that the current legal situation offers a certain legal security for operators who are signing sponsorship agreements,” said Edgar Lenzi, a Brazilian gambling consultant and attorney with BetConsult.
“Fixed-odds sports bets stopped being a criminal contravention under Article 50 of the Criminal Conventions Act and became a lawful lottery, just one that’s not yet regulated.”
In Europe, it has been a relatively common tactic for online betting companies to sponsor local sports teams and leagues to build up their brands before markets regulate and licenses become available.
Still, the Brazilian agreements are being forged without a guarantee that operators will be able to participate in the market once regulations are adopted.
December’s law does not specify whether there will be an open licensing regime, which would allow an unlimited number of operators in Brazil.
Another option under consideration is a more restrictive concession system that could to be limited to a definite number of well-capitalized groups able to pay upfront fees and meet other competitive bidding criteria.
The chief gambling official in Brazil’s economy ministry recently said the two possible models were still being studied, with a decision on which direction to take anticipated by the second half of the year.
Specific provisions for advertising to reflect “best practices in corporate social responsibility” will also be established in the future regulations, which the government has up to four years to adopt.
Another uncertainty is whether authorities could also take measures to prevent offshore operators from ramping up their Brazil-facing activities prior to regulation.
In Europe, the Netherlands has been particularly assertive in this regard, fining a number companies for actively targeting Dutch residents while new legislation is in process and warning them they could be excluded from licenses under the future regime.
Those betting companies sponsoring local sports teams in Brazil are not likely to face legal difficulties before the market becomes fully regulated, suggested Lenzi, the consultant and lawyer.
“We have a peculiar legal situation and on top of that, the clubs need this revenue to support their operations,” he said. “With the exit of Caixa, international sponsorships are an alternative for them.”
Maia said it was hard to predict what actions authorities may take, although it is ultimately in Brazil’s “best interest to absorb most of the operators in the legal market.”
“In that sense, having clear rules, a reasonable tax structure and a transition period for all current operators to migrate to the regulated market would be the most effective way to maximize revenues for the government and the operators, creating more incentives to attract operators to the country than to remain offshore,” he added.
Brazilian football teams, meanwhile, are set to benefit financially from sports betting regardless of any sponsorship agreements they strike.
December law’s will entitle soccer clubs to receive 1 percent of online bets and 2 percent of retail stakes as compensation for giving up “the rights to the use of their names, trademarks, emblems, symbols and the suchlike for the promotion and operation of … fixed-odds betting."
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