The first is the proposal for a comprehensive regulation of games of chance (casinos, bingos, jogo do bicho, eSports), with general law initiatives led by deputies and senators and discreetly supported by portions of the Executive. Bill No. 442/1991 in the Chamber and Bills No. 186/2014 in the Senate address the issue with a comprehensive and technical view of the sector.
From various angles, the texts approach the modern foreign approach. They recognize the interest of players, bring traditional and emerging modalities to legality, typify illegal gambling, define the allocation of tax revenues, impose responsible gambling initiatives, restrict advertising, promote a mix of state regulation and self-regulation, institute mechanisms to combat laundering of money, establish risk management practices, signal that the Internet has already arrived in Brazil.
What the sub-lines suggest, but the wording does not dictate, is the need for the empowerment of a central regulatory authority that combines the capacities of standardization, inspection, promotion of competition, innovation, and institutional dialogue to keep pace with the market and the north of public policy. It is so in all jurisdictions.
This model creates known and common challenges for various sectors in Brazil; Parliament and the Executive, even if they want the same thing, have difficulties to act. With a limited public budget and under the political context, the Executive has restrictions to propose the creation of a regulatory body to meet the demand. Neither can Congress determine its creation, since the Constitution defines that the laws governing administrative organization and the creation of public administration bodies are the private initiative of the President of the Republic.
If the Executive does not gain the muscle necessary to exercise such powers, sectoral alternatives gain traction.
The second move is casino-specific regulation. The number of projects in the Houses is significant, and the theme goes back to the period immediately after the closure of these establishments in the country. In the federal government, it has been formally promoted by the Ministry of Tourism. In states and municipalities, similar bodies also drive the agenda.
Today, the projects that associate and condition the installation of casinos in resorts and hotel spaces stand out. Bill 4495/2020 is the most recent text and signals political support. Among the susceptibilities, the maximum limit of one concession per state and the risk of hindering the progress of legalization of other modalities are noted.
The third is the regulation of the sports betting market, as a result of Law No. 13,756 / 2018. The Congress inserted the text on the lottery modality called fixed-odd bets, as the exclusive public service of the Union, in the procedure of provisional measure in 2018.
In August, Decree No. 10,467 / 2020 qualified the modality in the Investment Partnership Program of the Presidency of the Republic (PPI), designated the National Bank for Economic and Social Development (BNDES) as responsible for execution and appointed the Ministry of Economy as coordinator privatization process. Technical and legal studies must be contracted to model the operationalization of the market and offer regulatory paths.
The fourth refers to state lotteries. In September, the Supreme Court ruled that sections of Decree-Law No. 204/1967 were unconstitutional, which ensured the Union's monopoly over the exploitation of lotteries. The Court ratified the Union's private competence to legislate on consortia and draws, but authorized states to explore and regulate lottery activities. The decision of the STF causes plans and expectations for the privatization of lotteries and sports betting to be reorganized, due to the new regional lottery scenario.
In 2019, the Italian-English International Gaming Technology (IGT) and the American Scientific Games International (SGI) formed the consortium Estrela Instantânea, winner of the LOTEX auction and would receive the grant for R$ 800 million (US$ 155m). The consortium argues that the Supreme Court's decision reached the companies' plans and, in the midst of other frustrated negotiations on the distribution of instant tickets through CAIXA's 13,000 lotteries, withdrew from the scratch card concession process.
Ministry of Economy and BNDES reported that the process was closed for non-compliance with the terms of the notice. Negotiation has been going on for months. With so many concurrent movements, the country must make informed decisions about which model to follow. There are global references on how to build balanced regulation that ensures leisure, competitiveness, control, and collection for public causes.
Government and market must seek to understand industry practices and standards, the necessary public and private governance structures, and, in the end, where sustainable business opportunities reside. Inaction slows down possible collection, alienates investors, and promotes illegal gambling. Executive, Legislative and Judiciary have been showing their cards. It is time to define the rules of the game that is already being played.
Sérgio Garcia Alves
Master in Law & Technology from the University of California, Berkeley. Master in Regulation from the University of Brasília. Partner at Abdala Advogados.
