Ludmer Law contributed with the chapter on Brazil in ICGL Gambling 2021

1. Which entities regulate what type of gambling and social/skill gaming activity in your jurisdiction?

1. Casino gaming (including slots and casino table games such as roulette & blackjack)
   Gaming and betting in Brazil have been generally regarded as illegal since 1946 and considered a criminal misdemeanour pursuant to Article 50 of Decree Law 3,688/1941. The main criteria for establishing if a certain game is illegal is whether such game is exclusively or mainly dependent upon luck. For the occurrence of the misdemeanour, the gaming activity needs to take place in a public place or a place accessible to the public. Article 50 of the Decree Law was updated in 2015 to explicitly include the internet in the definition of the misdemeanour. The amendment to the Law also provides that players caught participating in games of luck, whether physically or on the internet, are subject to a fine of BRL 2,000.00 to BRL 200,000.00.
   
   Those who commit the offence of exploiting gaming and betting are subject to a penalty of imprisonment from three months to one year plus a pecuniary fine. Further, the Brazilian Supreme Court has been called to decide on a lawsuit regarding the legality of gaming and betting on the grounds that the general prohibition has been lifted in light of the constitutional principle of freedom of business, as provided by the Brazilian Federal Constitution. The precedent to be handed down by the Supreme Court should bind all lower courts.
   
   There are two main Bills in advanced legislative stages ready to be voted on by Congress, seeking to legalise and regulate gaming and betting in Brazil: Senate Bill 186/2014; and House Bill 442/1991.
   
   Last year, two new Bills were presented: (i) House Bill 530/2019; and (ii) Senate Bill 2,648/2019.
    
2. Bingo
   After almost a decade of being permitted during the 90s, the commercial exploitation of bingos was banned from the Brazilian legal system by force of Provisional Measure 168/2004. Until July of 2020, by force of Law 13,019/2014, third-sector entities could carry out bingos under the premise that the same would fall into the generic category of “similar activities” to prize draws and contests as allowed by such law. The very recent Law 14,027/2020 now permits not only third-sector entities (which were already allowed to carry out prize draws and contests and similar activities) as well as concessionaires of public broadcasting services to carry out such activities. However, the new law expressly forbids the operation of bingos, together with any other operation that may be considered a game of luck. As such, from the wording of the new law, it seems that bingo has been completely banned from the Brazilian legal system. Law 14,017/2020 also expressly prohibits any prizes distributed under such law to be granted or converted into cash.
    
3. Betting / Sports/horse race betting (if regulated separately to other forms of betting)
   Horse betting, insofar as conducted in permitted racetracks, is allowed in Brazil. Although the Decree Law provides for a clear prohibition on sports betting, since the coming into effect of Law 13,756/2018 it is widely accepted that fixed-odds sports betting has become legal in Brazil with several companies already exploiting such activities in a market already worth billions. Just in the Brazilian Premier League, 13 out of the 20 teams already count on the sponsorship of companies from the sports betting industry.
    
4. Fantasy betting (payment to back a ‘league’ or ‘portfolio’ selection over a period of time)
   Fantasy games are generally considered a game of skill rather than a game of chance, and, therefore, both the exploitation and participation of players are permitted in Brazil.
    
5. Lotteries
   Pursuant to Decree Laws 204/167 and 759/1969, the Brazilian Federal Administration, through the Brazilian Public Saving Bank known as “Caixa”, holds the monopoly for the exploitation of lotteries. Law 13,155/2015 created the instant scratch card lottery LOTEX. After two failed attempts to privatise LOTEX, spanning over three years, the private consortium between the companies Scientific Games and International Game Technology (IGT) placed the sole minimum required winning bid in the amount of BRL 817.9 million. The concession is valid for a 15-year period.
   
   Further, on 30/09/2020, the Brazilian Supreme Court unanimously decided that the monopoly conferred by the abovementioned Decree Laws is unconstitutional and that although the Brazilian States are not entitled to legislate on the subject matter, they are eligible to explore lotteries; therefore, the legal provisions that grant exclusivity to the Federal Administration/Caixa are now considered void.
   
   This means that we may potentially have all the 27 Brazilian States and the Federal District creating their own lotteries and a possible process of privatisation of each one of them. The ruling may also have consequences with regards to fixed-odds sports betting since such category of betting was classified as “lottery” under Law 13,756/2018.
    

2. Specify: (i) the law and regulation that applies to the Relevant Products in your jurisdiction; and (ii) – in broad terms – whether it permits or prohibits the offer of Relevant Products to persons located in your jurisdiction.
The main piece of legislation governing gaming and gambling in Brazil is the Decree Law that provides for an extensive ban on such activities. Lately, we have seen a movement towards legalisation and regulation of some of these activities as provided by Laws 13,155/2015, 13,756/2018 and 14,017/2020 as well as by relevant decisions handed down by the Superior Courts and the formation of significant political and economic pressure by important stakeholders.
 

3. What regulatory licences, permits, authorisations or other official approvals (collectively, “Licences”) are required for the lawful offer of the Relevant Products to persons located in your jurisdiction?
Since most gaming and betting activities are prohibited, there is no licence system in place yet. In relation to fixed-odds sports betting, which became legal by virtue of Law 13,756/2018, the government has not yet decided what the licence regime would be.  Up until now, three public consultations were held by the Ministry of Economy, through the Secretariat of Assessment, Planning, Energy and Lottery – SECAP.

After the first consultation, it seemed that Brazil was striding towards the unlimited licence system by means of the so-called “authorisation” regime.  However, in the last two consultations and as a result of the legal requirements made by the Attorney General Treasurer’s Office, the possible model now seems to be switching to the limited licences granted pursuant to the so-called “concession” regime. A final decree regulating and setting forth the requirements for applying for licences is slated to come to light this year.
 

4. How does local law/regulation affect the provision of the Relevant Products in online/mobile/digital/ electronic form, both from: (i) operators located inside your jurisdiction; and (ii) operators located outside your jurisdiction?
Operators located inside the Brazilian territory carrying out any types of gambling and betting activities not permitted by the law, whether online or by any other means, will be committing a misdemeanour and therefore subject to the penalties set forth in Article 50 of the Decree Law. Concerning operators located outside Brazil, it is important to clarify that Article 2 of the Decree Law provides that the application of such law is limited to misdemeanours that took place in Brazil.

On the other hand, Law 12,965/2014, known as the Internet Civil Landmark Law provides that Brazilian law will be applicable whenever “the collection, storage, keeping and treatment of records, personal data or communication by providers of internet connections or internet applications” is done in Brazil. A similar provision is also provided in the General Privacy Protection Law, known as LGPD, which just became effective. The courts have not yet been called to decide on which of the above provisions should prevail and whether operators located outside Brazil targeting Brazilian consumers should be held responsible for any offences.
 

5. What terminal/machine-based gaming is permitted and where?
If a machine-based game is considered a game of luck rather than a game of skill, then it is not permitted.
 

6. Who is liable under local law/regulation?
As mentioned above, both operators and players are deemed to be committing the offence provided in Article 50 of the Decree Law.  Whilst operators are subject to imprisonment from three months to one year, gamblers are subject to fines ranging from BRL 2,000.00 to BRL 200,000.00.
 

7. What form does enforcement action take in your jurisdiction?
Enforcement agents from both the Federal and State Authorities often perform and carry out investigations and proceedings against illegal gaming and betting.
 

8. What appetite for and track record of enforcement does your local regulatory authority have? Have fines, licence revocations or other sanctions been enforced in your jurisdiction?
Brazil does not have a gaming and betting regulatory authority yet so there is no track record regarding licences, fines, and revocations.  Sanctions may be enforced as a result of legal proceedings anchored in the Decree Law by the relevant courts, once the entities and individuals are prosecuted by the relevant law enforcement agents.
 

9. What (if any) intended changes to the gambling law/regulations are being discussed currently?
The main pieces of legislation aiming to legalise and regulate gaming and gambling are:

(i) Senate Bill 186/2014;
(ii) House Bill 442/1991;
(iii) House Bill 530/2019; and
(iv) Senate Bill 2,648/2019.

Whilst Senate Bill 186/2014 and House Bill 442/1991 deal with gaming and betting in Brazil generally, providing: (i) the definition of general principles; (ii) the powers of the different authorities; (iii) the categories of games; (iv) the rights of the users/gamblers; (v) the criteria to receive licences; and (vi) the application of penalties and sanctions, House Bill 530/2019 and Senate Bill 2,648/2019, which were both proposed last year, deal specifically with gaming and betting activities inside resort casinos.

Eduardo Ludmer
Eduardo Ludmer holds an LL.M. in Intellectual Property from the Hebrew University of Jerusalem and an LL.B. from the Catholic University of Pernambuco. He is a dual-qualified lawyer in Brazil and Israel and has accumulated over 15 years of experience handling Corporate, Contract, Intellectual Property and Litigation matters working in top-notch law firms and big companies. Eduardo is a published author of many books and articles and is a frequent lecturer at legal seminars. Some of his articles have had a concrete positive impact on the modernisation of the Brazilian legal system.

Source: GMB