GMB – What is your assessment of the current discussions about integrity, considering that the iGaming sector is now more focused on online casinos than on sports betting?
Roberto Brasil Fernandes – Events that have sports as their core reinforce sports integrity with a focus on what was approved under Law 13,756, which sought resources and new levels of integrity in sports. With legalization, online games were included, which gave economic viability to the activity. The market faces the challenge of coexisting with both sports betting and online games. We have just over six months of legal operation, yet we are still dealing with 70% of the market being clandestine.
It is from this illegal sector, which has not obtained authorization from the federal government, that the problems arise. There is no caution with the bettor, no concern for sports integrity, nor the technological tools that the regulated market requires of operators. Brazil is living a positive yet challenging moment. An event like this [Brazil Sports Tech Summit, by GovRisk and Genius Sports] is fundamental to provide people with information so they can better understand the business and differentiate what is legal from what is illegal.
I emphasize the social importance of this industry, not only for tax revenue. The report released by the Secretariat of Prizes and Betting on the first six months identified more than R$17 billion in tax and non-tax revenues, which is crucial for people to understand how important this activity is, not only through revenue, but also through job creation and investment.
How can the illegal market be curbed or the clandestine operators brought into legality at a time when there is talk of a 50% tax increase?
The tax increase is a mistake. Increasing the tax burden will not increase tax collection. There will be a reduced tax base with a very high rate. It’s the Laffer Curve, and it’s a mistake. How do we make the market prosper? By fighting illegality. Brazil cannot sustain informality, because it does not contribute.
I believe the Ministry of Finance has created an important regulatory agenda alongside the Federal Police, the Public Prosecutor’s Office, society, and even operators. The sector’s wish is to operate in the legal market.
Will the Secretariat of Prizes and Betting (SPA) be able to deliver on one of these goals, which is to combat illegality?
I believe so. It is up to the SPA to regulate the market, and other institutions such as the Central Bank, the Police, Coaf, Conar, and the sector itself can form partnerships to make this happen. Even society should be called upon to contribute.
Is choking off payment methods one of the ways to curb the illegal market?
Not just payment institutions. All activities that contribute to informality must be banned. Payment methods are one of the avenues, as they enable the informal activity. I think fintechs will go through a government filter, and we will see better days ahead for this market.
How do you view the proliferation of state lotteries and now a series of cities launching their own municipal lotteries?
State lotteries are fully regular and constitutional, as long as they operate within their limits and are backed by federal legislation. The exclusive legislative competence on this matter belongs to the Union, not to the states, which may have their local lotteries to operate lottery modalities contained in federal law within their territories.
Municipal lotteries, in my view, are not contemplated in the Federal Constitution nor in the decision of the Supreme Federal Court (STF). I have said, with all due respect to those who think differently, that it is an adventure. There is a risk of liabilities being created for entrepreneurs who believe in an authorization and make investments. If unconstitutionality is declared in the future, the consequences will be significant. It does not seem reasonable at this moment.
I do hope municipalities will have their role in this process. Bill 2234, currently under discussion in Congress, regulates various modalities and perhaps municipalities may join in partnership with states and the Union to operate some of these activities. Legal certainty must be kept in mind.
Source: Exclusive GMB
