Match-fixing scandals may clear path to Brazilian betting regulation

The Ministry of Justice is to send in a proposal to the government to regulate sports betting, potentially bringing a process that first began in December 2018 to a successful conclusion.

Many had feared the path to regulated sports betting had been blocked by former president Jair Bolsonaro failing to ratify regulations late last year, meaning the government had failed to regulate within the four-year window set out by the 2018 legislation.

This is the latest twist in a more than four-year saga since the country’s legislature voted to legalise both land-based and online sports betting in 2018.

The news was first published on the blog of Brazilian sports journalist Juca Kfouri, who cited José Francisco Manssur, special adviser to the executive secretariat of Brazil’s Ministry of Finance, as the source.

According to Luiz Felipe Maia, partner at Maia Yoshiyasu Advogados, recent months have seen a number of match-fixing scandals which have increased public pressure for reform and have triggered a response from the president.

“Without regulation, and with such a huge amount of betting operations from offshore, the Brazilian leagues are an easy prey for fraudsters,” says Felipe Maia. “It was a matter of time until it created a series of scandals that could result either in the regulation or the shut down of the market.”

Additionally, the lawyer says that regulation may prove useful for other purposes as well.

“The minister of finance, Fernando Haddad, is under a lot of pressure to look for new sources of revenue for the government,” he says. “The regulation of sports betting comes in good time.”

Ministry sends proposal

According to Neil Montgomery, founding and managing partner of the Brazil-facing Montgomery & Associados law firm, Manssur is a lawyer from São Paulo and a specialist in sports law who was involved in the legislation that created the SAF – Sociedade Anônima do Futebo, a special model of incorporating companies designed for Brazilian football organisations.

Manssur has worked in government before and is considered to be trusted by the country’s ruling Workers Party.

According to Kfouri, the ministry will send a proposal to the president’s chief of staff’s office at Civil Hill – a cabinet level office in Brazil – to regulate the offering of online sports betting within the country.

If approved by the government, the department will promulgate a provisional measure (PM), along with a number of ordinances, that will create the regulatory regime for online betting in Brazil.   

According to Montgomery, it is widely expected that the PM will amend the country’s sports betting law to add additional safeguards and penalties.

“It can potentially also amend other federal laws, including the anachronic Criminal Contraventions Law, which contains the general prohibitions on games of chance in Brazil,” says Montgomery.

He adds that in addition to the PM, the government may choose to also issue a decree signing on the 2018 regulations by current president Luiz Inácio Lula da Silva, which were not signed-off on by the outgoing president in December. This could be supported by an additional Portaria – that is legal document – from the Ministry of Finance.

A PM is a type of presidential decree that has power of law and lasts for 60 days, with the option of extending that period by another 60 days.

In order to become permanent, the PM must be approved by the country’s congress. The prospects of the pronouncement’s success in both the Chamber of Deputies and the Federal Senate is yet to be seen.

“This is one of the concerns around the process: the government may lose control of the legislative process and the final result may be different from the original proposal,” says Felipe Maia.

“The provisional measure may also be used by the congress to expedite the discussions around the legalisation of gambling in general.”

According to Montgomery, the PM will probably be sent on or around 27 February, after the Carnival break.

The regulations

According to Manssur, the regulations will require betting sites to be headquartered within the country, as opposed to the current arrangement where almost all online bookmakers are located abroad.

This would be to facilitate dialogue with the sector, the collection of tax revenues and the inspection process.

The location of betting businesses domestically would also allow for the government to have increased power in combating the degree of money laundering within the industry – which is a key goal of regulation.  

The special advisor has said that the key stakeholders have already been engaged with the regulation process.

These consultations have included a number of government entities including the Ministry of Sport, the Central Bank, the Federal Police and the Public Prosecutor’s Office.

Sporting bodies such as the Brazilian Football Confederation and Olympic Committee have also been involved, as well as industry voices and betting associations.

Manssur also indicated that the government will rely on technological solutions provided by foreign providers in order to effectively inspect the industry for illegal offerings and instances of match-fixing – with suspicious bets to be blocked.

If made permanent, the publication of these regulations will end the four-year limbo since the Senate passed Federal Law No 13,756 in 2018, legalising both online and retail fixed-odds sports betting.

Latest twist

Following the passage of the law, the government had a two-year timeframe to create and publish regulations – with the option of an additional two-year extension if required.

The government gave Brazil’s Secretariat of Evaluation, Planning, Energy and Lottery (SECAP) the responsibility of consulting with industry creating the regulatory regime. After opting to extend this meant that the final deadline was the 12 December 2022.

In May 2022, SECAP published the regulations – with included a large licence fee of BRL22.2m (£3.55m/€4.03m/$4.3m).

However, the president was required to sign off on the final regulations in order for SECAP’s proposal to become law.

Outgoing president Jair Bolsonaro opted to leave the final regulations without final confirmation, effectively vetoing them. This left a great deal of ambiguity in what the future of Brazilian sports betting would be

While the initial plan failed, Felipe Maia argued that perhaps efforts were not entirely in vain.

“The work that was done by SECAP in the past four years will surely be the basis for the current regulators,” he says. “Especially if the intention is to regulate sports betting in the next weeks.”

Whatever comes next, the Ministry of Finance publishing new regulations means that legalised online sports betting in Brazil is one step closer to reality.