Brazil betting ban battle enters new phase after Lula re-election
The Superior Electoral Court (TSE) of Brazil officially confirmed Lula’s re-election as the nation’s president on Sunday.
He reached almost 52% of the votes, against just over 48% for Flávio Bolsonaro. The small difference, of just over 4.3 million votes, demonstrates how close the contest was.
Lula’s anti-betting stance helped pave the way for the publication of MP 1,394, which banned gambling.
Lula may feel strengthened by the result of the polls and continue to criticise the betting sector. His campaign team even stated that the election would be a plebiscite for or against betting.
The fight begins again this Monday to reverse the provisional measure on two fronts: the Supreme Federal Court (STF) and the National Congress.
After the enactment of Provisional Measure 1,394, Lula spent days stressing that the ban on bets was focused on protecting indebted families.
With the vote margin in his favour, Lula is expected to toughen his rhetoric against gambling, even though tax revenue is fundamental to maintaining balanced public accounts. On the eve of the second round, Lula promised that gambling would not return, without realising that the decision is not his alone.
Supreme Federal Court is first line of defence
It will be up to the STF, initially, to decide whether the provisional measure is constitutional or not. Actions to this effect have been filed by entities in the sector and by football clubs. The rapporteur for the matter, Minister Luiz Fux, promised a decision as soon as the electoral process was over.
As a constitutional and legal expert, Fux has everything he needs to decide whether the provisional measure breaks contracts, promotes mass layoffs and does not end gambling.
No one is capable of ending gambling in Brazil through a provisional measure or decree. What is likely to be achieved is driving gamblers into the illegal market. Concerned about the issue – and seeing the unconstitutionality of the provisional measure clearly – it is to be expected that the magistrate will consider revoking the measure.
Even so, the provisional measure has already caused immense damage to the country’s credibility regarding its investability.
Furthermore, it mocked the investments of operators who believed in the regulation. They paid BRL30 million ($6 million) for five-year concessions and an additional BRL5 million in reserves. They had to halt their activities for more than 30 days and lost approximately BRL1.2 billion in revenue and the question now is who will pay for this?
At the same time, the government lost over BRL400 million in tax revenue, including direct tax on GGR and other taxes (Corporate Income Tax, Social Contribution on Net Profit, PIS/Cofins and social security contributions).
Another fact is that the permits expire on Sunday. If the STF overturns the MP, the cancellation of the licences will lose its validity.
National Congress
Another battleground will be the National Congress. The Joint Committee on Provisional Measure 1,394 has already appointed 12 senators and 13 representatives as full members. Among the alternates, six senators and seven representatives have been named. The complete committee has 26 senators and 26 representatives. A president and rapporteur have not yet been appointed, and the committee has not yet been installed.
Congress has until 25 November, according to the rules, to consider the provisional measure. By decision of the collegiate body, an extension of another 60 days may be requested. Even so, from 9 November onwards, Congress will have its agenda blocked until the provisional measure is voted on.
In the last semester, Lula had considerable influence over passing bills of interest to him in the Chamber of Deputies and the Senate, through exchanges of favours and support between him and leaders in both houses.
Now, with no more room for manoeuvre, it will be more difficult for the president to keep the provisional measure alive. And even if he does keep it, it will hardly be considered by 25 November. With this, Lula will face an even tougher fight. He will face opposition unlike any other head of the executive branch has ever faced. The PL, the party of his opponent in the election, has secured the largest blocs in both houses, which will be a major obstacle for Lula.
The indication in Congress is that betting sites can return just with sports betting and without online casino. The debate now is over the licences, which are invalid as of 25 October. Will the return of the activity depend on a new submission of licence applications? It will be up to Congress to decide this.