President Lula bans betting companies from operating in Brazil from 6 October
President Lula issued a provisional measure banning the operation of online betting sites in Brazil, effective immediately.
It was decided that, upon publication of the measure, no operator may accept customer deposits.
Bettors must request the withdrawal of their funds by 5 October. If they fail to do so, the sites are required to credit the amounts they hold to the registered accounts between 9-14 October.
Starting 6 October, all licensed sites will be blocked. Operators must return the money even if the bettor does not initiate a withdrawal during the 9-14 October window. Betting companies must handle this through their partner banks.
Brazil’s Minister of Finance Dario Durigan was tasked with announcing Lula’s decision.
He discussed actions taken by the Secretariat of Prizes and Bets (SPA) to regulate the industry and measures implemented to protect families from indebtedness. He then stated that these measures had proven ineffective. Echoing Lula’s remarks, he noted the existence of severe cases of gambling addiction, which prompted the decision to impose a total ban.
The provisional measure banning betting takes effect immediately. Durigan explained the government will maintain mechanisms to crack down on all websites offering betting services. He also stated that reports should be submitted via the government website.
In his remarks, Lula reiterated that online betting sites ruin family finances. He also criticised the fact that sports teams have become so dependent on sponsorship from betting platforms.
Deadlines
The following deadlines were established:
- Between now and 5 October – Bettors must withdraw their balances from the platforms.
- 6 October – The websites and apps will go offline.
- 7-8 October – Betting operators must consolidate customer balances by CPF.
- 9-14 October – Betting operators must fully refund the balances withdrawn by users.
- From 14 October – Caixa Econômica Federal (the state-owned bank) will facilitate the refund of funds should operators and banking partners encounter any difficulties.
Criminal penalties established
In addition to the provisional measure banning betting operations, the government will submit an urgent bill to the National Congress establishing criminal penalties for anyone who runs, operates or promotes sports betting.
The penalty will be four to six years of imprisonment, plus a fine. Institutions that process betting payments will face a penalty of two to four years of imprisonment.
The controversial decision adopted by Lula creates legal uncertainty, and the government should expect that immediate legal challenges will follow.
With almost 90 companies licensed, all of which paid BRL30 million ($5.8 million) in licence fees, they are expected to take legal action to seek the return of funds, reimbursement for investments made and compensation for lost profits.
Meanwhile, the federal government will still have to contend with states that have regulated sports betting through their state lotteries.
Trade bodies respond
In response to the provisional measure, the National Association of Games and Lotteries (ANJL) warned the ban on betting would lead to billions lost in tax revenue and the elimination of thousands of jobs, as well as driving bettors into the illegal market.
The association revealed it was already “taking appropriate measures to overturn the provisional measure by taking the matter to court”.
The ANJL said: “In a move unprecedented in the global industry — aimed solely at perceived electoral gain in the race for the presidency — the country is undermining constitutional principles such as free enterprise and human dignity; the latter is compromised by facilitating the migration of bettors to the illegal market.”
Meanwhile, the Brazilian Institute of Responsible Gaming (IBJR) said: “Shutting down this market shortly after its implementation will have significant economic and legal consequences and will undermine the progress made in formalising and controlling an activity that already existed in the country.”