Brazilian operators risk being punished for government inaction

| By Daniel O'Boyle
iGB op-ed: Daniel O’Boyle argues that Brazil’s latest crackdown on sponsorship punishes operators that believed they had a clear pathway to launching before the winter.
Brazilian footballer

Five matches into the season, the Premier League – and European club football in general – is well and truly back.

But the big moment of anticipation in the football world this year is still to come, when those domestic leagues will, of course, stop this winter, for the 2022 Fifa World Cup.

However excited those in Europe may be, surely no nation can match Brazil in its enthusiasm for the World Cup.

So naturally, the event has long been the circled date on the calendar for the launch of regulated sports betting in Brazil.

Operators had surely hoped that the months in the build-up to the event would be a time to prepare to get their licensed operations up and running, putting the finishing touches in place to take bets on the World Cup.

But instead, it might be close to the exact opposite.

With the opening match now less than three months away, a November launch may be difficult to reach.

The real problem, though, is not the timeline. It’s this week’s news that the Ministry of Justice will investigate betting sponsorship deals agreed by domestic football clubs and media entities. At the same time, deputies are hoping to pass a bill that would block payments to unlicensed operations.

If Brazilian authorities wish to take several years to implement laws that had been passed by public representatives, that’s one thing, but the latest action is unfair to operators who expected to be able to launch by now, and instead find themselves facing possible legal action.

Expected launch

Ordinarily, advertising sports betting in a country that does not have an active regulated market could be considered a problem. Were Brazil taking no steps to regulate, it would make plenty of sense for authorities to look into these deals.

But in this case, these deals were signed in the anticipation that a launch was imminent. 

The government had almost four years to work on regulations for the vertical – after being granted a two-year delay to its deadlines. Given it was Brazil, the World Cup had always been a date people were watching.

Eventually those rules were published, but then there were further delays to the finalisation of these regulations, with a looming election cited as the reason.

So these deals were not conducted with the hope of drawing players towards unregulated sites. Instead, the most important goal here was to lay the groundwork for their licensed offerings once the market opened, which operators expected to be coming.

Even then, some authorities do have legitimate concerns about operators advertising their services before the launch of a regulated market. For one thing, it could create problems if that brand decides it doesn’t want a licence after all, or isn’t approved for one.

But in this case, jurisdictions that have handled this issue well have made clear the steps required of operators pre-launch. Not so much in Brazil, where operators have learned that their sponsorships may not be legal, only after the deals have been in place for months if not longer.

Wider impact

Then there’s the impact on clubs. Even those who support complete bans on gambling sponsorship in sport acknowledge that a transition period is required.  

A club may be able to keep supporting itself with time to seek out a new deal, but if the Ministry of Justice abruptly forces clubs to terminate their sponsorship arrangements, it’s a much greater challenge.

As Brazilian football clubs continue to recover from the impact of Covid-19, sudden termination of deals could have a catastrophic impact.

Ultimately, this impact could have been avoided. Instead, the Brazilian government risks punishing both operators and clubs for a slow launch that was largely its own doing.

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