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GAMING AND BETTING IN BRAZIL (CONTINUED)

CURRENT STATUS OF LEGAL AND REGULATORY ENVIROMENT

As far as enforcement actions are concerned, these have so far focused only on local operators and money laundering issues. Since Brazilian credit card companies are subject to controls established in the Brazilian Anti-Money Laundering Law (Law No. 9,613/1998, as subsequently amended), which deems money laundering to be a crime when the monies laundered derive from any illegal activities (therefore, not only from crimes but also from criminal contraventions), some of them do not authorize clients to use their credit cards on gaming and betting websites. 

Brazilian credit card companies are subject to controls.

Once fixed-odds sports betting is regulated and licenses start being issued, it is likely that enforcement against offshore operators that are not licensed locally will increase significantly.  

Besides the legislative front, gaming and betting in Brazil have also been impacted by judicial decisions, especially those emanating from the Supreme Court (STF). 

In this regard, the courts of the State of Rio Grande do Sul are generally of the opinion that the Federal Constitution, which was enacted after the Criminal Contravention Law (which prohibits games of chance), revoked such law. 

Accordingly, such courts have issued decisions allowing establishments that exploit games of chance to remain open in such States (with certain restrictions until this is definitively ruled upon). The matter has been taken to the STF and has been deemed to be of “general repercussion”, which means that the ruling will be binding on all Brazilian courts. All lower court cases are suspended until this leading case is ruled upon. If the STF rules that the restriction on gambling is indeed unconstitutional, all forms of gambling could, potentially, be legalized without regulation. 

 The STF case and the bills of law mentioned in this column have been under review for a long time and are deemed extremely controversial. A ruling by STF, which may lift all restrictions on games of chances in Brazil, was expected for 7th April 2021and was then postponed for an indefinite date. In the light of the disruptions caused by the outbreak of the Covid-19 pandemic, it is uncertain whether there will be major progress in these matters within the next months. 

 Another important STF decision issued towards the end of last year and which unanimously ruled the end of the Union's monopoly on the exploitation of lottery modalities has also had a great impact not only on the lottery industry but also on fixed-odds sports betting. In its decision the STF recognized the Federal Union’s authority, embedded in clause XX of article 22 of the Federal Constitution of 1988, to legislate on consortia and draws (including lotteries), but that such authority does not preclude the States’ authority to exploit and regulate lotteries. 

Following this decision, several Brazilian states have taken the necessary steps to launch their own lotteries. However, the federal government wants to limit bets in state lotteries. In this regard, it is expected that SECAP will publish in the near future an ordinance establishing rules for the creation of lotteries and sports betting systems at the state level. One of them is the adoption of mechanisms that prevent bets from other states of the Federation. One of SECAP's goals is to prevent the creation of state lotteries from emptying federal concessions for the sector, but the measure can be challenged and end up in court. 

Several Brazilian states have taken the necessary steps to launch their own lotteries. 

 
Moreover, the STF decision, not only an important victory for Brazilian states which have been exploiting their own lotteries, but may also potentially impact the regulation and exploitation of fixed-odds sports betting in Brazil, since, as previously mentioned, they have been deemed by law as a lottery modality. This means that, at least in theory, while Brazilian states will be in a position, following the STF ruling, to exploit any form of lottery already in existence at the federal level, and given that fixed-odds sports betting is a form of lottery, Brazilian states may be able to impact the federal licensing program by granting licenses to operators at State level. 

 It follows from the above that gaming, betting, and lottery industries are gaining greater momentum in Brazil. This may be incremented now that Senator Ciro Nogueira, who has in recent years spearheaded the legalization of all forms of gambling in Brazil, has been appointed by President Jair Bolsonaro as his Chief of Staff (Ministro da Casa Civil). We will have to wait and see. 


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Dates Sep 14, 2021

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