Brazilian Betting Market Faces Legal Challenges
The National Association of Games and Lotteries (ANJL) has warned that the black market for gambling in Brazil would expand if the Supreme Federal Court (STF) deems the country’s betting law unconstitutional.
On Monday, November 11th, the ANJL presented its stance during the STF’s ongoing hearing to determine the constitutionality of Law No. 14.790/2023, which legalized sports betting in Brazil.
The two-day public hearing is examining the impacts of betting in Brazil, with several industry leaders participating. The hearing was initiated after the National Confederation of Trade in Goods, Services and Tourism (CNC), Brazil’s third-largest trade union, requested that the betting law be declared unconstitutional.
The union filed a Direct Action of Unconstitutionality (ADI), a legal action in Brazil aimed at invalidating a law or normative act that contradicts the Constitution.
Justice Luiz Fux, the rapporteur for ADI 7.721, stated on Monday that the STF is expected to assess the constitutionality of the betting law in the first half of 2025.
Fux emphasized the need to amend the law to protect vulnerable bettors, stating:
“The problems that have been raised here, relating to impoverished communities, mental health issues, and other serious concerns that have been highlighted, lead us to believe that this judgment must be urgent.”
The legal betting market is scheduled to launch on January 1, 2025. The government’s gambling regulator, SPA, is currently in the process of issuing licenses.
ANJL Warns ADI Could Disrupt Industry Job Creation
The ANJL is cautioning that the ADI could empower the illegal market in Brazil. It could also jeopardize the creation of up to 60,000 jobs and the generation of approximately 4 billion BRL in betting revenue during the legal market’s first year.
Pietro Cardia Lorenzoni, Legal Director of the ANJL, stated:
“If the Direct Action of Unconstitutionality (ADI) is accepted, it will ultimately, contrary to its own objective, do what it seeks to prohibit or avoid, which is to encourage pathological and illegal gambling.”
Also on November 11th, the Attorney General of the Republic, Paulo Gonet Branco, filed an ADI, or legal challenge, against Law No. 14.790/2023 and Law No. 13.756/2018, which legalize sports betting in the country. The ADI alleges that the laws do not meet the “minimum requirements for preserving constitutional goods and values.”
The ADI further asserts that the current legislation is “insufficient to protect the fundamental rights of consumers of the products and the national economy itself, in view of the predatory nature that the virtual betting market exhibits.”
Backlash Against Brazil’s Gambling Sector
Much of the criticism against the gambling sector comes from Brazil’s consumer goods sector, which claims that its profits are being cannibalized by the growing interest in betting.
A widely discussed study by the Brazilian Society of Retail and Consumption (SBVC) found that 23% of Brazilians who allocate a portion of their monthly salary to gambling have stopped buying clothes, while 11% have cut their spending on healthcare and medication.
ANJL Claims Betting Is Not Impacting Consumer Spending
Lorenzoni refuted these claims during the first day of the STF hearing. He stated that betting represents only about 0.23% of Brazil’s Gross Domestic Product (GDP) and that its impact on consumer spending was “insignificant.”
He also rejected the idea of prohibiting gambling advertising, reiterating that this could give an advantage to illegal operators.
“Advertising is one of the essential ways to differentiate regulated from unregulated gambling,” he continued.
The ANJL also argues that the current problems are due to the long delay between the approval of betting legislation in 2018 and the final approval by the Chamber of Deputies in December 2023, which some believe has led to a proliferation of illegal sites.
“And it is precisely this scenario that caused this reality today, with its harms, that we are experiencing [in the betting sector],” said Lorenzoni.
“Today, there are four thousand active betting sites. Many with fraud, including crimes against the popular economy. And that is not the reality of those seeking legal and regulated gambling.”
Regulus Partners estimates that the current gray market in Brazil is valued at $3.4 billion, stimulated by the increased digital adoption in Brazil following Covid-19.
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