“LEGALIZED GAMING IN BRAZIL IS IRREVERSIBLE AND INEVITABLE”
The president of the Brazilian Institute for Legal Gaming shared his views on the country’s potential to become one of the leading gambling markets in the short or medium term. He provided insights into the different implementation alternatives and possible scenarios for both local and international operators.
In the last seven decades and a half, several issues have caused controversy in Brazil, including gambling. The debate surrounding legalization has been corrupted by political, ideological and religious grounds, as the 78 years of prohibition have ended up wrongfully classifying this discussion as an issue related to moral values.
But the prohibition in force did not change the illegal gambling market set up in the country which generates around USD 5,000 million a year with “jogo do bicho”(an illegal lottery-like game in Brazil), bingo halls, slot machines, and illegal video games, sports betting and online gambling. This figure makes Brazil one of the top illegal gambling markets worldwide.
During the last six years, the Brazilian Institute for Legal Gaming, Instituto Brasileño de Juego Legal (IJL in Portuguese) resumed talks with the Congress, in an attempt to accomplish the opening of a gambling market.
Their first action was raising awareness about the benefits of legalizing and regulating this industry. Lack of actual knowledge has generated prejudices and a misconception that this industry is necessarily tied up to money-laundering activities and addiction.
Since these arguments can be refuted with evidence that shows harm can be prevented with best-practice methods adopted by other countries which have regulated this market the IJL, together with BNLData, developed and released a report on illegal gambling, the potential of the local market, investments, regulation, and employment.
Overcoming this misconception will enable the possibility to legalize gambling through bills in the Senate (PLS 186/14) and the Chamber of Deputies -the lower house of the Brazilian Congress (PL 442/91), which are still pending the vote of both houses, the last stage in the Brazilian legislative process. If approved, both proposals would regulate the operation of casinos, bingo halls, video bingo, video games, sports betting, online gambling, and the hundred-year-old jogo do bicho.
Integrated casino resorts
One of the proposals, passed in August 2016 by a special legislative committee on gambling regulation, has not been submitted to the Chamber of Deputies’ vote because of the doubts raised by the idea that the best for the country would be to legalize only a few integrated resorts (IRs), in an attempt to follow the regulatory scheme in Singapore and Japan. Lobbists who favor this proposal have tried twice (unsuccessfully) to solely legalize IRs in the Chamber.
The Parliamentary Front for the Regulation of Gambling in Brazil, made up of lawmakers from both the Chamber of Deputies and the Senate, promotes the regulation of gambling in all of its verticals, through bill PL 442/91, which includes the opening of IRs. The front believes the best option for Brazil is to legalize, control and collect taxes on gambling by following best practices developed in other countries.
The research conducted by IJL/BNLData shows Brazil’s gambling market, once regulated, could potentially generate USD 15,000 million in gross revenue and around USD 4,200 million a year in tax proceeds. Moreover, the government would collect over USD 1,700 million in licensing fees. It is also worth noting that these figures do not include investments and employment rates.
The research also shows that this industry would generate over 658,500 jobs, out of which 450,000 would derive directly from jogo do bicho and the remaining 208,500, from other gaming verticals. Other 619,000 jobs would also be created indirectly, deriving from the industry’s productive chain.
Hired by BNLData, and together with the IJL, the research company Paraná Pesquisas consulted over 238 members of the Chamber of Deputies whether they were for or against legalizing this industry in all of its verticals (casinos, jogo do bicho, bingo halls, videogames, and online gambling).
Results showed that 52.1% were in favor of a comprehensive legalization, while 40.8% were against it and 7.1% did not know or did not provide an answer.
Casinos in tourist cities
Paraná Pesquisas also asked pro-legalized gambling lawmakers whether they thought casinos should be located in any area, only in tourist cities, in cities with a low Human Development Index (HDI), solely in IRs or any other alternatives they deemed adequate. Most of them were in favor of developing casinos in tourist cities, while only a minority said they should be exclusively located in IRs.
The research shows 40.1% of lawmakers would prefer casinos in tourist cities and only 7.2% said exclusively in IRs.
A study carried out by ‘Global Views on Vices 2019’ about the populations’ stance on the matter shows 66% of Brazilians are in favor of casinos while 25% are against them, very close to the global average (70%-25%)
When asked about online gambling, 64% of the population said they are in favor of this vertical, while 25% disagree. These figures are, again, very close to the global average (68%-26%). Finally, when compared to other data available, the study shows rejection towards this sector has been significantly reduced in the last few years.
In an attempt to raise funds for public security, the Brazilian Congress passed in December 2018, Law 13.756/18, which legalizes sports betting.
The proposal outlines that the Ministry of Economy has a two-year term, renewable for two more years, to issue enforcement rules.
That is why the Ministry of Economy held a public consultation and received over 1,800 suggestions on the implementation of the statutory law. After that, the Ministry made available draft rules for a new consultation with stakeholders.
Based on the suggestions received, the Ministry of Economy decided to amend the original wording of the law, specifically, those provisions dealing with prize rates and the financial parameters of the operations. Now, those amendments must be approved by Congress, and as a result, the beginning of operations in the country has been delayed once more.
Sports betting was supposed to go live six months after the release of the enforcement rules, so the government estimates operations could begin in the second half of 2020.
A definite regulatory framework
President Jair Bolsonaro has shared repeatedly his views in favor of the regulation of gambling and said he prefers each state decide whether to allow this activity in its jurisdiction. Both the president of the Senate and the Chamber of Deputies agreed with Bolsonaro. Now, the executive and/or Congress must choose a regulatory framework to adopt.