“IT IS DIFFICULT TO THINK ABOUT THE CRITERIA CHOSEN TO LIMIT OPERATORS TO 30 COMPANIES”
The deadline for the public consultation launched by the Ministry of Economics for the new sports betting law was last Friday, March 6th. Partner of the Swedish leading group Betsson, the Brazilian company Suaposta, owned by businessman André Gelfi, gave its opinion on the subject matter. The lawyer specialized in administrative law and hired by the company, Caio de Souza Loureiro, had an exclusive conversation with Games Magazine Brasil where he explained each of the contributions that Suaposta made for good regulation.
In the interview, lawyer Caio de Souza Loureiro talks about the need to establish specific rules for the rate regime and concession assets. “If the concession option is maintained, the law must minimally discipline the form of the concessionaire regime for sports betting,” he explained. For him, the big problem of not addressing several issues in the proposal is the insecurity brought to the operation, which is quite peculiar and that is why public policy and parameters for how this service will be provided should be provided.
GMB – Some points in the sports betting proposal were not received with open arms, mainly by smaller operators. What changes are essential for the license to be granted fairly to competing companies (be they smaller or larger, national or international)?
Caio de Souza Loureiro – The way in which operators will be chosen is still very undefined. Even in the wording of the proposed Decree, there is no mention of any choice or criterion, except for the requirement that operators be companies incorporated under Brazilian laws and headquartered in the country. It is essential that before the launch of the public notices, the Ministry of Economy sets out what these criteria are, and, mainly, some kind of technical or economic justification for them. The ideal would be to anticipate some of these criteria for the text of the Decree, as this provides greater security and transparency. But, even if it is not possible, the fundamental thing is to prevent the market from only knowing the criteria with the notice, when the possibility of debate is much less.
You quoted that the “proposed regulation is omitted in matters relevant to the concessionary regime”. What issues are not addressed that deserve to be? Why?
The public service concession regime has a general law (Law No. 8,987 / 1995). It contains several elements specific to this regime, many of which must be reflected in mandatory clauses of the concession contracts. There is, for example, the need to establish specific rules of the rate regime (which, in the specific case would be more complicated, considering the nature of the bets), of the concession assets, that is, on which assets will be used during the provision of the service and which need to be transferred to the Government’s property, at the end of the concession (the so-called reversibility of the concession’s assets). The proposed regulation also does not mention criteria for establishing the term of the operation, nor by what parameters would the “adequate service” be achieved, a requirement of the concession regime. The big problem of not addressing these issues is the insecurity brought to the operation, since, since Law No. 13.756 / 2018 did not bring rules specific to the concession of fixed-odd bets, the concession contracts proposed by SECAP will end being governed by Law No. 8,987 / 1995. By not complying with the requirements of this law, the concession contracts end up becoming more fragile and can be questioned as to their legality, especially by control bodies and even in court. The simple omission of a mandatory clause provided for in the Concessions Law may raise questions that, in the limit, annul the entire concession.
According to you, “Law No. 13,756 / 2018, when providing for the public service nature of fixed odds betting, did not take care to observe the specificities of this service, refraining from shaping the general elements of the concessionary regime to the characteristics of that operation.” What consequences do you believe will come if the proposed law does not adhere to the specifics of this activity?
The Brazilian Constitution and legislation attribute the nature of public service to various activities, which makes the provision of these activities more regulated, precisely because it is understood that there is some public interest involved, which calls for greater State intervention, either in the direct provision, or in the regulation of the provision made by private individuals. There is, therefore, a much more rigid regime than the exercise of an economic activity, in which the State’s intrusion and inspection is much less. As public services can involve activities that are very different from each other, the specifics of each of them are usually dealt with in specific laws, which confer their own regulations, considering the nuances that each service presents. So it was with telecommunications services, basic sanitation, energy, oil & gas, highways, railways, ports, among others. All of them have specific laws (or regulatory frameworks), which take care to provide specific rules for the characteristics of each service, as well as the public policy decisions associated with them. This should have been a concern of Law No. 13,756 / 2018, when it attributed the condition of public service to fixed-odd bets. Especially in an operation that is quite peculiar, as is the case with bets, it would be recommended that the Law that assigned it the nature of a public service should provide for minimum public policy guidelines and parameters for the way in which that service will be provided, this that is, in what way can the operation of fixed odds betting take place. As it did not, the specific regulation of this “public service” needs to come from somewhere and the proposed Decree could fill this gap, at least so that the betting operation would enjoy some specific regulation. The problem of not providing for its own rules is, precisely, any incompatibility between the nature of the betting operation and the general elements of the public service regime, which may impede more efficient choices for the operation or even give it less legal certainty.
You say that the project presented for public consultation “has little or nothing about elements intrinsic to the concession.” How could SECAP make this proposal more complete and viable in relation to the concession?
If the option for the concession is maintained (remembering that Law No. 13,756 / 2018 also allows authorization), it is necessary for the regulation to minimally discipline the way in which the general elements of the concessionaire regime will be adapted to the operation of fixed-odd sports betting. For example, what would be the parameters for defining the term of operation and the conditions for the extension? How would the concession’s economic-financial balance be ensured; that is, how to protect the economic equation of contracts? What criteria – or at least guidelines – will guide the appropriate service? Will there be essential goods for the concession? If so, which ones will be reverted to the granting authority at the end of the operation?
Given that fixed-odd bets are considered a public service, how can the law guarantee the legal and financial security of operators so as not to compromise the effectiveness of the contract and the provision of services?
Assigning the status of public service to fixed-odd bets is positive from the point of view of legal certainty. The relevance of the public service means that the Administration takes care of specific obligations to ensure the correct performance, which necessarily involves ensuring continuity and the necessary ways to make this performance feasible. And because it attracts the need for specific regulations, the public service has legal parameters – or infralegal, but still, normative – that provide greater security during its provision. The ideal, repeat, would be to bring to the Decree (since Law No. 13,756 / 2018 was omitted in this respect) as many parameters and rules as possible that would better condition the form of the operation, from the criteria for choosing operators to elements as well as protection against illegal operations; that is, those carried out outside the concession or authorization, by operators who are not subject to the same regime as those who already operate and will continue to operate in accordance with the law in force.
The number of tenders was limited to 30. What criteria would you suggest to ME for choosing these 30 operators that will operate in Brazil?
As the ME did not disclose any information about what led to the optimum number of 30 operators, it is difficult to consider criteria for this choice, as it is not known whether the option will be for a geographical limitation (something common, but, in principle, incompatible with a virtual transaction) or by volume of bets, etc. What can be said at this point is the need to clarify the technical or economic justification for the delimitation of the number of operators, which involves an assessment of predatory competition and the feasibility of the operation. In addition, it is necessary that in the assessment of the interested parties, the ME considers their previous experience in the operation, in order to be aware of future operational capacity, including in the financial aspect. It is interesting, even to curb illegal practices, to provide protection to those operators who do not have a history of operating outside the current regulations.
Why do you believe that the concession is not the best alternative among the models provided for in Law No. 13,756 / 2018?
As mentioned above, the concession is a much more complex regime, subject to very strict regulations. Its adequacy to the operation of fixed-odd bets can cause problems, taking into account the need to regulate in more detail elements that could be more flexible, and, with that, make the operation less efficient or, at least, more bureaucratic, without gains in security and control. Authorization (another type provided for in Law No. 13,756 / 2018) is initially more advantageous, precisely because it provides a more flexible option, without thereby giving up rigor in more important elements, as in the case of choice and inspection of the operation. It is important to mention that many relevant services and activities are provided under the authorization regime, such as the Personal Mobile Service (cell phones) and port terminals for private use. In both cases, the regulation favored the specificities of each activity, making specific elements more flexible. But, in what was relevant, it provided for its own rules that guarantee the achievement of public policies in the telecommunications and port sectors. There is a misunderstanding in the assumption that control and inspection can only exist in the concession. Authorization can achieve the same objective, differing only in greater flexibility for elements that, unlike the concession, are not so relevant to the public interest (in the case of goods, for example). Thus, with a regulation that is attentive to the inspection of the fixed-odds betting operation, including the provision of obligations and duties of the operators and the possibility of applying sanctions by the ME, it is possible to use this model, taking advantage of its greater flexibility in other points, which allows for more efficient regulation of the specifics of this operation.
Source: Exclusive Games Magazine Brasil