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Brazil to Miss Out on Nearly $4 Billion World Cup Sports Betting Handle
By Jeff Osienya Aug 17, 2022 IndustryDue to President Bolsonaro’s political aspirations, Brazil will miss out on the sports betting windfall initially projected for the upcoming Qatar 2022 World Cup. The president has put sports betting regulation on hold to pursue re-election in October.The Qatar 2022 World Cup is fast approaching, and Brazil, the world’s bedrock of soccer, may yet again miss out on an excellent opportunity to have its residents bet on the matches. As the November kick-off for the world’s largest soccer spectacle approaches, Brazil’s journey to regulate sports betting and allow bookmakers to provide in-person gaming services now grinds to a halt.
Analysts had estimated that the bets to be wagered over the one-month duration of the World Cup would be about $4 billion. This is no doubt a great opportunity lost for Latin America’s most populous country to make a considerable income from gambling activities surrounding one of the world’s most celebrated soccer events.
Proposed Rules Possibly Shelved to Maintain Political Interests
Industry insiders have reported that the move to postpone the decision to push the discussions on the regulation of the Brazilian sports betting market was reached based on President Bolsonaro’s political ambitions.
The country’s general elections are to be held in October, and so openly endorsing gambling would cost the president the much-needed support from the church as he hopes to be re-elected. At the moment, it appears that Bolsonaro’s main opponent Luís Inácio Lula da Silva is leading in the polls, and the sitting president could use all the support he could get – even if it means putting gambling regulation on hold.
Law 13,756 of 2018 was signed into law by then President Michel Temer. This legislation gave the Ministry of Economy (formerly the Ministry of Finance) two years to come up with regulations to guide the market. Additionally, the 2018 Brazilian gambling law also made a provision for a two-year extension on the drafting and implementation of the rules. However, the extension period ends in December 2022, and as it draws close, tension is starting to build on whether the deadline will be met.
The continual delay in regulating the Brazilian sports betting industry has been closely tied to religious interference. Moreover, the president’s second in command, Deputy Marco Feliciano, has even admitted to directly requesting the president not to act on the law that Temer signed.
Feliciano cited his religious convictions as the main reason he was opposed to “any type of game involving cash betting,” adding that he believes gambling destroys families. If the deadline lapses for the final time, legislators would have to go back to the drawing board. Regulatory bodies have already started getting ready to hold accountable all parties involved in the failure to implement the agreed-upon regulations before the deadline.
What a Regulated Market Could Do for Brazil
The main reason for the passing of law 13,756/18 was to control operations by foreign bookmakers benefiting from the market without rendering tax revenue to the state. Currently, the unregulated market, mainly composed of offshore operators, is estimated to have an annual handle of about 60 billion reals (approx. $11.76 billion).
Proponents of sports betting in the country have argued that leaving the market unregulated does not prevent Brazilians from betting on their favorite sport. As such, it means that the main loser would be the government and its people, as there would be less money for meaningful community improvement projects.
André Gelfi, the Managing Partner of Betsson Group Brazil, pointed out the implications by noting that:
Quote“We are basically talking about penalizing an existing informality, protecting the bettor, and curbing currency evasion. What we see today is bad for Brazilian society. It is an activity that already moves 60 billion reais in the country, which has no rules and, until now, is neglected by the public authorities. Such is the size of the disaster.”
A Sleeping Giant in the LatAm Regulated Sports Betting Arena
LatAm’s ‘sleeping giant’ has become the focus of international operators looking to expand into that market. While analysts had estimated that Brazil’s sports betting industry would be set up by the end of 2021, the recent developments have put a wrench in the works. What remains is nothing but uncertainty as the highly anticipated revenue stream has been halted in the meantime.
Nonetheless, this does not imply that some players would not be taking advantage of the unregulated market. Currently, there are no strict reservations regarding what bettors can do in Brazil, leaving an untapped opportunity for offshore operators. Moreover, if the government beats the December 13 deadline, sportsbooks already operating in Brazil would be required to have local subsidiaries and show evidence of having enough financial muscle to operate sustainably.
In mid-2021, President Bolsonaro ratified an amended sports betting tax law that applies a 3% levy on the GGR of regulated operators serving the country. And according to a provisional measure passed by the Ministry of Civil House, penalties would be imposed on defaulters. The expected revenue from 2023 onwards would be just over $1 billion.
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