In another twist to the attempt to regulate the Brazilian sports betting market, outgoing President Jair Bolsonaro has failed to sign the decree that would have enacted into law a bill for the country's billion-dollar grey gaming market.
The deadline for signing the bill was either Monday or Tuesday, depending on different interpretations of the two-year Covid-related extension granted for the official enactment of Law 13,756, but as of Tuesday afternoon in Brazil, the law had still not been published.
This throws into limbo the effort to establish a legal, regulatory framework for the existing lawless environment. Thanks to a legal loophole, residents of Brazil are currently allowed to place bets via offshore sportsbooks licensed in foreign jurisdictions without any penalty or tax liability.
This bill was first passed in Brazil in December 2018 and signed by then-President Michel Temer, which set in motion the process of having legal sports betting.
Under the terms of the law, Brazil's Ministry of Economy was given the jurisdiction to set out the legal and regulatory framework that would govern sports betting in the country and allow for betting sites to establish offices and conduct operations in Brazil, as opposed to taking bets in the current grey offshore market.
Currently, there are several major operators taking in hundreds of millions of dollars of sports bets each from Brazilian customers. Although there are no official statistics available, an Aposta Hub survey of the most-searched betting sites on Google revealed that bet365 led the way, followed by Betfair, Betano, EstrelaBet, Betsul, Betmotion, and 1Xbet.
Should Brazil finally legalize its exploding gaming industry, it is expected that many of the world's largest sportsbooks would be prepared to dive in and compete for a share of South America's largest multi-billion dollar betting market.
André Gelfi, Managing Partner Brazil for Swedish-based Betsson, expressed concern that the failure to enact the law will lead to further chaos within the unregulated sports betting sector.
"Nobody is against the legislation," said Gelfi in comments made to Brazil's Folha da Sao Paolo newspaper last week. "Part of the government wants it, the operators want it, and soccer also wants this security. Today we are big advertisers, and everyone is bringing this issue to light because they want legal certainty for the industry."
Lula to the rescue?
As of Tuesday, the bill now falls into a legal limbo whereby the Senate could still pass a new version of the bill before the end of the year, which would be subject to a possible veto by either Bolsonaro or incoming President-elect Lula da Silva, who defeated Bolsonaro in the presidential run-off election on October 31.
However, there are positive indications that suggest the new Lula administration will be anxious to tax the expected armada of incoming Brazil-based sportsbooks to finance the kinds of social welfare programs that are part of the incoming president's political platform.
During the election campaign, Lula said that he would respect any vote taken by Brazil's Chamber of Deputies with respect to sports betting legislation. This means that should the Senate pass an amended version of the now-lapsed bill, Lula would likely sign off on it.
Another sign that betting legislation could likely be enacted at the beginning of 2023 is recent comments made by Edinho Silva, president-elect Lula’s director of communications, who spoke optimistically about how tax revenue on sportsbooks would provide badly needed funds for social, education, and health care programs and that it was absurd that Brazil had no regulations in place to tax illegal sports betting.
Another key factor that suggests that the incoming Lula administration is ready to approve betting legislation is the appointment of Felipe Carreras, who sits in the Brazilian Chamber of Deputies, to head up Lula's presidential transition team.
Carreras was one of the original authors of the betting law's regulations governing the rollout of legal sports betting in the country.
Brazil is the western world's largest untapped betting market
The failure to enact the sports betting legislation has already cost the Brazilian government millions of dollars in lost tax revenue, with no better example than the 2022 FIFA World Cup that has been taking place over the past several weeks.
Gaming industry experts estimated in August that had the law been in place for the World Cup, the country would have collected R$3 billion ($564 million) in tax revenues in addition to R$2 billion ($376 million) from the sale of operating licenses.
Brazil is the largest nation on the continent and the fifth-largest in the entire world, both in terms of square mileage and population. With over 217 million inhabitants spread out across 26 states and 5,570 municipalities, Brazil is also the ninth-largest economy in the world, with a GDP of $1.85 trillion.
This makes it one of the largest untapped gaming territories in the western world whose residents are avid bettors. Should Brazil's President-elect Lula ultimately sign the sports betting law, this would immediately spark a mad dash by the leading operators to claim a share of this massive betting market.
