The inclusion of fantasy games in the legal framework for the electronic gaming industry has divided opinions among debaters who participated in a discussion in the Senate on Wednesday (20) about Bill 2.796/2021. Given the disagreement among experts, senators advocated postponing the vote on the matter, which is being processed under an urgent regime and is ready for deliberation in the Plenary of the House.
Bill 2.796/2021 defines fantasy games as competitions in a virtual environment based on the performance of real athletes. Participants in this mode "draft" imaginary teams, formed by characters that simulate the statistical performance of real athletes from a professional sport, such as soccer, volleyball, or basketball.
The text from the Chamber of Deputies includes electronic games under the same taxation rules as computer equipment. Thus, investments in game development or production are considered as applications in research, development, and innovation. The Information Technology Law (Law 8.248, of 1991) grants financial credit on R&D expenses for the deduction of federal taxes.
During the thematic debate session, a segment of the debaters defended the inclusion of fantasy games in Bill 2.796/2021. For another group of experts, the measure could open a loophole in the Bill for a more lenient taxation of gambling games.
“Jabuti”
For Vilson Antonio Romero, president of the National Association of Federal Revenue Auditors, the Bill should be split. He suggests that the provisions dealing with fantasy games be analyzed in an autonomous proposition, submitted to the analysis of the Senate committees.
“From the outset, everything happened hastily in the Chamber of Deputies. A Plenary amendment that included fantasy games had been rejected by the rapporteur. I judge that it is a 'jabuti' in the legal framework of electronic games. The fantasy games that are linked to a real game, [...] to the drafting of a soccer player, must be completely unlinked. They must be treated similarly to the regulation of the taxation of bets. We must bring them closer to fixed-odds gambling games than to electronic games,” he justified.
Professor Lynn Gama Alves from the Federal University of Bahia, a specialist in the relationship between games and education, reinforces the criticism. She points out a series of “weaknesses” in the bill. Among them, the inclusion of fantasy games in the matter.
“There was an inappropriate merger of two distinct categories: video games and fantasy sports. Fantasy sports are limited to a type of game that involves betting, rewards, competitions, and financial prizes, considering the performance of athletes in sporting events. This characterization may indicate openings for betting platforms to appropriate what is being said in the framework, 'justifying' the use of certain types of games that can be addictive. Distinct objects require separate frameworks that address their specificities. Why isn't there a specific bill?” she questioned.
The president of the Brazilian Association of Law and Economy, Oksandro Gonçalves, classifies Bill 2.796/2021 as “a generalized confusion.”
“It is not properly a framework. The object is not clear, the definitions are not properly framed, there is a generalized confusion about various aspects. If it intends to bring legal security, it is necessary that these definitions be precise. It is a collection of loose articles that needs to be ordered. This is only possible through extensive discussion, not through urgent requests,” he pondered.
“Strategy and skill”
The president of the Brazilian Association of Fantasy Sports, Rafael Marcondes, contested the criticisms. For him, Bill 2.796/2021 is “mature and ready to be approved.” He defends maintaining fantasy games in the text as a way to boost Brazil's investments in the technology area.
“The fantasy sport is a game of strategy and skill. It is not betting and it is not a game of chance. The legal nature of both activities is the same: technology. A gaming company, just like a fantasy one, is mainly composed of people related to the technology area. The DNA of these two activities treated in the legal framework is the same: technology,” he defended.
The lawyer Victor Targino de Araújo, legal consultant of the Institute of Sports Law, agrees. He cited academic studies and judicial decisions from countries like India and the United States to defend that fantasy games are not confused with gambling games.
“Fantasy games do not resemble bets. They are a figure of their own because they are absolutely dependent on the player's skill. This is very welcome in the bill. The first fantasy games began to be popular in the United States in the 1930s, linked to baseball. They were card games, they were physical games. Only the medium has changed, but the game already existed. The game depends on skill to win. This parallel between skill and luck makes both figures unmistakable,” he stated.
The lawyer Udo Seckelmann, master in International Sports Law by the Higher Institute of Law and Economy of Madrid (Spain), highlights the differences between fantasy games and gambling games. He advocates the approval of Bill 2.796/2021 as a way to attract foreign investments.
“The game of chance involves an amount to be risked, an element of luck or chance, and a prize to be paid in case of correct prognosis. In the fantasy game, this does not exist. While bets already have some legislative direction, fantasy operators do not have this legislative and regulatory clarity. They come to invest, but they get discouraged. A large part gives up exactly because they fear making high investments in Brazil and, in a month, public authorities knocking on the door and preventing the full exploitation of the activity due to a confusion related to the game's verticals,” he warns.
“Rashness”
The thematic debate session was suggested by Senator Leila Barros (PDT-DF). She criticized the “accelerated processing” of the matter in the Chamber of Deputies and in the Economic Affairs Committee (CAE) of the Senate.
“Despite the urgency required for the processing of Bill 2.796/2021, we cannot allow the matter to be forwarded with rashness. Some of the main entities operating in the electronic games sector have expressed concern about the text of the project. They point out conceptual contradictions and items that were not covered by the regulatory framework,” she pondered.
Senator Flávio Arns (PSB-PR), president of the Education and Culture Committee (CE), described as “absurd” the voting of the matter in the Plenary of the Senate without discussion in other permanent bodies of the House.
“The characteristic of the Senate in all debates is to do it with a lot of dialogue. Listen to all sectors of society, particularly in this bill, which involves many tax, legal, and educational aspects. We need to reach a common denominator that benefits Brazilian society in all aspects. For that dialogue to happen, time is necessary. The intention is to vote tomorrow. It's absurd. Society has to rise against this. Let's discuss. It doesn't make sense. The debate must be done,” he stated.
Senator Veneziano Vital do Rêgo (MDB-PB), 1st vice-president of the Senate, also advocated for more dialogue to build convergences and, after insistence from numerous parliamentarians, postponed the vote on the matter, which was scheduled for this Thursday, 21.
“The progress in this debate depends on us reaching some consensuses. We need to dialogue, debate the matter point by point to deliver the best legislative result to society. We already have a starting point, which is Bill 2.796/2021. About it, there are some natural controversies and disagreements. There is no doubt that the topic is current, relevant, and has a great economic and social impact,” he said.
For Senator Eduardo Girão (Novo- CE), caution is needed in analyzing the project.
“When there is haste, there are big controversies. I think we should prioritize caution. Is it important for Brazil? Yes, let's delve into it. Now, to do it in a rush? Does it have to be now? The bill excludes 95% of the gaming sector in Brazil. That is: it would exclude 1,500 Brazilian game development companies. Is this true? It's a mess: we need to settle and understand what's behind all this,” he warned.
Technology
Senator Jorge Seif (PL-SC) defended the voting of the matter. He cited an informative note from the Legislative Consultancy of the Senate according to which gambling games are not included in the definition of electronic games provided in Bill 2.796/2021.
“Slot machines and other similar games of chance are not considered electronic games. At this moment, I have nothing to object to. On the contrary: we need to support, legitimize, legalize, and give an opportunity for Brazil to grow in this very important area, which is technology,” he stated.
Senator Carlos Portinho (PL-RJ) also supports the project. The parliamentarian stated that, instead of seeking divergences about the nature of electronic games, it would be more correct to recognize what they all have in common: the use and development of technology.
“Are we going to foster conflicts between fantasy and video games? Come on, everything is technology. Where is the convergence? Electronic games are the result of technological evolution, science, and the exploration of a private activity. Electronic games, whether educational or competitive, are technology. And it is in the Ministry of Science and Technology that the resources are, because the legal nature of this activity, at its origin, stems from technological development,” he justified.
Ministries
The thematic debate session also included representatives from the Ministries of Finance and Science, Technology, and Innovation (MCTI). According to Henrique de Oliveira, Secretary of Science and Technology for Digital Transformation of the MCTI, although the department is in favor of a legal framework for the electronic games industry, Bill 2.796/2021 does not fulfill this purpose.
“The project aims to be a legal framework. However, it does not make clear whether the scope is limited to consoles or if it includes computer programs, software, and systems used. With this, from the point of view of tax relief, the incentive and stimulus to research, development, and production would be extremely limited,” he stated.
General Coordinator of Betting at the Ministry of Finance, Simone Vicentini emphasized the budgetary-financial impact of the bill.
“With these exemptions, the estimated loss of revenue is around R$ 800 million per year. The Federal Revenue is opposed from this aspect. From a technical point of view, due to the controversies and controversial points, we also believe that more time is needed for debates and deepening of studies,” she said.
Legislative Process
Bill 2.796/2021 was introduced by Congressman Kim Kataguiri (União-SP) and approved by the Chamber in October 2022. In the Senate, the matter was distributed only to the CAE. The committee approved the report of Senator Irajá (PSD-TO) in June this year and rejected the four Plenary amendments proposed.
In August, parliamentarians submitted requests for opinions on the bill from the committees on Social Affairs (CAS), Communication and Digital Law (CCDD), Human Rights (CDH), Education (CE), and Sports (CEsp). The requests were not analyzed.
Source: Senate Agency
