When Flamengo decided to create Flabet to operate iGaming in Brazil, it raised doubts in the market about the legality of the measure. In an article for Poder360, Udo Seckelmann and Pedro Heitor de Araújo, from Bichara e Motta Advogados, analyze the issue from a legal perspective. For them, the licensing for Pixbet is within federal law, there is no impediment by the regulation of Rio de Janeiro, and it may pave the way for other clubs to do the same.
On August 13, the Deliberative Council of Flamengo approved the creation of Flabet, a fixed quota betting platform that leverages the prestige of the club's intellectual properties. Managed by Pixbet, the main sponsor of Flamengo and a betting operator licensed by the State Lottery of Rio de Janeiro (Loterj), Flabet positions itself as an innovation in the betting market.
However, this decision immediately raised doubts about its legal compliance, especially in light of the provisions of Law 14.790 of 2023, the Fixed Quota Betting Law, and the regulations issued by the Secretariat of Prizes and Betting (SPA) of the Ministry of Finance.
According to SPA/MF Ordinance 827 of 2024, it is clear that the granting of authorization to exploit fixed quota betting is restricted exclusively to legal entities constituted in the form of a limited liability company or a corporation. Thus, as Flamengo is a civil association, the current legislation legally disqualifies it from requesting the necessary authorization to operate Flabet directly.
Moreover, the Betting Law establishes that the partner or controlling shareholder of a betting operator, whether individually or as part of a control agreement, cannot hold a stake, direct or indirect, in a professional sports organization. This restriction, aimed at avoiding conflicts of interest and preserving sports integrity, combined with the requirement of the corporate form, prevents Flamengo from being the operator of Flabet within the federal regulatory perimeter.
At the state level, the scenario presents distinct nuances. The guidelines of Loterj do not establish an explicit disqualification that prevents civil associations, like Flamengo, from participating in the accreditation process. However, the conditions of participation stipulate that only legal entities active in a field of activity compatible with the contracted object are eligible, which could, in theory, exclude the club from this procedure.
Given these limitations, the question arises as to how Flamengo structured the business model of Flabet to avoid violating the provisions presented here. According to information circulated in the media, the club adopted a brand licensing model to enable the operation.
This agreement guarantees Flamengo a minimum revenue of R$ 82.5 million, distributed as follows:
R$ 10 million – in 2024;
R$ 22.5 million – in 2025;
R$ 25 million – in 2026;
R$ 25 million – in 2027.
In addition to this amount, the club may receive a royalty fee of 1% of the gross revenue from betting (GGR) if this percentage exceeds the guaranteed minimum value, also characterizing it as a performance-based compensation.
Therefore, the format of this partnership seems to ensure compliance with the Betting Law, while allowing Flamengo to expand its revenue sources by strategically monetizing the value of its brand, producing additional income. At the same time, Pixbet can expand its presence in the market, leveraging the club's great popularity to increase its consumer base and capture incremental value throughout the life cycle of the partnership.
In conclusion, the model adopted by Flamengo with Flabet represents an innovative solution to the challenge of reconciling commercial opportunities with the restrictions imposed by current legislation.
This strategic approach raises a crucial question: will other football clubs follow the same path, adopting similar models to capitalize on their brand power in the growing betting market? The replication of this strategy by other sports entities may signal an emerging trend, whose ability to identify and exploit regulatory gaps becomes essential to maximizing revenue creation opportunities in the sector.
Udo Seckelmann
Lawyer and head of the Betting and Crypto department at Bichara e Motta Advogados, professor at CBF Academy and master in international sports law by the Instituto Superior de Derecho y Economía, in Madrid (Spain).
Pedro Heitor de Araújo
Law student at PUC-RJ and has been working in the areas of crypto & gambling at Bichara e Motta Advogados since 2022. As an analyst, researcher, and enthusiast, he is dedicated to the legal dynamics related to the regulation of crypto assets, DeFi (decentralized finance), betting, and gaming. He has taken courses in DeFi and non-fungible tokens (NFTs) at the University of Nicosia (Cyprus). Additionally, he founded the legal community "pedroheitor.eth", promoting debates and disseminating information about Cryptolaw and Gambling Law.
