It's not today that sports betting has invaded the Brazilian market and become the main attraction among sports fans. However, some recent changes tend to reverse a scenario that today is full of uncertainties.
Facing an exponential growth of the famous “bets” in Brazil, the Ministry of Finance sanctioned Law 14.790/2023, which regulated online sports betting and will come into effect, in practice, from January 2025. But after all, how does this affect Brazilian clubs?
The current scenario of bet sponsorships in Brazil
Just like the online casino sites in Brazil, betting houses quickly consolidated in a scenario where operational regulation was a problem since 2018, when then-President Michel Temer sanctioned the MP 846/2018.
In the measure imposed by the Federal Government at the end of that year, legal loopholes that allowed the operation of platforms based outside Brazil became a real headache for the fiscal control of the Federal Revenue.
To get an idea of the popularity of betting in Brazil, a survey by Banco Itaú in August 2024 revealed that Brazilians spent R$68.2 billion on games that include sports betting over the last 12 months.
In this scenario, the Ministry of Finance, led by Fernando Haddad, found in the online bets market the need for a fiscal adjustment aimed at protecting Brazilian players from risks and ensuring fair tax control.
Main changes with the regulation of betting
The regulation of online sports betting in Brazil, now consolidated by two main laws, brought significant changes for both operators and bettors.
Law No. 13.756/2018 was the initial milestone that legalized fixed quota betting and established the basis of the regulatory framework. Recently, Law No. 14.790/2023 expanded these parameters, introducing new obligations and detailed rules for the sector.
Sports betting sites must comply with a series of obligations to operate legally in Brazil. Among the main requirements is the taxation of prizes. Any prize over R$ 2,200 must be declared on Income Tax and is subject to a 15% rate.
In addition to taxation, the new rules impose additional restrictions. People who have family members directly involved with betting, employees of betting sites, and minors under 18 are prohibited from participating in betting. These measures aim to prevent conflicts of interest and ensure the integrity of the sector.
Starting in September 2024, the Secretariat of Prizes and Betting (SPA), linked to the Ministry of Finance, will begin distributing licenses for betting sites.
This secretariat is responsible for the supervision and regulation of the sector, according to the new laws. The full implementation of these regulations and the start of the application of taxes on betting are scheduled for January 2025.
How does regulation affect Brazilian football?
The Brazilian regulation will come into effect in the coming months, and football clubs that have partnerships with the companies may suffer direct impacts in the face of a new reality in the gaming market in Brazil.
A survey from May 2024 conducted by the Bolavip Brazil team revealed that 80% of Brazilian football sponsorships are made up of companies representing online sports betting platforms, the famous bets.
In the face of regulation that foresees taxation of up to 12% on the turnover of betting companies, the trend is for the bets to adjust their accounts to maintain a positive balance at the end of the month.
This means that, indirectly, sponsorship agreements may suffer impacts. Contracts that today are considered gigantic may become rarer, especially in clubs with less national projection.
In the year 2024, for example, three of the five largest master sponsors of Brazilian teams are from sports betting companies. Pixbet leads the ranking, with an annual value of R$85 million to Flamengo, the most popular club in the country.
Next come Superbet, which sponsors São Paulo and Fluminense with an annual value of R$84 million, and in fifth place in the ranking, behind Crefisa (Palmeiras) and Banrisul (Inter and Grêmio), Blaze, with R$28 million annually to Santos.
Possible impacts on football clubs
Less money, less advertising. This is the logical thought behind a scenario where sports betting companies will undergo administrative changes and will need to adjust their sponsorship quotas in national football.
As the new regulation of the online sports betting sector comes into effect, football clubs in Brazil may feel the direct impacts of a new business policy offered by the companies in the local market. Among the challenges, the following stand out:
Financial and contractual adjustments
A recent survey by Exame showed that Brazil has eight of the ten most valuable football clubs in South America. And what explains the phenomenon of this potentiation in the continental scenario is the high capital power, which also comes from sponsorships.
In the face of eventual contractual adjustments and a new “ceiling” offered by the bets, it is possible to imagine that national clubs will need to redo their financial adjustments according to a new economic reality, which does not appear catastrophic, but may indicate a downturn.
Conmebol, responsible for organizing South American football tournaments, may see this scenario with good eyes. With this, the competitiveness in the Libertadores and the South American Cup could be an attraction for selling the product.
Searching for new revenues
Sponsorships are fundamental for the positive revenue of a football club in Brazil, but an eventual adjustment with the regulation of bets could require that managers seek new alternatives to maintain the standard of expenses.
New advertising agreements or campaigns in partnership with fans could be reviewed and, in some cases, created possible solutions so that the club does not need to cut expenses in other sectors of the administration.
It is not yet possible to imagine which market sector could meet the bets, which today move billions of reais annually in Brazil and are capable of covering a large percentage of advertising for major clubs. But it is an eventual challenge for the teams.
Impacts on the field
Less revenue means less purchasing power, consequently resulting in more modest squads for the competitions throughout the season. On the field, clubs could feel direct impacts of a reduced budget.
In the Convocados Report of June 2024, it was disclosed that the sum of the debts of the 20 main clubs in Brazil exceeds R$11 billion. That is, the current reality already imposes on managers an administration aimed at long-term financial recovery.
In more extreme cases, where FIFA's transfer ban blocks the hiring of clubs due to payment delays, a solution found by managers is to use the base. That is, investing in the training of new athletes may be a way for reconstruction.
Future perspectives for the betting market in football
The world of football is cyclical, but recent years have recorded considerable inflation in the expenses of major clubs in Brazil. Although it is not the only direct cause, bets have an influence in a hotter and less competitive market with neighboring countries.
In a scenario where bets may present sponsorship adjustments in the coming years, some changes may occur, but today they are just perspectives. In a simple analysis, it is possible to imagine:
1. Greater competitiveness among bets: with a regulated market, the competition for space in major clubs should be greater and concentrated only in companies that demonstrate responsibility and professionalism in the Brazilian market.
2. Direct engagements with fans: sponsorships of bets in Brazilian football are still timid, without many direct advertising campaigns. In a scenario of greater competitiveness, it is possible to imagine that companies will seek greater engagement with fans, with exclusive promotions and personalized bets.
3. Diversification of partnerships: it is not possible to rule out the eventual emergence of new markets that come to Brazilian football with the intention of meeting the advertising demands that, due to a regulation of betting, may undergo changes.
Conclusion
In this exclusive article from Games Magazine Brazil, we brought a complete analysis of the possible impacts that the regulation of online sports betting may generate on the advertising revenues of the main football clubs in the country.
For at least five years, bets have been responsible for a large percentage of the sponsorship value of the main teams in Brazil, and in the face of a scenario of eventual administrative adjustments, some changes may occur in the medium and long term.
Although it is still only in the speculative field, major football clubs in Brazil already foresee changes that, whether they like it or not, have the possibility of directly impacting their revenues in the coming years. And you, do you think these eventual changes could contribute to a stronger football or that it should go through financial instability?
