Has the betting market in Brazil reached its exhaustion?

Last week there was an avalanche of information (mostly misinformation) about the sports betting and online gaming market in Brazil.

It is frightening how news spreads, even by official bodies, without proper knowledge and, mainly, without understanding the market fundamentals.

We heard shocking things, including from parliamentarians.

As Barão de Itararé would say, "from where you least expect, that's where nothing will come out".

Being against games is a legitimate right of any citizen. But misinforming, to defend your point of view, is not.

I heard things like:

We have to ban, because these games return 10% of prizes to the players and the houses get rich by keeping 90%.

And the worst, absurdities like this if not contested become truth.

The betting market only grew because it practices an RTP (return to player) that reaches 97% in some cases. The average in Brazil should be between 90 and 92%.

That's right. The truth is this. For every 100 reais bet, 90 to 92 reais are returned to the bettors as prizes.

The recent government ordinances establish a minimum RTP of 85%.

Then someone says that betting houses must be closed because they pay 10% of the prize and "it's all good".

I heard another defend that we need to ban Pix for bets because it is indebting the population. This person represents the banking system that practices interest rates on credit cards that exceed 400% per year and that works with the infamous payroll loan that, especially in the retired class, caused brutal damage.

When I heard this aberration I immediately thought of Ciro Gomes who guided his last two presidential campaigns defending actions to "remove 60 million Brazilians from Serasa". And there wasn't even talk of the existence of bets. Pepper in someone else's eyes is refreshment...

But the greatest violence is thinking about forbidding me from using Pix (my money and available in my bank) to use it wherever I want. The discussion of using a credit card is valid and should have already been banned, although it has no practical effect, as almost no one in the sector accepts cards.

But will Febraban also propose to ban the use of cards to parcel out Pix as many banks (including the one that calls itself the largest) are doing?

Bets only got where they are because the RTP is high. The consumer is not foolish.

Some, with astonishment, made a fuss that fixed quota bets surpassed federal lotteries by a ratio of 10 to 1.

How to compare a product that returns to the bettor 90 to 92% of what is played against another that returns 43% and is totally obsolete, with no launches in the last two and a half years?

I also read a statement that even with this 10 X 1 turnover, the AQFs revert less taxes than the lotteries.

If the person who wrote this knew how the market works, and thought just 30 seconds about what they wrote, they would not have been surprised, because it's a logic that even a child starting to learn math understands.

The official Brazilian lotteries, managed by Caixa, commit the absurd practice of taking slices of "taxes" on the turnover (total general of the bets). This causes the bettor to be "harmed" with a very low return (one of the lowest in the world). Under the discourse that we need resources for social benefits (all of them certainly very noble and deserving) we practice the "tunga" of these resources penalizing the bettor. It results in what it results in. A paltry collection of just over US$ 4 billion per year.

In fixed quota bets, from 2025 taxation will be done correctly, on the GGR (gross gaming revenue), which is the balance between the total bet minus the prizes paid. Well, if the revenue of betting operators is what is bet minus what is paid in prizes, only then can something be taxed. Nothing more obvious.

And as the RTP is high, consequently the GGR is low. Simple as that.

That's why I see with double astonishment the verbosity of the press, ministries, monetary authorities, class entities etc.

Qualified people (some even participants in the edition of regulatory acts) have been talking so much nonsense that sometimes I feel nauseous reading...

We are going through the regulation of the sector. Late regulation that contained successes and many mistakes.

Criticizing the "criminal delay" of the previous government in regulating is easy and not entirely wrong. We really waited four years FOR A LAW TO BE COMPLIED with and nothing.

But this is not an isolated problem. It is true what Minister Fernando Haddad said about it recently. True also that the current government was quick to present a provisional measure trying to regulate "by force" the market. It was not successful, as it ended up in the black hole of the tug-of-war with the National Congress, which wanted, and was, the protagonist of the matter.

But where the government sinned, and still has not recognized.

It was wrong not to "insist" that several measures of the new regulation should have immediate effect, and not confirming a deadline for adaptation "until the end of the year".

Here are some questions:

Why do serious companies in the segment need time to practice the principles of responsible gaming? What is right is right, the government doesn't need to tell me that...

What is the reason for a company in the segment needing time to adjust its communication language to what Conar suggested if what is there is so obvious and necessary for a healthy market?

What is the reason for accepting payment by credit card (money from third parties)?

This cannot be credited to the cursed heritage as the problems inherited from previous governments were once called. The government was wrong.

It is clear that the regulation process comes to separate the wheat from the chaff. It is not for nothing that we always hear that there are currently more than 4,000 sites operating in Brazil and we only had 113 companies that applied for the license.

The government's delay in issuing important ordinances for the sector also contributed to this. Until 20 days before the deadline, it was not known what could be done. The ordinance that defined the modalities was only published at the end of July and the deadline for applying for the license expired on August 20. Another negative point for the Government. And all the blame is on the previous government...

It is clear that currently there are more people hoping for the market not to be regulated (4,000 X 113) than the opposite.

And the worst is that it seems that the main actors of this movie are falling into this trap.

Answering the title of this article I affirm that no, the betting market has not reached exhaustion.

It is a thriving market that, like any other, needs clear rules, legal security, predictability and, mainly, serenity and knowledge of its functioning.

While people who write about it do not know how to distinguish turnover, GGR, cash in and cash out we will continue to be subjected to a public and moral lynching that harms Brazil.

Here's a warning. Much worse will it be if everything continues as it is or if we think again about prohibiting. We will regress several houses in this board game and who will take this step back is Brazilian society.

Amilton Noble
CEO of Hebara Distribuidora de Produtos Lotéricos, working in the gaming market for over 30 years.