The Brazilian iGaming sector has been under attack from all sides, accused of evils for which companies seeking to regulate themselves in the country have not contributed. Udo Seckelmann and Pedro Heitor de Araújo, from Bichara e Motta Advogados, analyze in an article for Poder360 the current moment of the activity and point out that distorted information diverts the focus from the importance of robust regulation in accordance with best international practices.
In recent months, betting has become the target of intense criticism in the media, allegedly responsible for various negative impacts in Brazil, such as family over-indebtedness, reduced consumption of essential goods, worsening the situation of Bolsa Família beneficiaries, and even being the main motivator for the increase in divorces.
At the end of September, after such a narrative of abomination of the betting industry was consolidated, the CNC (National Confederation of Commerce of Goods, Services and Tourism) filed the Direct Action of Unconstitutionality 7721 in the Supreme Federal Court, aiming at the unconstitutionality of Law 14.790/2023, known as the Fixed-Quota Betting Law, based on conjectures about the effects of betting on the economic, social, and public health order, which would harm, especially, the most vulnerable social classes.
In summary, the anti-betting narrative has drastically changed direction in the last month. The discourse that previously focused on the importance of regulating betting activities to protect consumers has now shifted to defending the total prohibition of the activity again, as if such an extreme measure would solve all the problems previously raised.
On the contrary: Brazilians were already betting online before the legalization of the activity in 2018. What will happen is what already existed before (and still persists): Brazilian consumers betting on illegal and unregulated betting sites in any country, which only gradually increases the negative impacts of the activity that prevail today.
It is necessary, first, to question to what extent these criticisms are really founded or if they only reflect a rhetoric that distorts the facts, aiming purely to wear down the image of the betting industry to benefit the economic interests of other sectors.
Many of these criticisms, based on fragile perceptions, lack a more objective analysis, given the bombardment of information disseminated in various media. The central problem is not in the nature of betting itself, but in the absence (and delay) of regulation of the activity.
State inertia
The promulgation of Law 13.756/2018, which legalized sports betting in Brazil, caused a profound change in consumption dynamics in the entertainment sector. Since then, the market has grown exponentially, attracting a large portion of the population to bet.
However, what is often not disclosed, or emphasized as it should be, is the limbo of more than six years that we had between the legalization of the activity in December 2018 and the start of the regulated market from January 2025.
The 2018 legislation expressly determined a period of two years, extendable for another two, for the regulation of the activity – which was not done. Regulating the activity in such a period would extinguish – or, at least, considerably mitigate – the majority of the problems faced today.
Brazil is not reinventing the wheel by legalizing betting. Of the 38 OECD countries, only Iceland has not legalized betting. From the G20, only Brazil, besides Saudi Arabia and Indonesia, which are Muslim countries, have not yet legalized/regulated betting. It is unlikely that the entire world is wrong and Brazil is right in keeping such economic activity illegal.
Prohibiting the activity in Brazil will not solve the problems that are raised today. Quite the contrary; the public figures who today advocate for the protection of the popular economy and the treatment of people who suffer from gambling addiction will magically disappear and do what they did during all the last decades of prohibited gambling: sweep the dust under the rug and ignore who they are, how many they are, and where are the vulnerable who suffer from compulsive disorders linked to betting.
If there was not a broad, concrete, and effective attitude for assistance and treatment of such vulnerable people during the last decades of prohibited gambling, it seems quite unlikely that any eventual new prohibition will result in forms of protection for such consumers.
Regulation to separate the wheat from the chaff
Regulating is to bring to light what today operates in the shadows, promoting more responsibility and transparency. The period without regulation has exposed a fact: there are indeed malicious betting operators whose intention is to exploit Brazilian consumers to the maximum, not obtain a license in Brazil, and continue operating in the shadows. For these operators, the longer the activity is prohibited or unregulated, the better.
On the other hand, there are numerous serious operators, who are regulated in various jurisdictions and submit to a legal framework and rigorous supervision by regulators around the world to operate within the rules.
These operators are interested in obtaining a license in Brazil, complying with regulatory requirements, and preventing "adventurous operators" and unregulated ones from continuing to exploit the activity at the expense of Brazilian consumers and tarnishing the reputation of the industry as a whole.
It is not because Odebrecht, HSBC, and Alstom were convicted of money laundering that we should prohibit companies from the sectors of engineering/construction, financial services, and energy/transport infrastructure from existing or exploring such activities. Every sector has companies that tarnish the reputation of an entire industry, but we cannot believe the narrative that all are like that.
With the regulation of fixed-quota betting starting on January 1, 2025, Brazil is going through a period of adjustment, as established by Ordinance SPA/MF 1.475 of 2024.
The materialization of this activity into the regulatory framework introduces a series of norms aimed at protecting the consumer and promoting social interest. Such measures include certification of the platforms and games offered, prudential limits for betting, self-exclusion programs for at-risk bettors, education on responsible gaming, and continuous monitoring to prevent the participation of minors in betting.
Education for consumers and responsible gaming
A large part of the problems faced today would be considerably mitigated with education – which is encompassed in the guidelines for responsible gaming established in the ordinances of the Secretariat of Prizes and Betting of the Ministry of Finance.
As it is a relatively new economic activity, various myths must be demystified and the reality about the activity must be widely disseminated. Then, once the population is duly alerted about the activity and the potential harms associated with it, people should have the freedom to choose whether to bet or not.
Write in bold and uppercase: BETTING IS ENTERTAINMENT. The advertising of regulated betting operators must never promote betting as a form of investment, source of income, or personal enrichment. If it does, it will be sanctioned through an administrative process, as determined in Law 14.790/2023.
For this reason, the ordinances of the Betting Secretariat already determine the guidelines for responsible gaming and sector advertising, which sought inspiration in other jurisdictions that have already regulated the activity. It is important to note that influencers who promote betting operators must also observe such rules and guidelines from SPA on responsible gaming and advertising, under penalty of being sanctioned as well.
Prohibiting an activity is the easiest path for populist discourses; educating the population and implementing awareness policies is more difficult. Perhaps, for this reason, the discourse has changed so abruptly.
The illusion of numbers
Recent studies on the impact of betting on consumption and the economy should be analyzed with greater caution, as they are based on speculative projections and incomplete data, resulting in narratives that distort the real dimension of the betting market in Brazil. The lack of regulation in force compromises the obtaining of official data, making premature and inaccurate estimates about the economic and social effects.
The study by CNC, for example, focuses only on the direct financial flow, without taking into account the funds retained in the graphic accounts of bettors or the values returned as prizes, creating a mistaken perception that all the resources bet are withdrawn from consumption, which does not correspond to reality.
The study by Itaú, on the other hand, adopts a more appropriate approach, distinguishing the total amount bet from the net amount effectively spent, which would be estimated at R$ 23.9 billion —significantly lower than the gross value. However, it also does not take into account the values retained in the graphic accounts of bettors on betting platforms.
Itaú also shows that retail sales continue within macroeconomic expectations, without relevant deviations, indicating that the impact of betting on the consumption of essential goods is much more limited than suggested.
In the study “The Impact of Sports Betting on Consumption”, by PwC Brazil and Strategy& Brazil, for example, it is stated that operators retain a rate of 12% of the amount bet as GGR (Gross Gaming Revenue), which is incorrect, because 1) this rate will only be applied from January 2025, with the new regulation, and 2) the tax will be the responsibility of the operators, without transfer to the bettors. Moreover, the claim that “a good part of the winnings is reinvested in new bets” lacks empirical evidence to prove such behavior in the market.
Thus, the extrapolation of incomplete data to conclude about delinquency and loss of purchasing power exemplifies how the absence of regulation transforms conjectures into “truths” in public opinion. Only with the implementation of robust regulation will it be possible to obtain reliable data that provide a fair and realistic view of the impacts of betting on the Brazilian economy.
Path to development
A calibrated regulatory structure, as issued by SPA, is the only viable way to mitigate the concerns raised about the possible negative impacts of betting.
Clear rules, combined with effective responsible gaming programs and assertive supervision, are not only capable of protecting the vulnerable, but also pave the way for the economic development of the sector without compromising social interests. By adopting a solid regulatory framework, Brazil can position itself among the jurisdictions that skillfully balance public interest with market development.
The attempt to preemptively suspend and declare the unconstitutionality of Law No. 14.790/2023, as requested by the CNC, perpetuates the regulatory vacuum that would only amplify the negative impacts. Instead of protecting consumers, this gap exposes society to greater risks by maintaining the power of “adventurous operators” who prefer to live in the shadows of an illegal and unregulated market.
Therefore, the enemy is not betting; it is the lack of regulation.
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 cryptoassets, DeFi (decentralized finance), betting, and gaming. He has taken courses in DeFi and non-fungible tokens (NFTs) at the University of Nicosia (Cyprus).
