The legalization of the gambling industry in Brazil in recent years has triggered many new legal issues. Gambling, as an industry completely banned in mainland China, may have a completely different market environment and development prospects under different political, historical, and legal backgrounds abroad.
In Brazil, where gambling has just been legalized, there will inevitably be legal ambiguities in many aspects, and there will be deviations in practice between states. The compliance issues triggered by the introduction of new regulations also deserve our attention.
Which industries are the targets of Brazil's current gambling regulations, and which companies or industries might be classified into gambling?
1. The Legal History of Gambling in Brazil
The history of gambling development in Brazil is closely intertwined with its social changes, political games, and economic demands, showing a cycle of "prohibition—opening—re-prohibition—re-opening." This legalization is not the first time that the gambling industry has been opened up in Brazilian history.
During the 16th century Portuguese colonization period, mixed-culture gambling appeared; the first official lottery before independence in 1822 was used to fund hospital construction; after independence, Pedro I allocated lottery revenue (3.2% of fiscal revenue) to military expenses; the coffee economy in the 19th century gave rise to underground casinos, which were unsuccessfully suppressed by the Catholic Church's "Anti-Moral Corruption Law"; after the legalization wave from 1930-1946, the military government from 1946-1993 only allowed border underground casinos; after democratization in 1985, three legislative proposals (2004/2011/2014) were made, finally achieving legalization at the legal level in 2018.
The 2023 "Law No. 14,790" established a national framework, opening online sports betting and tourist area casinos, legalizing federal monopoly lotteries and bingo, prohibiting street slot machines and illegal platforms, and issuing 35 ten-year online licenses (27 already issued by 2024).
The 2024 amendment allows pilot physical casinos in Amazonas and Rio Grande do Sul states, and in the same year, the "Mercosur Gambling Regulatory Memorandum" was signed to share a blacklist to combat cross-border money laundering, and through the "OECD Tax Agreement," cross-border tracking of gambling enterprise revenue and expenditure data will start from 2025.
2. The Role of the Government in the Gambling Industry
The gambling industry undoubtedly brings huge benefits and revenues to the Brazilian government, with the total tax revenue in 2024 alone already exceeding 8.7 billion reais, about 1.74 billion US dollars, accounting for 0.093% of the total government revenue, approximately four times the growth compared to before full legalization in 2023.
While gaining huge benefits, the government also continuously plays an important role in the entire gambling industry. Its promoted measures attempt to control the overall gambling industry from a macro level, increasing tax revenue while trying to minimize the addiction problem among citizens, but in actual operation, it has triggered many economic, legal, and ethical issues.
(1) Government Regulation
The Brazilian government, through "Federal Law No. 14,790/2023" and subsequent amendments, has built the most complex gambling regulatory system in the world. Brazil's regulation of the gambling industry features "strict formal recognition + dynamic substantive review," focusing not only on formal compliance but also expanding substantive boundaries through judicial precedents. The National Gambling Administration (ANJ) under the Ministry of Finance is responsible for license issuance and cross-border business regulation. In addition, all gambling industries are mandatorily connected to the central bank's real-time payment system (PIX), with localized data storage, which is "strict formal recognition," with clear regulations and supervision on licenses and access accounts; state economic departments also have gambling supervision bureaus to regulate physical venues.
For casinos, government-required casino revenue must implement a blockchain tax system (BT chain) and AI audit, with tax evasion detection rates rising to 89%. The gambling industry also needs to allocate 0.2% of its revenue to the anti-addiction fund and mandatorily broadcast anti-gambling advertisements; the government also mandatorily requires all casinos to install neural detection systems and biometric systems, and bear the costs of purchasing and installation themselves.
Although the Brazilian government regulates casinos and the entire industry from multiple aspects such as tax, data licenses, and systems, major issues continue to arise in specific implementations.
For example, the measures mentioned above:
For instance, the blockchain tax system, São Paulo state uses Hyperledger Besu (Ethereum enterprise version), data stored in JSON format; Rio de Janeiro state uses Corda (R3 consortium chain), data as binary streams; Bahia state self-developed BChain, using Protobuf serialization protocol, while the federal and state government regulatory interfaces are not unified, state chain management APIs (such as user identity verification, transaction reporting) standards vary, forcing cross-state gambling enterprises to develop multi-chain adapters (Multi-Chain Adapter), causing technical costs for small and medium-sized enterprises to soar by 30%-50%.
The other two cases also have similar issues of enterprise costs or data security problems. While the Brazilian government solved the target problems, it once again triggered new business difficulties and legal issues.
(2) Citizen Regulation
The above-mentioned neural detection systems and biometric verification systems that the Brazilian government requires all gambling industries to install are part of the regulation of citizens. The Brazilian government uses high-tech systems to judge all players, which can intercept cases of minors using false identities by comparing with the national information database, and by detecting players' biological state information, such as "whether pupils are dilated by 35%, whether heart rate is above 120 beats per minute" to determine whether players have entered an addiction state.
The Brazilian government also requires all online gambling platforms to connect to the national gambling data platform. As of 2024, this system has covered over 98% of casinos in Brazil, achieving real-time analysis of players' betting frequency, amount, time, and other 30 indicators; at the same time, the AI system will real-time detect players' daily betting amount and facial live double recognition authentication.
Regarding gambling payment channels and consumption limits, the Brazilian government has also made very strict regulations. All cash and credit card payments are illegal and prohibited, and all payments must be made through the central bank's DREX system.
However, the introduction of high technology by the Brazilian government not only caused information security risks but also caused serious legal and ethical issues, materializing all human information into collected electronic signals. In the state of Amazonas, this has already led to personality rights litigation cases. The Brazilian government's macro-control over the industry and society, as well as its regulation of individual players, has not achieved their expectations well, leaving huge gaps in gambling laws.
3. Conclusion
The essence of legal regulation of the Brazilian gambling system is a radical experiment of "replacing social consensus with algorithmic justice," which, although it has compressed explicit social costs in the short term, has laid deeper governance crises:
· When technological monitoring indiscriminately penetrates into neural responses and private consumption, where is the boundary for the surrender of civil rights?
· When "anti-gambling" is alienated from a medical concept to an administrative label, who has the right to define the threshold between normal and pathological?
The answer may not be within the existing policy toolbox, but in the eternal struggle between technological rationality and human dignity.
