Brazil betting launch faces delays after regulatory shift

18 February 2020

Brazil’s Secretariat of Evaluation, Planning, Energy and Lottery (SECAP) has launched a third consultation on fixed-odds sports betting, heralding a major shift in its approach to regulation of the market and all but certainly delaying the launch of legal sports betting in the country.

The new consultation, launched yesterday (17 February), calls for public comment on a shift to a concession model, where a fixed number of licences are put up for tender. This marks a sharp about-turn from the original plan of a qualitative model, in which any operator able to meet the licence conditions would have been able to secure approval to operate.

The change is the result of an intervention from the Attorney General’s Office of the National Treasury (PGFN), which consults on legal matters within the Ministry of Finance.

The PGFN argued that a concession model would give the government more control over the Brazilian sports betting industry, both to crack down on wrongdoing by licensees and to tackle illegal operators targeting the market.

This is the third publication to be run by SECAP on sports betting, following one launched on 30 July, attracting 1,849 submissions. A second, which ran until 27 September, invited public comment on draft sports betting regulations, and attracted 2,644 comments.

While SECAP noted that these had been crucial in preparing the draft Presidential Decree to implement sports betting legislation, the latest consultation will look to improve the draft further by developing a concession-based model.

The latest consultation will run until 6 March, meaning that the opening of the market is likely to be pushed back. Once the final decree is published, the legislation will come into effect 180 days later.

This final Presidential Decree was originally expected to be published in January or February. As a result of the consultation, and factoring in time to consider the submissions and any changes, the earliest point at which the market could launch is likely to be late 2020.

Operators hoping for a licence in Brazil have already faced an unexpected hike in potential tax rates, after the 1% turnover tax included in the original draft decree was raised to 3%. This was down to the 3% rate being included in Law Number 13,756/18, which was signed into law in December 2018.

A Presidential Decree cannot override a law, meaning the tax rate could not be changed.