Brazil: "President-elect Lula da Silva will respect the Congress decision on the legalization of gambling"

The defeat of President Jair Bolsonaro in the recent Brazilian elections generated uncertainty regarding the regulation of sports betting and the transfer of the Ministry of Economy to Justice. In this context, the Brazilian news agency BNLData pointed out that President-elect Luiz Inácio Lula da Silva promised to respect the decision of the National Congress on such legalization.

It is worth mentioning that the Brazilian media assured that a "high parliamentarian of the Workers' Party (PT) and with direct contact with Lula" asked him for his opinion on the legalization of gambling, and the future president promised to respect the decision of the National Congress and to sanction the proposal approved by the parliamentarians.

Luiz Inácio Lula da Silva was elected this Sunday as president of Brazil, for the third time in history, after having obtained 50.9% of the votes in the second round of the 2022 elections, beating the current president Jair Bolsonaro by a slim margin, as the latter obtained 49.1% of the votes.

With regard to the gambling situation, Law 13,756/18, which legalized fixed odds or sports betting, is currently awaiting the regulation of the Executive Power. The deadline established in the law expires on December 12 of this year, and it is known that there is currently a draft of the regulatory decree and of the Provisional Measure, which creates the administrative sanctions to be promoted.

Subsequently, the Ministry of Economy will be in charge of issuing several ordinances to complement the set of rules for the activity to be operated in the country and not from abroad.

The regulation was not sanctioned before the elections, so as not to upset the conservative evangelical electorate that makes up a large part of Bolsonaro's governmental base. During this time, the National Consumer Secretariat - Senacon requested copies of advertising contracts signed with sports betting platforms, by the 54 federations, clubs, CBF, and TV Globo.

During this process, a dispute arose within the Federal Government over the regulation of the modality. The Ministry of Justice demanded the regulation for its portfolio, and the Minister of Economy, Paulo Guedes, did not resist.

Fifteen days ago, the details of the negotiation for the regulation of sports betting, lotteries, and commercial promotions transferred from the Ministry of Economy to the Ministry of Justice, were revealed. Several meetings and an exchange of documents were held to make the transfer possible, but it depended on the outcome of the elections since it was necessary to confirm the reelection of President Bolsonaro to endorse this agreement.

The change would be possible at the beginning of the new term, in January 2023, with the administrative reform. But the presidential defeat generated many doubts and uncertainty in the betting market because nobody knows what will happen after Lula's victory.

"Brazil will face 60 days of transition, and we do not know if the Executive will be willing to change the ministries to regulate the sector, or even to publish the rules to regulate sports betting. It would sound strange to transfer the regulation two months before the end of this term of the government. Besides, we will still have a World Cup in the meantime", according to BNLData's analysis.

This media cites sources from the Palácio do Planalto, who confirmed that the regulatory decree would be published after the elections, regardless of the outcome of the elections. But it is wise to wait to know the impact of the defeat on the Government, especially since Bolsonaro is not what could be called a "predictable president".

While the Government cannot fail to regulate this law, nor avoid the effects of not regulating it, such regulation could be postponed until the next Government takes office.

Legalization of gaming by the Congress

Another important point for the sector is the vote in the Senate of PL 442/91, which legalizes casinos, bingos, betting, and online games, which was approved by the Chamber of Deputies last February 25.

Some sources revealed to BNLData that the Senate President, Rodrigo Pacheco, is planning to appoint a rapporteur and define the procedure for processing the proposal, shortly after this Sunday's elections.

Even the column Radar in Veja magazine published this week the article "Marco dos jogos de azar deve ser aprovado ainda neste ano", and says that 'the Congress must approve - and Jair Bolsonaro sanction - this year the legal framework for gambling. The project is still in the Parliament and faces the opposition of different parties, but it has gained strength because it is an important way of income for the Government, which will take office in January very indebted due to the electoral expenses of this year. To have an idea, the parliamentarians who worked in the discussion of this proposal and defend the regulation of gambling estimate that the potential revenue from all activities, which will be taxed with the approval of a legal framework, is 150 billion reais".

The information was confirmed by journalist Leandro Mazzini in his column in Isto É magazine this week. The note "Gambling in sites and casinos" reports "that whether elected or not, Bolsonaro has already given the go-ahead to the government to push the agenda of gambling in the Senate, an issue he has already approved in the Chamber of Deputies, which frees bingos, casinos and the like. And why did he hold back until now? Fear of the reaction of the evangelicals during the elections. The regulation of online sports betting, for example, did not happen because of the articulation of Deputy Marco Feliciano, who led this blockage so that his leader would not lose votes. The draft regulation is ready in the sub-office of the Civil House of the Palace. The forecast is that the concession of each license will cost 20 million reais'.

What about Lula's victory?

According to the analysis made by Magnho José, editor of BNLData, before the first electoral round, there were no guarantees that former president Lula would be the best option for the gambling sector, but there were certainties that Bolsonaro would hinder the advances of legalization and regulation of the sector, mainly because he has pastor Silas Malafaia as an advisor and a commitment with the evangelical bench and the conservatives regarding this issue.

It should be noted that the corruption scandal involving Waldomiro Diniz, former advisor to the Minister of the Civil House, José Dirceu, in 2004, accused of extorting money from businessmen in the lottery sector, left a negative mark on the Workers' Party (PT).

The legalization of gambling became a forbidden agenda for the party's parliamentarians, and during the 13 years of the Workers' Party (PT) government, the sector went through times of promises and disappointments, which generated a great setback for the gambling sector.

BNL points out: "We do not know the updated public opinion of Luiz Inácio Lula da Silva. The former president was once, a strong supporter of the legalization of gambling, even stating it publicly on several occasions in the 2002 campaign and at the beginning of his government in 2003, but after the Waldomiro Diniz scandal, Lula and the Workers' Party (PT) always avoided addressing the issue publicly. The atmosphere improved in 2016, when the Ministry of Tourism, at the request of the Planalto Palace, conducted a broad survey to assess the impacts of the eventual legalization of casinos in Brazil and the possible models of gambling operations."

"After the approval of PL 442/91 in the plenary session of the Chamber of Deputies, a high parliamentarian of the PT and with direct contact with Lula asked him for his opinion on the legalization of gambling and the former president promised to respect the decision of the National Congress and to sanction the proposal which was approved by the parliamentarians. Prudence obliges us to wait a few more days for a more mature reflection on the agendas of the lottery, betting, and gambling sector. After all, Brazil is not for amateurs, and tomorrow anything could happen, even nothing", they concluded.