Brazil seeks to define competition model for sports betting in first half of 2019

The Brazilian Ministry of Economy seeks to define in the first semester of 2019 the most viable model of competition in the Brazilian market for the operation of fixed-odd sports betting —in which the bettor knows in advance how much they will receive if they win—, as part of the regulatory process of Law 13.756 / 2018 (see Chapter 5 articles related to sports betting).

In November 2018, Brazil approved legislation for sports betting, since Provisional Measure 846/2018 was turned into Law 13,756/2018 by the Brazilian Congress after the President Michel Temer sanction in December 2018.

According to the Secretary of Evaluation of Public Policies, Planning, Energy and Lottery of the Ministry of Economy (SECAP), Alexandre Manoel, two models of operation are being considered, both for the physical and the online betting modalities. "This decision depends on the choice between a fixed number or a variable number of companies that will operate the bets. If we decide for a fixed amount (at least two), we will choose the model of 'concession'. If it is variable, the model will be one of 'permission' (authorization)," he said in an official statement this week.

"Now that the matter is legal, there will also be a need for the Ministry of Economy, through SECAP to decide how (concession or authorization/permission and if by bidding or only filling rules) and when to start the operation of sports betting in Brazil," said Edgar Lenzi, BetConsult’s founder and director. “Our forecast to have the regulation was between 6 and 9 months, what with the latest Alexandre Manoel’s declarations begins to became true.” 

The Law stipulates that sports betting in fixed quota must necessarily be operated in a competitive way. Once the definition stage of the competition model has been completed, the government will design the minimum structure to introduce the regulation, both in physical and technological-operational terms. "The existing structure is only enough to regulate Caixa Econômica Federal, which today is monopolistic, and also betting by means of instant lottery, which will soon be operated by a completely private company, consortium or Specific Purpose Society (SPE)," explained the Secretary.

Manoel stressed that the main federal government's goals to regulate this law will be to widen private initiative involvement in the Brazilian market, facilitating job creation, and ensuring the integrity of sports. "What prompted the Ministry to support the legislators was to understand that this regulation contributes to the sports' integrity by guaranteeing that the match results will be reliable and derived from the athletes' effort," he argued.

According to the Secretary, in the search for quality and justice in sports, the government hopes to count on the international associations that are already operating in foreign leagues during the regulation process of the law: "We are specially observing all European countries, which already have a matured sports betting market, such as Portugal, England and Italy".

As for the eventual companies that use sites hosted in other countries to operate sports betting in fixed quota in Brazil, the secretary remarked that they are illegal. "By regulating the law, we are going to adopt all legal measures to toughen the existing penalties. As a regulator, we will only address what is legal, what is illegal is a matter of the police," he said.

Under Law 13,756/2018, the government has two years, renewable by two others, to regulate it. According to Manoel, the current expectation is to meet the initial deadline, without the need for an extension: "This is our goal, we are already driving the opening of the lottery market to the private sector with the Lotex concession, the instant lottery modality that the government tenders in the private sector, with a bidding scheduled for March 26. If this concession is achieved, it will surely facilitate compliance with the law in two years," he concluded.