Big Boost for Brazil's iGaming & Sports Betting Power

It’s all go in Brazil as the world has its eyes on this exciting iGaming market, but what does the future hold in the home of carnivals and the great Amazon rainforest, the heart of the Latam market?

WeAreGame has been closely following the progress in Brazil, as the country establishes itself as a powerhouse in the gaming sector. Following on from our article published on 5th April, we revisit the land of football, samba, and jaguars, to take a closer look at the events unfolding.

Brazil So Far…

Until 2018, there were strict laws to prevent most legal betting and gambling. Brazilians only had access to certain activities, such as the lottery and betting on horse racing. Gradually, the rules relaxed as the country changed and other pursuits like slot machines and bingo were allowed.

2018 ushered in a new era. Despite some criticism, the Brazilian Institute of Responsible Gaming (IBJR) came into being with the purpose of being an initiative leading towards the regulation of Brazil's sports betting industry.

As well as the IBJR, the Associação Brasileira de Defesa da Integridade do Esporte (ABRADIE) sports integrity body was created, adding another step along the way towards a safer and more secure, regulated market.

While the future of Brazilian iGaming and gambling was being explored, many notable people in Brazil entered the discussion on the way forward. During this, from December 1st 2022 to March 24th 2023, elected parliamentarians were surveyed with about 65% responding and 38% in favour of regulating gambling. Whereas a recent survey of over 2,000 smartphone users found that over 25% had already engaged in sports betting as a hobby.

Sport Betting Regulations – What Will They Mean?

Mid-May saw Brazilian President Luiz Inácio Lula da Silva receive the Provisional Measure destined to bring about the regulation of sports betting operations in the country.

The Ministry of Finance drafted the measure which was processed through the Civil House. Minister of Finance and notable academic, Fernando Haddad, has long since been a strong advocate for the changes, giving evidence as to how Brazil and its people can benefit from the changes.

A decree to create a working group to monitor the sector and any issues that may arise was delivered to the President. It addressed areas that may cause concerns and how they can be challenged, such as the recent match-fixing scandal (more on that later).

One area that the measure stipulated was that financial transactions between bettors and platforms must go through banking institutions authorised by the Central Bank, and data and account information from companies may also be requested. This would keep transactions visible and allow proper monitoring of the sector.

The MP modified law 13.756/18 brought in new legislation in regard to tax rates. It allowed some betting companies to operate as long as they were following certain procedures;

• To decrease the percentage assigned to bookmakers from 95% down to 84%,
• To allocate 10% of tax to Social Security
• To allocate 1% of proceeds to the Ministry of Sports.

Then and Now

So what’s changed in the last five years? Essentially, many of the regulations are very similar, if not the same, as they were in 2018. The main difference being slightly more money will now be taken from operators to use in various public areas. This will not only help the Brazilian people but also go some way to appease the opposition to the changes.

Unlicensed sportsbooks will not be able to advertise, forcing them to obtain a licence and support the Brazilian economy. Also, betting companies will be impeded from operating in the pursuit of internet or television rights.

Working groups are being established to fight manipulation and will be made up of representatives from a variety of corporations. People from the Ministry of Justice and the Ministry of Sports will be joined by people from guests from the Brazilian Association of Sports Betting (ABAESP), the ABRADIE, the International Betting Integrity Association (IBIA), the Order of Attorneys (OAB), the Brazilian Football Confederation (COB), the Brazilian Olympic Committee (COB), the Brazilian Paralympic Committee (CPB), the Brazilian Institute of Sports Law (IBDD), the National Association of Games and Lotteries (ANJL), and the IBJR.

Once the Provisional Measure has been fully published, it will be valid for 60 days with the possibility of being extended for a further 60 days. During this, the measure will be assessed by the House and the Senate, who can implement changes and sign it as law.

2018 Law

2023 Provisional Measure

• 95% for the betting lottery operator
• 2.55% for the National Public Security Force (FNSP)
• 1.63% for sports entities
• 0.82% for public schools

• 84% for the operator of the betting lottery
• 10% for Social Security
• 2.55% to the National Public Security Force (FNSP)
• 1.63% for sports entities
• 1% to the Ministry of Sports
• 0.82% for public schools

Cleaning Up Sport

All but one team (Cuiabá, from Mato Grosso) in Série A of the Brasileirão has some sort of sponsorship deal from the iGaming and gambling industry. Corinthians's partnership with Pixbet (powered by WeAreGame), provides the team with a whopping $35 million to advertise on their kit. A hefty reward for Brazilian clubs when markets such as the UK and the Netherlands are moving away from sports shirt advertising deals.

The new legislation will enforce that employees of sportsbooks, and those who work in the sporting sector such as coaches, athletes, and managers, will be prohibited from betting which will support the legitimisation of the market.

One of the biggest news stories of late in Brazil has been the investigation into match-fixing. The Goiás Justice accepted a complaint that was filed by the Public Prosecutor's Office. This was the result of a total of sixteen people who are under investigation in the Penalidade Máxima II operation, seven of whom are professional footballers.

The investigation uncovered manipulation and match-fixing that covered thirteen football games and the ongoing court action has revealed corruption and deception at the highest level. Matches affected were from Séries A and B of the Brazilian Championship last year, and the 2023 Gaucho and Paulista championships.

Hugo Jorge Bravo, the president of Vila Nova Futebol Clube, reported the case of fraud and the attorney general and prosecutor of the Public Ministry of Goiás (MPGO) Cyro Terra Peres and Fernando Cesconetto, will join Mr Bravo in the court hearing.

Joining them will be many other influential people speaking on both sides of the investigation, including Ana Moser – the Minister of Sports, Andrei Rodrigues – director of the Federal Police, and Roberto Campos Neto – president of the Central Bank. Invitations to attend were also extended to the Federation of Football Referees of Brazil, the IBJR, the presidents of the National Association of Football Referees, and the National Association of Games and Lotteries.

The Public Prosecutor’s Office continues to investigate, citing bookmakers and clubs as victims. Government Officials are not taking the action lightly. The scandal is not good for a country seeking regulation and investment. There will be heavy consequences as Brazil comes down hard on those found guilty as a sign that future corruption will not be tolerated in any way.

On a positive note, the strong action, in this case, should restore investors’ confidence in the market resulting in more mutual trust between operators, bettors and the sports industry as a whole. If everyone feels safer in the knowledge that sport is honest and fair, investment should increase.

Industry Reactions

André Gelfi, CEO of Betsson in Brazil and CEO of the IBJR, stated “Sector regulation is essential to increase authorities’ monitoring and collaboration actions to curb match-fixing schemes, protecting sports betting companies and Brazilian bettors.” He then went on to say “When you have the betting segment working in an articulated and preventive way, with monitoring control mechanisms and established punishments, this mitigates the possibility of this type of thing (match fixing) happening.”

There is much excitement surrounding Brazil at the moment, with eyes in all four corners of the globe keeping track of the ongoing changes. Khalid Ali, CEO of the International Betting Integrity Association said "We welcome the Brazilian government's decision to regulate the sports betting industry as an overwhelmingly positive move. As IBIA's 2021 optimum betting market study confirms, balanced and efficient sports betting regulation is part of the solution to sports betting-related match-fixing."

Hugo Baungartner, Vice President and Director of International Business at 27th Gaming Group, remarked that “It’s the giant. Everyone is talking about it. Everybody wants to come to Brazil.”

Future Projections

Estimates vary as to the full potential of the Brazilian market. O Globo estimates the amount to be around $30 million. Fernando Haddad puts the potential tax estimate to between $12 billion and $15 billion.

The market has shown enormous growth since 2018 of 360% (Datahub survey) with a record number of 239 publicly traded companies. A similar survey by Máquina do Esporte, found that 191 houses with a Portuguese platform were in operation. Already this year, in the first quarter, 69 new sportsbooks opened which far exceeds the same time in 2020.

As well as specialist platforms, country-specific banks, affiliates, and homegrown tech companies are also increasing to further boost the Brazilian iGaming economy.

In a few short weeks, SiGMA Américas – in Association with Brazilian iGaming Summit – will be underway in Sao Paulo between the 14 and 18 of June. Everyone who’s anyone will be in attendance. The event is expected to be the biggest yet with exclusive networking opportunities, talks, and debates. With the projected potential profit for Brazil being at the forefront of many people’s minds, the event is likely to draw in huge crowds and result in multiple new platforms coming to fruition.

It is also expected that soon the long-awaited gaming expansion bill in Brazil will again take centre stage in the coming months. Having lingered far behind the talk of sports betting, the sister vertical of casino could prove to be a double whammy in Brazil’s hit parade, making it the number one destination for new platform creation.

Big Future in Brazil

Brazil continues to grow, with no signs of slowing down anytime soon. As regulations become fully established, security tightened, and the country secures its rightful place as an iGaming giant, more and more iGaming platforms will develop in the market.

WeAreGame are Brazilian iGaming experts. If you want to know more about how we can help you start up your own Brazilian iGaming business, or expand your current brand with our solutions, get in touch with us via email at: hello@weare.game

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