Brazil Advances Comprehensive Sports Betting Legislation: Key Provisions and Amendments Explained

The Sports Commission (CEsp) has given its approval to a bill regulating sports betting, colloquially known as bets. The legislation seeks to amend existing laws related to the distribution of prizes and the allocation of lottery revenue. The bill, identified as PL 3,626/2023 and originating from the Executive Branch, has received a favorable report from the president of the collegiate, Senator Romário (PL-RJ).

The proposed changes affect the laws governing the free distribution of prizes for advertising purposes (Law 5,768, 1971) and the allocation of lottery revenue and the lottery modality of fixed-odd bets (Law 13,756, 2018). The focus of the bill is on the regulation of fixed-odd betting, encompassing virtual online gaming events and real sports-themed events like football and volleyball matches. In this modality, bettors win by matching any condition of the game or the final result of the match.

The bill introduces provisions for both physical and virtual betting. Bets can be placed physically through the purchase of printed tickets or virtually via electronic channels. The authorization process specifies whether the operating agent can engage in one or both modes. The legislation also encompasses fantasy sports, an electronic modality based on the performance of real individuals, exempting it from lottery modality regulations.

Authorization for operating the fixed-odd betting system is subject to approval from the Ministry of Finance. The authorization, valid for five years, requires adherence to several criteria, including compliance with Brazilian legislation, proven knowledge and experience in games, betting, or lotteries, technical and cybersecurity requirements for information systems, and policies to prevent money laundering, terrorist financing, and other fraudulent activities.

The administrative authorization process is conducted electronically, with restricted access to the interested party and the representative during the analysis. Authorization is contingent upon the Ministry of Finance determining the company's technical and financial capacity, as well as the reputation and knowledge of controllers and administrators. The companies seeking authorization are required to pay a consideration, capped at R$30 million.

Marketing and advertising actions by operating agents must include prominent displays of authorization details at electronic channels and physical establishments. The communication and advertising must also feature warnings discouraging gambling and highlighting its potential harm. Prohibited advertising practices include presenting betting as socially attractive or implying that it contributes to personal or social success.

The bill includes provisions related to the prescription of bets, with bettors losing the right to receive the prize or request a refund if the payment due is not credited to the graphical account maintained by the operating agent. Unclaimed prizes expire after 90 days, with half of the value going to the Student Financing Fund (Fies) and the other half to the National Fund for Public Calamities, Protection, and Civil Defense (Funcap).

To address concerns related to integrity, the bill outlines actions to mitigate match-fixing and corruption in sporting events subject to fixed-odd betting broadcast live. Bets proven to have been made through fraud are considered void. Bettors' resources cannot be pledged as collateral for debts assumed by the betting operating company.

The legislation imposes restrictions on who can place bets, including minors, individuals with significant influence or employees of betting operating companies, public agents directly involved in regulating and supervising the activity, individuals with access to the bet's computerized lottery systems, and those who may influence the outcome of the lottery event.

Penalties for infractions are investigated through an administrative process, with fines ranging from warnings to a maximum of 20% of the proceeds from the collection. Fines cannot be less than the advantage obtained by the offender and not more than R$2 billion per infraction. The bill outlines various penalties, including the partial or total suspension of activities, revocation of authorization, prohibition on obtaining new authorization, prohibition from participating in bidding, and disqualification from acting as a director of a company operating any lottery modality.

The distribution of revenue is a key aspect of the bill, with allocations to social security, sports (6.68%), tourism (4.5%), and education (1.82%). The bill lowers the amount companies can retain from gross revenue after prizes and income tax from 95% to 82%. Approved amendments include extending the authorization period to five years, limiting advertising to an adult audience, allowing operators to explore up to three commercial brands, and prohibiting betting advertising between 6 am and 10:59 pm.

The bill has undergone a thorough review and incorporates changes based on amendments proposed by various senators. The next step in the legislative process involves consideration by the Economic Affairs Committee (CAE) before proceeding to the Plenary for further evaluation and potential approval.

By fLEXI tEAM