REGULATION OF SPORTS BETTING IN BRAZIL: after the legal "back-and-forth" a sea of opportunities and risks emerges

The history of gambling and betting regulation in Brazil reflects the complex

interactions between social values, economic needs, and political arrangements

across different historical periods. From an almost absolute prohibition to a specific

authorization for “fixed-odds sports betting”, the legislative trajectory reveals

paradigm shifts and the State's adaptation to new realities and demands. Although

recent regulation has increased state revenue and created opportunities for various

entrepreneurs, it’s essential to remain mindful of the risks associated with this

activity, particularly considering the historical and legislative context in which

betting in Brazil is situated.

Historical and Legal Overview

The Brazilian Penal Code of 1890, enacted during the transitional period from

Empire to Republic, criminalized, under Article 369, the operation of "gambling

houses where people habitually gather, even if no admission fee is charged, to play

games of chance, or establishing them in a place frequented by the public". Article

370 defined "games of chance" as those whose gains and losses depend exclusively

on luck.

The criminalization of gambling in the period possibly reflects the influence

of republican moralism and the strong Catholic heritage in Brazil, which at the time

viewed gambling as a socially deviant practice. Besides the alleged concern for

maintaining social and moral order, the sole paragraph of Article 370 created an

exception to allow betting (at the time, gambling and betting were referred

indistinctly in Brazil) on foot or horse races and similar activities - demonstrating, on

a practical analysis, a selective application of the law favoring activities traditionally

associated with wealthier social groups.

Subsequently, amid economic restructuring and the need to foster strategic

sectors, the rigidity of the 1890 Penal Code concerning gambling was softened by

Law No. 3897 of 1920. Article 14 of this law permitted the temporary granting and

operation of games of chance (gamble), specifically in clubs and casinos located in

thermal and climate resort areas, under certain conditions. These conditions—

including prior licensing, prohibiting minors, and requiring formal management—

sought to channel gambling towards revenue generation and regional development

while maintaining monitoring, reflecting a continued ambivalence toward the

activity. Notably, no requirement for moral integrity or good reputation was imposed

on business administrators, revealing a still cautious approach.

With the end of the so-called "Golden Age" of casinos in Brazil, a new wave

of restriction came during the “Estado Novo” (New State) dictatorship. Law No. 3688 of 1941 (known as the Criminal Misdemeanors Law) criminalized in Article 50 the act of “establishing or operating a game of chance in a public place or one

accessible to the public, whether admission is charged or not.” According to

paragraph 3 of this article, a "game of chance" is one whose outcome depends

exclusively or primarily on luck; as well as any unauthorized bets on horse races or

any other sporting events. This prohibition was reinforced by Law No. 9215 of 1946,

which, even after Brazil’s return to democracy in the Populist Republic period,

banned the practice and exploitation of games of chance throughout the country.

During a subsequent military dictatorship, Decree-Law No. 204 of 1967

established a new framework for the operation of lotteries, positioning them as a

public service exclusively under federal jurisdiction and not subject to concession.

Accordingly, except for explicitly authorized lotteries, the operation of all other

games of chance remained prohibited, which was justified as a means of preventing

criminal exploitation and the diversion of public funds.

It is worth noting, however, that even after the reestablishment of the

democratic state in 1988, various laws were enacted to alternatively relax or tighten

gambling restrictions. For instance, Law No. 8672 of 1993 innovatively authorized,

under Article 57, sports governing bodies to operate bingo games or similar

activities as a funding mechanism. Similarly, Law No. 9615 of 1998 allowed these

sports administration and practice entities to run bingo games but banned gambling

machines or electronic amusements in bingo halls. Article 64 of this law also

prohibited operational authorizations based on mere indications of the

unfitness/unsuitability of sports entities, commercial companies, or their

managers.

However, due to the proliferation of bingo halls and their alleged association

to illegal activities, including money laundering, tax evasion, and organized crime,

Law No. 9981 of 2000 was then enacted to re-criminalize bingo, making it once again an illicit activity under Article 50 of the Law of Misdemeanors. After significant

pressure from economic actors, political interests, and the rise of an informal and

increasingly lucrative betting market, both domestically and abroad, Law No. 13756

of 2018 was enacted to legalize “fixed-odds sports betting”, reflecting the digital and

globalized context of the modern gambling/betting industry.

Nevertheless, as the law lacked detailed regulatory criteria, exposing the

sector to traditional criminal risks such as money laundering and tax evasion, Law

No. 14790 of 2023, popularly known as the "Bets Law", was finally introduced to

regulate this highly profitable and somewhat risky sector that had already been

operating for several years.

Fixed-Odds Sports Betting: Key Concepts and Requirements

Although Law No. 14790/2023 regulates exclusively “fixed-odds sports betting”,

it is evident that it aims to bring Brazil closer to international models in the matter,

such as those of United Kingdom, Germany, and France. For better understanding,

it is useful to highlight some of the main definitions set forth in Article 2 of the law,

especially because the conduct generally known as mere “gamble” is still prohibited:

• Betting: the act of risking a certain amount of money in expectation of a prize.

• Fixed-odds: the multiplier factor of the wagered amount that determines the

  payout, per unit of currency bet, in case of a win.

• Real sports-themed event: an event, competition, or act including sports

  tournaments, games, or trials, either individual or team-based, whose

  outcome is unknown at the time the bet is placed and which is promoted or

  organized.

• Online game: the digital medium enabling virtual betting on games where

  the outcome is determined by the result of a future random event, using a

  random number, symbol, figure, or object generator as defined by the rules.

• Virtual online game event: a digital event or competition whose result is

  unknown at the time the bet is placed.

The scope of the law is limited to real sports-themed events and virtual online

gaming events. It explicitly prohibits betting on youth categories or events involving

only underage athletes, as well as the installation of physical equipment or

terminals intended to facilitate online “fixed-odds betting” in public

establishments.

To operate in Brazil, betting agents must be legal entities headquartered and

managed in Brazil, under Brazilian law and subject to authorization from the Ministry of Finance. Foreign partners may be involved, provided there is at least one Brazilian partner holding a minimum of 20% of the share capital. Article 26 also sets out a non-exhaustive list of individuals prohibited from placing bets, such as coaches, athletes, and referees, to preserve sporting integrity, with potential expansion by the regulatory authority.

The requirements for obtaining authorization are strict and generally include

proof of lawful origin of funds; suitability of legal representatives, partners, ultimate

beneficial owners, and strategic position holders; implementation of anti-money

laundering and counter-terrorism financing policies, as well as corporate

governance, "know your customer" procedures, monitoring of suspicious activities,

customer support services, continuous training programs for employees, user

awareness campaigns on responsible gambling, and measures against match

fixing and betting addiction.

The license fee is R$30 million and covers up to three brands for a five-year

period. Additionally, operators must deposit R$5 million in a secured account to

safeguard prize payments. From a tax perspective, a 12% rate applies to the

operator’s Gross Gaming Revenue - calculated as betting revenue minus prize

payouts and income tax withheld from winnings - and a 15% Income Tax is applied

to the net gains of the individual bettor.

In addition to the requirements provided by Law No. 14790/2023, operators

must comply with various regulations issued by the Secretariat of Prizes and Betting

(SPA), a branch from the Ministry of Finance, which is responsible for authorizing,

granting, regulating, monitoring, supervising, and sanctioning activities in the

sector. These regulations cover a wide range of issues, including bettor rights and

obligations, payment transaction rules, internal controls, and lists of eligible sports

and entities for betting.

Risks and Challenges

Despite its economic potential, the legalization of sports betting raises

concerns regarding not only pathological betting/gambling disorders but also

serious criminal threats. The ease of online transactions, the large volume of money

involved, and the global nature of the activity can attract both vulnerable individuals

and sophisticated criminal schemes, particularly those involved in money

laundering, thus requiring rigorous monitoring by both operators and regulators.

A growing concern is match-fixing, particularly in the context of betting on

secondary events (e.g., who will receive the first yellow card or which team will win

the first corner kick), which raises doubts about the legitimacy of a match outcome

and gives space for frauds. These bets increase the complexity of monitoring, as

they are more susceptible to manipulation, making enforcement efforts more

difficult. Ensuring sporting integrity is therefore a regulatory cornerstone,

demanding not only control policies but also coordinated actions between

operators and national and international monitoring entities.

In this context, the main criminal risks regarding sports betting in Brazil

include the use of betting platforms for money laundering (under Article 1 of Law

No. 9613/1998) and tax evasion (under Articles 1, 2, and 7 of Law No. 8137/1990).

Article 25 of the Bets Law explicitly states that operators must both monitor

suspicious activities and report them to the Financial Activities Control Council

(COAF), Brazil’s financial intelligence unit, indicating that the directors have a duty

to act.

Unsurprisingly, following the enactment of the Bets Law, several police

operations have been launched to combat unlawful activities involving match

fixing, money laundering, and tax evasion. These include operations such as “Jogo

Limpo” (“Fair Play”), “VAR” (Video Assistant Referee), “Spot-Fixing” and

“Integration”. Such investigations highlight the ongoing need for robust oversight to

prevent the distortion of both sports betting and sports themselves.

But not only. Given the complexity of operations and the broad array of

criminal offenses outlined in Brazilian law, certain behaviors may also constitute

sports fraud (Article 200, Law No. 14597/2023), in a hypothesis of match-fixing, or

the misdemeanor offense of operating illegal games of chance (Article 50, Decree

Law No. 3688/1941), such as when betting occurs in violation of legal requirements.

The involvement of minors may also lead to violations of Articles 243 and 244-B of

Law No. 8069/1990 (Statute of the Child and Adolescent), or even false or

misleading advertising offenses under Articles 66, 67, or 68 of Law No. 8078/1990

(Consumer Protection Code), particularly if advertisements mislead consumers or

fail to comply with statutory standards.

Conclusion

The historical and legislative evolution of gambling and betting in Brazil

reveals a legal landscape marked by ongoing adaptation to shifting social and

economic realities. From moralistic prohibition to selective authorizations and

subsequent reversals, the country has now reached a stage of specific legalization

and regulation of “fixed-odds sports betting”. This most recent phase prioritizes the

formalization and control of an already existing market, aiming to generate tax

revenue, protect consumers, prevent match-fixing, and deter the use of the sector

for criminal purposes.