The National Association of Games and Lotteries (ANJL) has said Brazil's black market activity would increase if the Supreme Court deems its betting law unconstitutional.
On Monday (11 November), the ANJL shared its thoughts at the ongoing Federal Supreme Court (STF) hearing which will determine whether Law No 14,790/2023 for legalised sports betting in Brazil is considered unconstitutional.
The two-day public hearing this week is investigating the impacts of betting in Brazil, with a number of big industry names speaking at the event. It was initiated after Brazil’s third biggest trade union, the National Confederation of Trade in Goods, Services and Tourism (CNC), requested the betting law be declared unconstitutional.
The union filed an ADI (Ação Direta de Inconstitucionalidade), which is a legal action in Brazil that seeks to uphold a law or act that goes against the constitution.
The rapporteur of ADI 7721 is minister Luis Fux, who said on Monday the STF must assess the betting law’s constitutionality within the first half of 2025.
Fux insisted the law is altered to protect at-risk bettors, saying: “The problems that are brought up here, relating to deprived communities, the minor problems and the other serious problems that are highlighted, lead us to the idea that this resolution must be urgent.”
The legal betting market is set to launch on 1 January 2025. Government gambling regulator the SPA is in the process of assigning licences.
ANJL warns impact of ADI could disrupt 60,000 new industry jobs
The ANJL is warning that this action would empower the illegal market in Brazil. It could also disrupt the formation of up to 60,000 jobs and approximately BRL4 billion (£542.3 million/€654.7 million/€695 million) in betting revenue in the legal market’s first year.
ANJL legal director Pietro Cardia Lorenzoni said: “If the Direct Action of Unconstitutionality (ADI) is accepted, it ends, contrary to its own objective, doing what it seeks to prohibit or avoid, which is the incentive to pathological gambling, illegal gambling.”
Also on 11 November, Brazil’s attorney general of the republic Paulo Gonet Branco filed an ADI, or legal rebuttal, against Law No 14,790/2023 and Law No 13,756/2018 which legalise sports betting in the country. The ADI claims the laws don’t meet the “minimum requirements for preserving constitutional assets”.
The ADI also states the current legislation is “insufficient to protect the fundamental rights of consumers of the products and the national economy itself, given the predatory nature of the virtual betting market”.
Backlash against Brazil’s gambling sector
Much of the criticism of the gambling sector has come from Brazil’s consumer goods sector, which claims its profits are being cannibalised by increasing interest in betting.
A controversial and much-discussed study from the Brazilian Society of Retail and Consumption (SBVC) found 23% of Brazilians who dedicate a portion of their monthly salary to gambling had stopped purchasing clothes while 11% had cut their spending on healthcare and medication.
Betting is not impacting consumer spending says ANJL
Lorenzoni refuted those claims during the first day of the STF’s hearing. He said betting only accounted for around 0.23% of Brazil’s national gross domestic product (GDP) and that its impact on consumer spending was “insignificant”.
He also dismissed the idea of banning advertising of gambling, again highlighting that it could present as an advantage for illegal operators.
“Advertising is one of the essential ways to differentiate regulated from unregulated gambling,” he continued.
The ANJL also claims the ongoing issues are down to the long delay between the passing of betting legislation in 2018 and the final approval from the chamber of deputies in December 2023, which some believe led to a proliferation of illegal sites.
“It is precisely this scenario that caused this reality, with the harms we are experiencing [within the betting sector],” Lorenzoni said.
“There are currently four thousand active betting sites, with several [supporting] fraud, including crimes against the popular economy. But that is not the reality of those operators who seek regulated gambling.”
Today (12 November), Regulus Partners estimated the current grey market in Brazil is worth $3.4 billion, stimulated by increasing digital adoption in Brazil after Covid-19.
