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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Charlie Horner (00:02.67)
Brazil's President Lula is set to declare an outright ban on Brazil's bet's law as an election pledge of his Workers' Party government. Just two years after Lula himself signed the bill to make the regulated market a reality, he has made himself the sector's enemy. He said he's no friend of gambling and he's set to bring the sector to a close. So, what is happening in Brazil? Why is the regulated sector coming under so much pressure, and why is Lula set to ban it?
Welcome back to iGaming Daily, supported by Optimove, the creator of positionless marketing and the number one player engagement solution for sports betting and iGaming operators. I'm Charlie Horner and today to dissect all of this with me, we needed to get the SPC Noticias Brazil team on to to to break this one down. So please welcome the the editor, Leonardo Biazi, and also Elise Marcanci. Leo, how are you doing?
Leonardo (00:57.772)
I'm great, Charlie. happy to be back here, even though it is under such green circumstances for our market.
Charlie Horner (01:06.946)
Yeah, absolutely. Yeah, yeah. Pressured times. Elisa, how are you?
Elisa Marcante (01:13.208)
good, thank you. How are you, Charlie? Happy to be here with you for the first time.
Charlie Horner (01:15.916)
Yeah, very well, thank you.
Yeah, very good. It's it's also yeah, it's great to be joined by by the the both of you. It's very rare that we we do this as as a trio on the podcast. But I I know it is under such grim circumstances, so let's let's break things down for for our listeners. maybe Leo w will come to you first. What what is the the crux of the story here? Because we were we were just talking off air and w this has escalated very quickly, right?
Leonardo (01:44.33)
Yes, it has escal escalated quite quickly. What we know thus far, Charlie, is that Lula is possibly banning gambling, all gambling, all online gambling. That means online casinos, sports betting. I mean that's one of the proposals that he had on his desk. he was meant to choose between restricting betting advertising
And the second option would be banning online casinos and restricting betting advertising, but keeping sports betting s because it is so vital to our football clubs, to our competitions, to Olympic sports. And the third proposal would be the outright ban. that's where he's leaning to, according to multiple reporters from Brasilia that are well connected, well informed, that they're hearing what the ministers are saying. But
Yeah it it could be quite d disaster.
Charlie Horner (02:50.017)
Yeah, it's it's quite remarkable that he's gone from maybe restricting advertising to some level, which we see in many markets around the world, to just outright banning the entire sector, particularly when he was the guy who signed the bill in the first place. There is a little bit of irony in there. Elisa, what what has been the primary political catalyst for for this turnaround? Why why is Lula so against the market?
Elisa Marcante (03:18.641)
I would say elections for sure. he knows that we a lot of Brazilians don't like gambling and sports betting. And I think he's trying to use I believe everyone's I mean everyone's thinking that he's trying to use this to gain some votes during the elections and to be a president again. So yeah, I would definitely say elections is the main reason for all of this.
Leonardo (03:44.663)
Yeah, it's it's g it
Charlie Horner (03:44.727)
Sure, yeah, the the election is happening on on the fourth of October, isn't it? sorry Leo, did you want to add add the
Elisa Marcante (03:49.437)
Yes.
Leonardo (03:51.458)
Yeah, this is a great reminder to or to whoever is listening and it's not from Brazil, the election happens at for the fourth of October and Lula is closely tied with Flave Bolsonaro in an eventual second turn of the elections, which is programmed for the end of October. So really here he's trying to gain any edge that he can. Like he has the pen or the pencil, as we say in Brazil, so he can like
Elisa Marcante (04:24.999)
Yeah, also it's good to highlight that I heard I have heard from people inside the of the industry that if he's ahead of Flavio Bolsonaro on the on the polls today, he's not gonna publish anything, but if he's behind, he will publish today. A a provisional measure banning the market or restriction publicity or we don't know yet, but that's what I heard.
Leonardo (04:51.633)
And what is funny here, Charlie? sorry. What is funny here, Charlie, is that Flavio has also begun to target online betting. he had not done this in the past, but because Lula is trying to to get this this narrative going, Flavio always also have to speak against gambling.
Charlie Horner (04:52.279)
That's a a really interesting So, go ahead. No no go ahead.
Charlie Horner (05:18.327)
So it's it strikes me then that the the industry is very unpopular amongst the electorate. Is that is that the case? And I guess if so, why is why is the sector so unpopular amongst Brazilians?
Leonardo (05:31.19)
So we published this research by Datafolia earlier this week and seventy five percent of the Brazilians are against gambling. the reason gambling is so unpopular here in Brazil, I think it has to do with online gambling being a thing so new for us that gambling always existed in Brazil, but this form of gambling in which you use your use your smartphone, you have access to it is new. So
So I think we're still trying to to learn how to deal with this. And of course there is a lot of narrative going into that. that sorry guys.
And also there is this common saying, this narrative that gambling is is just taking away money from poor people, that they're betting everything they can, even though we know that in the regulated market, like that doesn't happen or shouldn't happen as often as the illegal market. The government the government for example, they you can't you can't bet if you are receiving money from the government, from Bolsa Familia in the legal market. But if you take
the legal market and it all becomes illegal then people that are receiving money from the government will turn to the illegal market and bet their money there.
Charlie Horner (06:59.693)
Yeah, it's the it's the protection layer that the the regulated sector offers that that perhaps the politicians don't fully understand, don't they? and and talking about that, Lisa, have we seen any reaction from the industry itself, from from sort of the trade bodies, and and if so, how have they responded to Lula's attack on the sector?
Elisa Marcante (07:21.317)
Yes, we have. even yesterday, nine i nine associations and institutes from the industry have published like how how do I say manifesto in English? Like a a let
Leonardo (07:35.905)
Manifesto like
Elisa Marcante (07:38.394)
manifest like a letter for the government and explaining the risks of banning the the legal market and which are like increasing the illegal market and people losing their jobs impacting economy Brazil's economy so the they they are all together trying to explain to the government what's going to happen if he bans everything so
People from us from the industry, we are very worried worried what's going to happen in Brazil. we are afraid because it can impact our jobs, it can impact our life, our future. So we see everyone moving against this movement from the government. and they are trying just to explain that's not how it works. this is more dangerous for us than safer for the players if we ban the
the legal market. also we've heard that the operators will
tr have like a legal action against the government if they lose their license which are supposed to be valid for five years so if Lula ends with the regulated market they will pub probably issue the government or do something like in legal terms to try to revert the situation.
Charlie Horner (09:14.123)
Yeah, it's it it is a a very fraught time time, isn't it? And I I I think there's there's something to be said for that, Alisa. You that these comp companies did get five year licenses, they've paid for those licenses, they've demonstrated that they can be compliant with those those regulations that have been set out. they've also invested a a lot of money. you know, all these international operators who targeted Brazil.
Elisa Marcante (09:30.279)
Yeah.
Charlie Horner (09:38.698)
and it was such a a hotly anticipated market. It was something that everyone was excited about and all those companies did invest a a lot of money in good faith in in Brazil. perhaps just before we go to a break, it might be a good idea just to look at the the impact that that the market has had on the economy so far in terms of generating tax revenue and and the all the all the different things that it's it's supposed to go towards. would you say that the Brazilian market has met the expectations?
up up until this point where where it certainly has has has gone off track. what do you think, Leo?
Leonardo (10:14.837)
I think it have surpass surpassed expectations. what Brazil made from from taxes. it was quite high last year, close to ten billion reais, and it is projected to reach sixteen billion reais these years if things stay the way that operators planned, but we know that that is not the case right now, with Nula possibly announcing a ban on to online gambling. as and
Well the the reality here here, the sad reality is that the illegal market could account for up to twelve billion reais in uncollected taxes according to a study by the Brazilian Institute of Responsible Gaming that they released yesterday and we have it on our site. So the the message here that the these major trade bodies are trying to send to the government is that one, you lose money on taxes, two
Players will be unprotected. Like that is for sure. Because again, like they have this data. For example, the National Association of Games and Lottery, the ANGL, they released this study yesterday, which said that for every legal operator in Brazil, like we have 187 domains we have that are legal here in Brazil. For every one of them, you have 365.
illegal domains. So by banning gambling as it is today, like legal that you have these companies investing, like you just have like
thousands and thousands of illegal sites is still running and still be like is still being created every day. Like they they also projected that nearly 15 sites nearly 15 illegal sites are created every day here in Brazil.
Charlie Horner (12:16.001)
Yeah, and and those sure.
Elisa Marcante (12:16.005)
Yes, can I just add something?
this year from January to to July we the industry generated more than eight billion heyis only in the seven months.
Elisa Marcante (12:33.511)
I forgot what I was gonna say. I'm sorry. we generate more than eight billion AIs. my god, I completely forgot. Okay, I'm just gonna res restate this and we can move on.
Charlie Horner (12:36.567)
That's okay.
Leonardo (12:40.457)
Mm-hmm.
Elisa Marcante (12:54.447)
Just to add something, from in this year from January to to July, we generated more than eight billion reais in revenue for the government. So we would lose this money even more because it's not the end of the year yet. And we know that Brazil is not in the best economic scenario right now. the best s economic scenario, is that correct? Yes?
economy scenario right now. So it's gonna be a huge impact for us, in terms of economy, of course, if Lula bends the the legal market.
Charlie Horner (13:34.637)
Sure. Well look, Elisa, Leo, we'll take a very short break and we'll come back and we'll talk about some of the consequences. because as you both rightly say, if the if the market is banned outright, people aren't going to stop gambling. So join us after the break.
Elisa Marcante (13:53.437)
Sorry guys for this last part.
Charlie Horner (13:54.731)
No, no no problem.
Charlie Horner (14:02.795)
Welcome back to iGaming Daily. Now we know that this is an argument that plenty of industry bodies around the world like to make. That if you add regulation or you in this case ban regulation, then players aren't just going to stop gambling altogether. That they're going to find alternatives. And w we know that the Secretariat of Prizes and Bets has has blocked
around sixty six thousand illegal sites this year and and Leo, your your stat before the break was was also incredibly stark in terms of the sheer number of sites that that there are that that are unlicensed and and don't have or presumably don't have physical domains or or or businesses registered in Brazil like you you have to under the under the regulation at the at the moment. so if the government bans the regulated sector, d do we know what's
going to happen to those unlicensed websites? So that are they going to continue blocking them or are they just going to grow?
Leonardo (15:07.349)
So Lula will have to tighten our laws because as of right now, like you don't have like it's not a crime to run an illegal site in the means like but these people are like of often prosecute persecuted for money laundering, stuff like this. So he'll having to tighten our our our laws to try to amend that situation. It's actually one of the things that members of the government are worried.
it about okay like you can ban gambling but how do you prevent batters from turning to turning to the illegal market and one of the issues that Brazil has actually is that as I was saying we don't have a law for that but we have a law for exploring illegal gambling in physical spaces for example like Jogo do bicho which we have which we have here in Brazil and notoriously funds the Rio de Janeiro Carnival.
It's so light, like it you only go to jail for one year if you're caught and proved that you are doing that. So what it what what Lula will have to do is like include online gambling and make the the
the the jail time possibly more severe like up to three five years so p people think like think harder if they want if they want to go down the route but as as we were saying here this is this is very hard to do like how it's it's simply impossible I think I'm afraid
Elisa Marcante (16:51.451)
Yeah, no, I don't think staying in jail for more years is going to have to help. I think we need like real toes to not let them operate in Brazil, which we don't have because we see now we have like forty one or forty two percent of the market is illegal. So we know we are not prepared for this, for this scenario.
But he Lula or anyone from the government ex h they didn't explain what is going to happen if they ban the market. no one told us how they will prevent more
illegal sites to to to be created. we we will have again offshore companies offshore and illegal s websites. The offshores are the one offshore companies are the one who which operates under another jurisdiction with a license but not in Brazil s and the illegal ones that are only there just to pr to to to do fraud and to
and money laundry money so we have these two these two options again people don't know the difference between them we are not going to be able to to monitor or to give a support to any player if they have to
it's for me it's going to be a mess in my opinion. we are not ready for that. Not even with the legal market, so especially if we have the the whole market is illegal. We are not ready for to prevent the risks.
Charlie Horner (18:36.353)
Yeah, there's there's a whole you know, if you if you ban or block certain number of sites, you can probably imagine that they will close one day and they might reopen the next under a slightly different domain with maybe one letter changed or something like that. and and those sites you can you you know, that they're gonna be operated by people who don't employ people in Brazil that don't pay tax in Brazil. So there's all those economic disadvantages that
that the government will have as well, but it increasingly feels like there is an inevitability of the market being being closed. Do you do you think there's any hope for a reversal of this decision or or do you think that the damage is is is already done and and Lula has made his his mind up? Elisa, do you want to take this one first?
Elisa Marcante (19:23.571)
Yes, of course. I don't think the damage is done. I have hope. I think everyone in the industry has hope right now.
until we have something concrete, like we have this this provisional measure, we have this law, or anything else. until there, I think there is hope. Because this could be just like some warn up for for the elections and nothing happened. we have seen this before. he promises he says a lot of things and then he doesn't do anything. so this could be just one of
this times again and yeah, I have hope. I have
Leonardo (20:06.879)
May may I add something to this, Charlie?
Charlie Horner (20:10.871)
Sure, sure.
Leonardo (20:12.861)
So what I'm trying to think right now is that this provisional measure is essentially the first half of the game. Okay, Lula will announce a ban to online gambling, but then a provisional measure only lasts for two months. The Congress has to it either vote like okay, no, or they can completely ignore it and things go back to the way they were before. And we know for a fact that
operators will challenge this in both the Congress and the court. So this thing will drag for for months.
Elisa Marcante (20:52.679)
Yeah, but if they publish the the provisional measure, it starts to it's valid from day one, right? And then they vote and then okay. Yeah.
Leonardo (20:58.688)
Yes, yes.
Leonardo (21:03.519)
It's valid for day one but then in order to keep the the provisional measure to in order to it to become a a law, yes, the the Congress, both houses, both the chambers of of deputies and the Senate has to approve it. But yeah.
Elisa Marcante (21:08.295)
They need to vote.
Elisa Marcante (21:18.067)
So there's like a there's like a possibility to bend the market for like two months and then nothing happened and everything goes back to normal. But still two months of complicated.
Leonardo (21:27.561)
Exactly.
Charlie Horner (21:31.862)
Yeah, well it's it is an interesting time as as I as I said earlier, it it is around the the election which is taking place on on October the fourth. And you know Lula if he if he announced this ban and then didn't go through with it, wouldn't be the first politician in the world to abandon a pledge after being voted in. So there is the possibility of that. But what what does the polling look like around the election and and do you think the result of that election might impact the
the decision, i.e., do we know what the oppon opponents and the opposition's outlook towards the market is? Leo, I know you said earlier that they were sort of mirroring some of Lula's rhetoric on this, but is that just a a sort of public pleaser at an election vote mechanism, or do you think that the opposition also has some sort of animosity towards the industry?
Leonardo (22:24.391)
So Charlie betting has become one of the weapons for this election as as as I was saying, Lula has been quite harsh on it the entire year, and as he's his he was losing steam because of some scandals here in Brazil, he turned on to prohib pro to prohibit gambling. but thing is, like almost every other candidate is also against gambling. Fla Flavio Bolsonaro, for example, this week.
He said that he promised that he would ban online casinos if he gets elected, and it's going to be a close race between him and Lula right now. right now we know that Lula is four points ahead in the in the first term of the election, which is on the 4th of October, but they are tied in an eventual in a possible second term by the end of October. So
Whoever I guess whoever wins, I don't know if they will take this this serious after the elections. It could be very well just a a ref rhetorical thing to do. Like the way I'm seeing Lula is trying to do this to then wash his hands like months later later and say, I tried to ban gambling in Brazil, but the Congress does doesn't want like blame then. I am good. They are bad. Like that that sort of thing.
Charlie Horner (23:51.349)
Yeah, that's that that wouldn't surprise me wholly. But look, Elisa, Leo, it's been great to to talk about this. I know I know it's a a huge story and you know a consequential story, but I'm sure it's something that we'll return to in in the weeks to come, particularly in the aftermath of the election. But for now, thanks ever so much for joining me on iGaming Daily. thanks to Optimove for supporting the show.
And to our listeners, thanks for tuning in to today's episode and come back tomorrow to keep up to date with all the latest global gambling news.