Since 1946, iGaming in Brazil has been illegal. While the gambling laws have changed somewhat since then, there’s no proper regulatory body or structure. However, things may soon change in the South American country.
The Brazilian Congress has been in talks around changing the legal status of online gambling since 2019. Stats are showing how much revenue the iGaming industry could bring in, based on the current illegal earnings. While specific sports betting selections are allowed, Congress has yet to establish how to regulate it so that gambling operators can create their sites for Brazil patrons.
Let’s take a look at the current status of iGaming in Brazil and where it may be heading the next few years.
The Current Legality Of iGaming In Brazil
The law on iGaming in Brazil falls under Decree Law 3,688/41. The decree is more than 75 years old, with many definitions of which activities fall inside and outside the scope of iGaming law.
We’re going to discuss the details for each section.
Gaming
This category for iGaming in Brazil has three sections. The first consists of casino gaming, which includes slots. It also lists table games, which mainly features roulette and blackjack. The decree defines casino games as that which causes a financial loss based on luck.
The next section is poker. Tournaments with buy-ins are allowed, as the Congress views it as a game of skill rather than chance. If the players use cash to fund the poker game, it’s seen as gambling and against the law. There are also no authorities regulating the table game or issuing licenses.
The final section is Bingo, which the government views as illegal. However, there’s an interesting loophole that some businesses take advantage of to host bingo games. Decree 13,019/2014 states that non-profit organizations may hold prize draws to fund their charities. Many bingo games are held on this premise.
Betting
There are also three sections for betting. General sports betting comes first, which Brazil still views as illegal in part. Only fixed-odds wagers made it through approved legislation in 2018, with punters hoping that the other bet types will follow soon. We’ll get to that a bit later in this article.
Horse race gambling trots into the second section. This form of sports betting has been legal for decades and remains that way today. However, you may only make race bets at the racecourse. Any wagers made outside the track are illegal.
Finally, there’s fantasy betting. As with poker, it’s seen as a game of skill more than luck and is therefore legal. We don’t see any mention of virtual sports gambling in the decree, so we assume it forms part of general sports betting in the first section.
Lotteries
Caixa Econômica Federal is a public bank in Brazil that has a monopoly on the federal lottery. Only the bank may hold the lotteries, but there are talks in place to legitimize instant lotteries for the private sector. The Brazil Minister of Economy is responsible for issuing private sector licenses if it’s approved.
Social And Skill Gaming
The last category in the iGaming in Brazil decree is for social and skill gaming. Social gambling refers to betting on casino and sports games that don’t involve real money. It’s completely legal in the country, with many players using their smartphones to enjoy social games.
As mentioned with poker, skill gaming requires a specific way of playing to win the game rather than luck. The government of Brazil doesn’t view it as gambling, so no betting license is needed. It includes contests such as chess and esports.
New Discussions Around iGaming in Brazil
Talks have been underway since 2019 to legalize all forms of iGaming in Brazil. The Brazilian Legal Gaming Institute (IJL) reported that 2017 revenue consisted of $6.4bn worth of illegal betting. Financial experts have shown the government that it’s losing out on funds it could acquire from gambling tax.
The above is only possible if there’s a proper legal framework for it. The initial public talks reveal that the Brazilian people are ready for it to become legal, which means it’s now in Congress’s hands. IT specialists have also shown that the country’s internet and mobile connections can handle the influx of online casinos.
One of the obstacles that iGaming in Brazil will face is the acceptance of new payment methods. For the moment, the availability of payment gateways is as follows:
- Credit/debit cards: 71%
- Cash: 21%
- ewallets and bank wires: 4%
With so many payment methods available in countries worldwide, Brazil needs to expand its options. Most financial systems are either cloud-based or online, which will hopefully smooth things over.
Why Brazil May Become One Of The Largest iGaming Markets
Experts state that, should iGaming in Brazil become entirely legal, the country could see gross profits of $101bn by 2024. The argument is that Brazilian punters are taking money to offshore casinos, which impacts the economy. By allowing betting, Brazil will see a massive boost in revenue, not only from players in the country, but also from tourists.
Esports has already proven how large the industry can become, with the formation of the Brazilian League of Legends Championship. It’s one of the world’s largest contests, with thousands of players and more than a million fans. Imagine how well the country would do if it allowed betting on Brazillian sports.
Two Different Regulatory Systems Proposed
The crux of the matter is how Congress will approach the regulation of iGaming in Brazil. Although there are several legal forms of gambling, as you’ve seen above, there’s no regulatory body to issue licenses. It’s become a point of contention in the government.
Law and financial firms have spoken up and recommended an Authorization-based System. It allows for an open-license framework where operators can apply for a Brazil iGaming license from anywhere in the world. This system’s benefit is that there’s no limit to how many permits the government can issue, and it promises to increase revenue massively.
On the other hand, there is the Concession-based System for iGaming in Brazil. The government will appoint one or two central operators, based in Brazil, to run all gambling operations. Many experts have indicated that this format will limit how much the country makes in tax returns. It also reduces the income funneling into Brazil from the outside.
One proposal to this dilemma is to limit casinos to resorts where tourists stay when in the country. However, the debate is that this approach only considers the government’s interests and not the gambling public.
Final Thoughts
There’s no doubt that gamblers in Brazil want to move forward in the iGaming industry in the same way that saw the United States open its online betting doors this year. It’s a massive source of income, but the government needs to start regulating gambling practices. In that way, it can still control wagering activity while boosting the country’s economy.
