The year 2022 is a very promising one in terms of regulating environments that make use of information technologies. Some legislative projects stand out in regulating the use of artificial intelligence mechanisms, crypto assets and the use of social media. In this scenario, it is expected that the regulation of sports betting will advance, even more so in the year of the Football World Cup, which will start in November.

This modality is already successful in the world, with very expressive numbers. In 2021, in the United States, for example, the practice resulted in a total of more than US$ 4 billion in revenues, an increase of almost 180% compared to 2020.

Sports betting is just one kind of game. Its regulation needs to be considered, alongside, for example, the regulation of lotteries, betting on animal races, physical and online casinos, fantasy games, poker or other games understood as skill, games and applications. In Brazil, the practice is already known and has occurred via platforms hosted outside the country, which does not violate points of discussion that still exist associated with the practice of games or the lack of specific regulation, such as the Criminal Misdemeanors Law, which in its art. 50 considers the practice of gambling as a criminal offense.

Before dealing with regulation in the country, two points seem to be worth mentioning: (i) the reasons why gambling is regulated; and (ii) the main issues or concerns that justify the legal concern with the topic.

Among the reasons why gambling is regulated, it is possible to highlight the interest in the fiscal profitability that derives from these activities, in the promotion of economic development with the evolution of commercial interrelationships and in the protection of the rights of vulnerable groups (children, elderly, etc.).

As for the concerns and risks involved in sports betting, the following can be highlighted:

●             the necessary protection of responsible gaming;

●             bring legal certainty to investors in the sector and other services involved (financial institutions, advertising agencies, etc.);

●             the necessary establishment of robust compliance standards;

●             the necessary protection of the users (consumers) involved in relation to fraud, vulnerable publics and the processing of personal data;

●             the risk of using platforms to commit crimes (especially money laundering);

●             proper observance of advertising standards;

●             legal-contractual and intellectual property protection involved in all sector relationships;

●             containment of the increase in cases of pathological gamblers and the resulting social problems;

●             mitigation of match-fixing practices.

The regulation of online sports betting in Brazil began with a more remarkable start with Law n° 13,756/2018. This law, in its art. 29, defined this lottery modality as “fixed-odds betting”: “Art. 29. The lottery modality is created, in the form of an exclusive public service of the Union, called fixed-odds betting, whose commercial exploitation will take place throughout the national territory. § 1 The lottery modality referred to in the caput of this article consists of a betting system related to real sports-themed events, in which it is defined, at the time of placing the bet, how much the bettor can win in the event of a correct prediction.”

Without prejudice to the discussions regarding the definition set out in the law (the fact that betting, technically and precisely, would not be properly a lottery modality, for example), the fact is that fixed-odds betting (or sports betting) is defined in the legal system such as betting systems relating to real sports-themed events and that, at the time of placing the bet, the bettor knows how much he can win if the prediction is confirmed as the final result of the event.

Detailing the concept a little, it is possible to extract the following elements:

●             there is a bet contract signed, in which, here, there is a promise of consideration for the user if the prediction is confirmed;

●             the bet must be linked to a real sporting event, which includes any sporting event, from football to chess and eSports for that matter, but excludes fanciful or non-real situations;

●             this must be done via a physical or digital system (set of organized elements), normally supported by the well-known betting platforms that exploit the business (bookmakers);

●             when the bet is placed (either before the sporting event or during), the bettor already knows how much return value he will receive if the prediction he bet on (future results of the sporting event) is confirmed (result bet is equal to the result real end).

Paragraphs 2 and 3 of art. 29 defined that these bets will be authorized or granted by the Ministry of Economy, which should regulate the subject within 2 years of the publication of the law, a period renewable for up to 2 more years. In other words, the maximum term is in December 2022. This regulation is in charge of the Secretariat of Evaluation, Planning, Energy and Lottery – SECAP of the Ministry of Economy and some drafts of the Regulatory Decree have already circulated in this period. It is worth mentioning some expected points:

The first is the legal definition of the agents involved in this market, such as regulators, bettors, operators, those who provide services to operators, resellers, among others. The second is how the authorization for the exploitation of the activity will be done in itself, for example: in a monopoly (more unlikely), in a limited number of players or in an open number of players; and under which regime, criterion and for how long the exploration will be authorized. The third is the definition of the competences of the Ministry of Economy and SECAP in the regulation, supervision and inspection of this market and how this will be done.

The last point is the establishment of the obligations of the agents involved in the exploitation of sports betting, such as ensuring responsible gaming and the integrity of bets, mitigating the risks mentioned above and respecting the best and most legal advertising parameters.

It is also expected that the regulatory Decree will also govern the tax operationalization of the collection of amounts involved in the exploitation of bets.

Maurício Tamer
Lawyer in the area of Digital Law and Data Protection at Machado Meyer Advogados