The EGR platform spoke to experts in Latin America about what they believe the return of former President Lula will mean for the future of the industry, as Brazil turns its back on Jair Bolsonaro.
“They tried to bury me alive and here I am,” shouted Luiz Inácio Lula da Silva as he began his victory speech, following a surprising electoral upset that saw him unseat Jair Bolsonaro, to become president of Brazil once again. In a close contest between the leftist and the ultra-right-winger, Lula won 50.9% of the vote, to end Bolsonaro’s controversial stint in power. Lula, who already served two terms between January 2003 and December 2010, will become president again on January 1, 2023.
The 77-year-old former steelworker spent 580 days in prison before his conviction for taking bribes was overturned, allowing him to return to politics and claim victory. And while there are serious issues to address in Brazil, such as pulling millions of people out of hunger and protecting the Amazon in the wake of Bolsonaro’s dismissive attitude to climate change, the focus in the betting circles has shifted to what Lula’s return could mean for the industry.
Brazil has been described as a sleeping giant with no formal regulation, but the gray market has continued to attract heavyweights such as Entain and bet365.
With a football-obsessed population of 214 million, interest is buzzing at the prospect. Bolsonaro, who drew on a firm base of evangelical supporters opposed to gambling, was reluctant to pass the legislation, much to the chagrin of the sector.
However, Lula had already expressed his intentions to legalize sports betting and online gambling, as the potential tax revenues for the Brazilian government are equally beneficial.
Currently, Law 13,756/18, which deals with the regulation of sports betting, awaits presidential approval. In addition, Bill 442/1991, which seeks to legalize all forms of physical and online gambling, is currently underway.
While there is hope that Lula will be able to usher in a new era in Brazil, parliamentarians close to Bolsonaro have obtained a majority in the Brazilian Congress, indicating possible delays in a tense political environment.
In this framework, EGR spoke with several Latin American experts about their views on Lula’s return and what it could mean for future legislation.
Neil Montgomery – Montgomery & Associates, Managing Partner
“As far as the gaming industry is concerned, you will probably see less resistance on the legislative front, going forward. With Bolsonaro’s departure on December 31, there is no reason why the presidential decree regulating Law 13,756/2018 should not be published by the legal deadline of December 12, particularly as its text appears to be ready. It could be one of his legacies,” he pointed out.
“We should also see faster progress in Congress, for the approval of Bill No. 442/1991, especially now that the president, who openly said he would veto the bill, will no longer be in power. The change of administration, however, will undoubtedly affect the ordinary course at the ministerial level and in public companies such as Caixa, given that the first months of the new administration will surely result in changes at senior executive levels. This may delay the licensing process for sports betting operators if the 2018 law is actually regulated.”
Miguel Ángel Bueno Jiménez – Igaming Consultant
“Everyone is aware that online gambling, in all its variants, is a social demand for leisure and entertainment, and that this demand in unregulated markets is being covered by clandestine or unregulated gambling. It is the obligation of regulators, to regulate it for several reasons, including disrupting problem gambling, providing guarantees to players, and tax revenues. Everyone knows that Bolsonaro opposed in-person gambling, and wanted to limit online gambling, but it has been proven that these positions are not valid today due to the ease of technology, to access online gambling.”
“With Lula taking office, more in line with Argentina’s liberalization policy, for example, he should regulate the sector as a whole, be more liberal and also take advantage of this source of revenue for the Brazilian public coffers.”
“I believe that Lula will make an effort to legalize gambling in Brazil and align with surrounding countries. This does not mean that it should be done in a disorderly and rushed manner, as this would lead to losing focus on the problems of the three factors I have indicated above.”
“However, there is still much to be said about the licensing model adopted by the Brazilian government, not only for operators to opt for them, but also to make their investments profitable by controlling and closing down clandestine gambling sites (already deeply rooted in the country) and avoiding unfair competition.”
Luis Jimenez – Condor Gaming, Regional Director for Latin America
“Lula’s stance on market regulation remains a mystery, and no one knows for sure what his current position is. Although in the previous elections he expressed his willingness to regulate, the issue was vetoed in his government after some corruption scandals.”
“It is necessary to take into account that image of corruption, which is still his great Achilles heel, for at least half of the Brazilian population. One thing is for sure: Bolsonaro’s government was not very interested in regulating, because that would create a big problem for his religious supporters. So perhaps, Lula’s victory could be a new opportunity for regulation. At least, the regulation lobbyists will not face an insurmountable wall, as Lula has committed to respect Bolsonaro’s government policies in this regard (according to a congressional source).”
“Lula’s government will face several pressing issues before looking into the regulation of gambling. The consolidation of his power and government must come first, as we have seen revolts from Bolsonaro supporters who do not accept Lula’s victory. However, Congress must send the regulatory framework to Bolsonaro for approval this year and, as I said, Lula has committed to respect that. Lula knows that regulation will bring new jobs for Brazilians and billions in taxes for the government.”
“Most of the acceleration of the regulation depends on Bolsonaro’s sanction before the end of the year. If this happens as expected, we should see a really positive scenario for regulation. Otherwise, regulation will remain dormant for years, as usual. We probably won’t see any major changes before the World Cup, the summer, and, finally, Carnival. In the end, in Brazil, anything and nothing can happen.”
Magnho José – Instituto Brasileiro Jogo Legal, President
“I believe that Lula’s election may represent a breakthrough in the legalization of gambling. Currently, PL 442/91, which legalizes casino, bingo, jogo do bicho, and online games, and which was approved by the Chamber of Deputies in February of this year, is in the Senate awaiting the definition of the rapporteur and processing. One of the advantages is that President Bolsonaro had promised to veto the bill approved by Congress while President Lula promises to sanction it.”
“We still do not have elements to define whether the victory of former president Lula could accelerate the regulation of sports betting. I believe that in a week, we will have a better-defined scenario after the maturing of President Jair Bolsonaro’s defeat. The regulation of sports betting does not depend on the National Congress, it depends on the President of the Republic to issue the regulatory decree. There is already a draft of this regulation, and it was not published before the elections because the president heeded the request of an evangelical pastor who is a federal deputy”.