Analysis: Will Brazil ever legalise egaming?

Brazil has concluded the most furious round of general elections for a generation, electing the so-called “Trump of Brazil”. Jair Bolsonaro, a former military officer, known for his extreme views on a variety of subjects survived a gruelling two-month political campaign in which he was stabbed at a political rally.

Bolsonaro’s stance on gambling shifted throughout the course of the election, but when asked about whether he would consider legalising egaming, he originally said: “There is a possibility, and I’m just saying a possibility, that we submit this issue for debate. Personally, I am against it, but it is a new topic that could be addressed.”

However, Bolsonaro later distanced himself from any possible change in regulatory course, calling it “nonsense”. Bolsanaro added: “We know that if casinos were allowed here, they would be used as a money-laundering tool. Also, they would be detrimental to Brazilian homes, as many people give themselves away to gambling addiction, causing major family chaos.”

Analysts have been keen to talk up the positives of Brazilian egaming legalisation, with key stakeholders visiting Brazil on numerous occasions, even speaking at Congress, to share their views on the international experience in regulated markets.

There have been several attempts by Brazilian legislators over the years to bring the country’s casino and egaming industries out of the shadows and fully regulate one of South America’s biggest potential casino markets. With estimates from the Remote Gambling Association stating the Brazilian market could be worth almost R$6.7 billion ($2.1 billion) if regulated properly, the financial implications for legalising gambling are obvious.

Tiago Almeida, CEO of a local egaming services firm, remains downbeat about the chances of egaming legalisation, “Each time this sort of initiative happens, we see a lot of hype about it with many people understanding, maybe even believing that things are about to change.” “Then when it hits congress the legislation is always voted down and this has happened at least eight times over the last few years.”

Add to this Brazil’s Legal Gaming Institute’s assertion that Brazil’s government loses R$6bn a year in taxes on the R$20bn illegal gambling market then the case for regulation becomes even more compelling, however it never seems to happen for Brazil.

Almeida offers his thoughts on why this keeps happening: “We have two separate legislative chambers in Brazil and even if the parliament can pass an initiative like this one its very unlikely that the congress will be able to approve it. This is primarily because they won’t be able to get a congressional majority due to the situation with the president and that this is a subject that for the time being doesn’t gather any sort of political consensus in Brazil.”

Since 2014, Brazil has been gripped by a corruption scandal which has rocked its government and caused the resignation and subsequent jailing of former Brazilian President Luiz Inacio Lula da Silva. Dilma Rousseff, Lula’s successor as president of Brazil, was not directly implicated in the scandal, but was later removed from office following significant economic crises which shrunk Brazil’s economy by 4% in one year, adding another 4 million to its unemployment figures.

Political instability does not breed political progress, and for Almeida the number of parties participating in Brazil’s government plays its part in stopping egaming legalisation: “You have a coalition of different parties in power some of them are extremely conservative, some of them belong to minorities and extreme religious groups and consequently it will be very hard to get any sort of legislation through.”

Political developments aside, 64.6% of Brazil’s population follows the Catholic faith, which has a very anti-gambling stance. When you consider this, and the political climate, the situation seems dire, however Neil Montgomery, managing partner for lawyers Montgomery & Associates offers this note of optimism, adding: “I sincerely hope that we will see concrete developments in the next five years. This will coincide with the next president’s term in office.”

Whether Jair Bolasano is or is not a pro-gambling Brazilian president is largely an afterthought, the long-term issue for Brazil when it comes to gambling is whether it can afford to dismiss the potential benefits of legalising a multibillion dollar industry which could generate financial stability for generations to come.