Brazil's Superior Electoral Court (TSE) confirmed Luiz Inácio Lula da Silva's re-election as president on Sunday, with Lula garnering nearly 52% of the vote compared to just over 48% for Flávio Bolsonaro. This close contest, decided by roughly 4.3 million votes, highlighted the intense political division in the country.
Lula's position against betting has contributed to the establishment of Provisional Measure 1,394, which prohibits gambling. Following his electoral victory, Lula may feel empowered to intensify his criticisms of the betting sector. According to his campaign team, the election served as a referendum on the issue of gambling.
The battle to reverse this provisional measure will take place on two fronts: the Supreme Federal Court (STF) and the National Congress, starting this Monday. Lula has emphasized that the ban is intended to protect families struggling with debt.
Equipped with a favorable election outcome, Lula's rhetoric against gambling is expected to become stricter, despite the importance of tax revenues from the sector for maintaining balanced government accounts. Right before the second round of voting, Lula asserted that gambling would not be reinstated, unaware that the final decision is not solely his to make.
The STF will first assess the constitutionality of the provisional measure. Entities from the gambling industry and football clubs have filed legal actions regarding this matter. Minister Luiz Fux, the presiding judge, has indicated that a decision will come soon after the electoral process concludes. Fux, who specializes in constitutional law, is tasked with evaluating whether the measure violates contracts and triggers extensive layoffs—all while acknowledging that outright elimination of gambling in Brazil via a provisional measure is unrealistic. It is anticipated that he will find significant grounds to consider revoking the measure, particularly as it risks pushing gambling activities into the black market.
The provisional measure has already inflicted substantial damage on Brazil's reputation as a viable investment destination, leaving operators who trusted in the regulation feeling deceived. Many had invested BRL30 million (about $6 million) for five-year licenses and paid an additional BRL5 million in reserves. With operations suspended for more than 30 days, these operators lost around BRL1.2 billion in revenue, raising questions about financial accountability.
Conversely, the government has incurred a loss exceeding BRL400 million in tax revenue from various sources, including corporate income tax and social contributions, due to the ban.
The licenses issued to operators will expire on Sunday, and should the STF annul the provisional measure, the cancellations would be rendered moot.
Turning to Congress, another conflict over the measure lies ahead. The Joint Committee on Provisional Measure 1,394 has named 12 senators and 13 representatives as full members, with six senators and seven representatives appointed as alternates. The complete committee consists of 26 members from each house. Currently, a president and a rapporteur have yet to be chosen, and the committee is yet to be convened.
According to procedural rules, Congress has until November 25 to address the provisional measure, with the option to request an additional 60-day extension. Nevertheless, the congressional agenda will effectively be stalled from November 9 until a vote on the measure takes place.
In the last legislative session, Lula wielded considerable influence in passing key bills through mutual agreements with legislators in both the Chamber of Deputies and the Senate. However, he now faces increased difficulty in maintaining the provisional measure. Should it even remain under consideration, it is unlikely to advance by the November 25 deadline.
Lula must navigate a challenging landscape, with opposition mounting against him like none other faced by a sitting president. The PL party, associated with his electoral rival, has achieved the largest party blocs in both legislative houses, presenting a significant hurdle for his administration.
Indications from Congress suggest that gambling activities may only return with a focus on sports betting, excluding online casinos. Ongoing discussions will revolve around the licenses, which are currently invalidated as of October 25, and the decision on whether re-establishing operations will hinge on the submission of new license applications rests with Congress.
