President Lula has enacted a provisional measure that bans online betting sites from operating in Brazil, effective immediately. Under this order, no betting operator is allowed to accept customer deposits once the measure is published.
Bettors have until October 5 to withdraw their funds from these platforms. If they do not act by that deadline, the sites are mandated to credit the amounts held in their registered accounts between October 9 and October 14.
Starting on October 6, all licensed betting websites will be blocked from operation. Even if a bettor does not request a withdrawal during the designated window, operators are still responsible for returning the funds through their partnered banks.
Dario Durigan, Brazil's Minister of Finance, announced Lula's decision and outlined efforts by the Secretariat of Prizes and Bets (SPA) to regulate the betting industry. He discussed the ineffective measures previously taken to prevent mounting debts among families, which, along with severe gambling addiction cases, led to the complete ban on betting activities.
Lula reiterated concerns about online betting sites damaging family finances and criticized sports teams for their reliance on sponsorships from these platforms.
The timeline for compliance is as follows:
– Until October 5: Bettors must withdraw their balances from the betting platforms.
– October 6: Websites and apps will be taken offline.
– October 7-8: Betting operators must consolidate customer balances by CPF.
– October 9-14: Operators must fully refund balances withdrawn by users.
– From October 14: Caixa Econômica Federal, the state-owned bank, will assist in refunding funds if operators and their banking partners have difficulties.
In conjunction with the provisional measure, the government plans to submit an urgent bill to the National Congress to impose criminal penalties on those who run, operate, or promote sports betting. The proposed penalties include four to six years of imprisonment and fines, with institutions processing betting payments facing two to four years in prison.
This decision, while controversial, introduces legal uncertainty. With nearly 90 licensed companies, each having paid BRL30 million ($5.8 million) in licensing fees, these operators are likely to pursue legal recourse for the recovery of their investments and lost revenues.
Trade organizations have responded vigorously to the ban. The National Association of Games and Lotteries (ANJL) expressed that the prohibition would result in billions in lost tax revenue and thousands of job eliminations, potentially pushing bettors to the illegal market. The association is preparing to challenge the provisional measure legally, emphasizing that it undermines constitutional principles of free enterprise and human dignity by forcing bettors into unregulated venues.
The Brazilian Institute of Responsible Gaming (IBJR) voiced concerns that abruptly shutting down the newly regulated market would have serious economic and legal repercussions, jeopardizing recent advancements in formalizing and controlling a pre-existing activity within the country.
