President Lula enacted a provisional measure that prohibits online betting sites from operating in Brazil, effective immediately. According to the measure, operators must not accept customer deposits once it is published. Bettors are required to withdraw their funds by 5 October. If they do not, the betting sites must credit the amounts held to the registered accounts between 9 and 14 October.
Starting 6 October, all licensed betting websites will be blocked. Operators are responsible for returning the money to users even if a withdrawal is not initiated during the refund window of 9 to 14 October. This refund process must be coordinated through the operators' partner banks.
Minister of Finance Dario Durigan announced the decision, noting that actions taken by the Secretariat of Prizes and Bets (SPA) to regulate the industry and protect families from debt had been ineffective. He highlighted severe cases of gambling addiction as a key reason for the total ban.
The provisional measure takes effect immediately, and Durigan stated that the government would strictly enforce the ban on websites offering betting services. Reports can be filed via a government platform.
In his speech, Lula underscored the financial ruin that online betting can impose on families and criticized the dependency of sports teams on sponsorships from betting companies.
Key deadlines have been established as follows:
– Until 5 October: Bettors must withdraw their balances from the platforms.
– 6 October: All betting websites and apps will cease operations.
– 7-8 October: Betting operators must consolidate customer balances based on their CPF.
– 9-14 October: Operators are mandated to fully refund the balances that were withdrawn by users.
– After 14 October: Caixa Econômica Federal, the state-owned bank, will assist with refunds should there be challenges for operators and their banking partners.
In conjunction with the ban, the government plans to present an urgent bill to the National Congress that establishes criminal penalties for anyone involved in running, operating, or promoting sports betting. These penalties could range from four to six years in prison, along with fines. Institutions processing betting payments face penalties of two to four years imprisonment.
This ban has sparked legal uncertainty, and immediate legal challenges are anticipated. Nearly 90 licensed companies, which each paid BRL30 million (approximately $5.8 million) in license fees, are expected to pursue legal action for the return of their funds, reimbursement for investments, and compensation for lost profits. The federal government will also need to address the interests of states that have established sports betting through state lotteries.
In response to the provisional measure, the National Association of Games and Lotteries (ANJL) indicated that the betting ban could result in billions of dollars lost in tax revenues and the elimination of thousands of jobs, pushing bettors to the illegal market. The association stated it is actively preparing to challenge the provisional measure in court.
The ANJL criticized the government's move as unprecedented in the global context, suggesting it was motivated by electoral interests at the expense of constitutional principles like free enterprise and human dignity, as it could facilitate a shift of bettors into illegal operations.
The Brazilian Institute of Responsible Gaming (IBJR) also expressed concern, stating that the sudden closure of this market so soon after its implementation could have significant economic and legal ramifications while undermining advances made in formalizing and regulating the activity that has long existed in Brazil.
