President Lula has enacted a provisional measure that immediately bans online betting sites from operating in Brazil. Under this new regulation, all operators are prohibited from accepting customer deposits from the moment the measure was published.
Bettors must request the withdrawal of their funds by October 5. Those who miss this deadline will see their remaining balances credited to their registered accounts between October 9 and 14.
Starting on October 6, all licensed betting sites will be blocked. Operators are obligated to return money to customers, regardless of whether the bettors initiate withdrawals during the specified window. This refund process must be conducted through their affiliated banks.
In the announcement, Brazil’s Finance Minister Dario Durigan explained the government's reasoning behind Lula’s decision. He highlighted the actions taken by the Secretariat of Prizes and Bets (SPA) to regulate the betting industry, stating these efforts have been ineffective in controlling issues such as gambling addiction, which was a significant factor in deciding to impose a total prohibition.
Lula emphasized the negative impact online betting has on family finances and criticized the dependence of sports teams on sponsorship from betting companies.
Key timelines have been established:
– **Until October 5**: Bettors must withdraw their account balances.
– **October 6**: Websites and apps will be deactivated.
– **October 7-8**: Betting operators must consolidate customer account balances according to the CPF (Cadastro de Pessoas Físicas).
– **October 9-14**: Operators must fully refund withdrawn balances to users.
– **October 14 onward**: If operators and their banking partners encounter issues, Caixa Econômica Federal, the state-owned bank, will assist with the refund process.
Additionally, the government plans to submit an urgent bill to the National Congress that would enforce criminal penalties for individuals involved in running, operating, or promoting sports betting, with potential sentences ranging from four to six years in prison, along with fines. Payment processing institutions associated with betting could face two to four years of imprisonment.
This abrupt decision by Lula introduces legal uncertainties, and immediate legal challenges are anticipated. With nearly 90 licensed companies, each having paid BRL30 million (approximately $5.8 million) in licensing fees, these businesses are likely to seek legal recourse to reclaim their investments and cover lost revenues.
The federal administration will also need to address states that have already legalized sports betting through their state lotteries.
Trade associations have reacted strongly to the provisional measure. The National Association of Games and Lotteries (ANJL) warned that the ban could result in lost tax revenue in the billions and eliminate thousands of jobs, pushing bettors into illegal channels. The ANJL is currently preparing to challenge the provisional measure through legal channels, arguing that this unprecedented move undermines constitutional principles such as free enterprise and human dignity by potentially driving bettors to the underground market.
The Brazilian Institute of Responsible Gaming (IBJR) commented that abruptly shutting down the regulated market could have serious economic and legal repercussions, reversing the progress made in formalizing and controlling an already existing activity in the country.
