President Lula has enacted a provisional measure that immediately bans the operation of online betting sites in Brazil. Effective from the moment the measure is published, operators are prohibited from accepting customer deposits.
Bettors are required to withdraw their funds by October 5. If they do not initiate withdrawals, the betting sites must refund the amounts held in user accounts between October 9 and 14.
Starting October 6, all licensed betting sites will be blocked. Betting companies are obligated to return customers’ deposits regardless of whether bettors withdraw their funds during the specified period, and they must coordinate these refunds through their partner banks.
Finance Minister Dario Durigan announced the decision, emphasizing the measures implemented by the Secretariat of Prizes and Bets (SPA) aimed at regulating the industry and protecting families from gambling-related debt. He remarked on the ineffectiveness of these previous measures, noting serious cases of gambling addiction which influenced the total ban on betting.
Lula reiterated his view that online betting negatively impacts family finances and expressed concern about the reliance of sports teams on sponsorship from betting companies.
Key deadlines related to the ban include:
– By October 5: Bettors must withdraw their funds.
– October 6: All betting websites and apps will cease operations.
– October 7-8: Operators must consolidate customer balances by CPF number.
– October 9-14: Betting companies must refund all balances withdrawn by users.
– After October 14: Caixa Econômica Federal, Brazil's state-owned bank, will assist in refunding funds if operators and their banking partners experience complications.
Alongside the ban, the government plans to introduce an urgent bill to the National Congress to establish criminal penalties for individuals engaging in, operating, or promoting sports betting, with sentences ranging from four to six years in prison, plus fines. Institutions that handle betting payments could face two to four years of imprisonment.
This controversial measure introduces a level of legal uncertainty, and immediate legal challenges from the nearly 90 licensed betting companies, which each paid BRL30 million ($5.8 million) for licenses, are anticipated as they seek reimbursement for their investments and lost profits. Moreover, the federal government will need to address issues arising from states that have already regulated sports betting via their state lotteries.
In reaction to the provisional measure, the National Association of Games and Lotteries (ANJL) warned that the ban could result in billions in lost tax revenues, thousands of job losses, and an influx of bettors relocating to illegal gambling markets. The association announced it is taking legal action to contest the provisional measure in court.
ANJL representatives described the decision as "unprecedented in the global industry," aimed primarily at perceived electoral advantages and undermining constitutional principles of free enterprise and human dignity, as it could drive bettors to illegal markets.
The Brazilian Institute of Responsible Gaming (IBJR) added that abruptly shutting down the betting market shortly after its establishment would carry significant economic and legal ramifications, reversing progress made in regulating a previously existing activity in the country.
