President Lula has issued an immediate ban on the operation of online betting sites in Brazil, following a provisional measure that prohibits these platforms from accepting deposits. Bettors must request to withdraw their funds by October 5, and those who do not will have their balances credited to their registered accounts between October 9 and 14. Starting October 6, all licensed betting sites will be blocked from operation, and operators are responsible for returning any leftover funds, even if users do not initiate withdrawals during the specified time frame. This process will involve collaboration with their banking partners.
Brazil's Minister of Finance, Dario Durigan, announced Lula's decisive action, which stems from the ineffective measures previously implemented by the Secretariat of Prizes and Bets (SPA) aimed at regulating the industry. In light of worsening gambling addiction issues, which Lula highlighted, the government has moved toward a total ban on online betting.
The regulations also establish clear deadlines: bettors are required to withdraw their balances by October 5, and all betting websites will officially go offline on October 6. Betting operators must harmonize customer balances according to CPF numbers on October 7 and 8, and they are obligated to fully refund balances withdrawn by users between October 9 and 14. By October 14, Caixa Econômica Federal, the state-owned bank, will assist in refunding funds if operators face any obstacles.
Along with the ban, the government is set to propose a new bill to the National Congress that would introduce criminal penalties for anyone running or promoting sports betting, with potential prison terms ranging from four to six years, in addition to fines. Institutions involved in the processing of betting payments could face imprisonment of two to four years as well.
This controversial decision by Lula introduces a level of legal ambiguity, with expectations of immediate legal challenges from nearly 90 licensed companies that collectively paid BRL30 million ($5.8 million) in license fees. These businesses are likely to seek reimbursement for both their investments and lost profits.
Additionally, the federal government faces challenges from states that have regulated sports betting through their respective lotteries.
Trade organizations have reacted strongly to the provisional measure. The National Association of Games and Lotteries (ANJL) has cautioned that the ban could result in losses of billions in tax revenue and thousands of jobs, potentially pushing bettors into the illegal market. They announced intent to challenge the measure in court, criticizing it as an unprecedented political maneuver detrimental to constitutional principles regarding free enterprise and human dignity. Furthermore, the Brazilian Institute of Responsible Gaming (IBJR) warned that abruptly ending this market will lead to significant economic and legal repercussions and would hinder prior efforts to formalize and regulate an already existing industry within the country.
