Brazil's Superior Electoral Court (TSE) confirmed President Lula's re-election on Sunday, with Lula securing nearly 52% of the votes compared to Flávio Bolsonaro's just over 48%. The slim margin—over 4.3 million votes—underscores how contested this race was. Lula's anti-betting policies laid the groundwork for Provisional Measure 1,394, which instituted a gambling ban.
With this election victory, Lula may intensify his criticism of the betting industry, as his campaign team framed the election as a referendum on gambling. The battle to reverse the provisional measure is set to be waged on two fronts: the Supreme Federal Court (STF) and the National Congress.
Following the implementation of Provisional Measure 1,394, Lula emphasized that the ban aims to safeguard indebted families. Given the electoral result, he is expected to assertively oppose gambling, even though tax revenue from the gambling sector is vital for supporting public finances. Just before the runoff election, Lula assured that gambling would not be reinstated, possibly not recognizing that the decision is not solely his.
The STF will initially evaluate the constitutionality of the provisional measure. Stakeholders from the betting sector and football clubs have initiated legal actions challenging the measure. Minister Luiz Fux, the assigned rapporteur, indicated a swift resolution would follow the electoral process.
Fux, possessing constitutional law expertise, will assess whether the provisional measure disrupts contracts and leads to mass layoffs or if it merely shifts gamblers into illegal markets. Observers expect him to consider revoking the measure, given its unconstitutional aspects and the harm it has done to Brazil’s investment credibility.
The provisional measure has disrupted the operations of regulated operators who collectively paid BRL30 million ($6 million) for five-year concessions and an additional BRL5 million in reserves, effectively ceasing their activities for more than 30 days and resulting in an estimated BRL1.2 billion revenue loss. The government, too, has seen over BRL400 million forfeited in tax revenue from direct taxes on gross gambling revenue (GGR) and associated levies.
Moreover, the licenses granted to operators are set to expire on Sunday. Should the STF annul the provisional measure, the cancellation of these licenses too would become ineffective.
The National Congress poses another venue for this debate. A Joint Committee on Provisional Measure 1,394 consists of 12 senators and 13 representatives as full members, accompanied by six senators and seven representatives as alternates. However, appointments for leadership positions have yet to be made, and the committee remains unformed.
According to existing regulations, Congress has until November 25 to review the provisional measure, with the possibility of extending the deadline by 60 days. However, from November 9, Congressional discussions will be hampered until a vote on the provisional measure occurs.
In recent months, Lula successfully advanced his agenda in both houses of Congress through negotiations with key leaders. However, now that space for maneuverability has diminished, maintaining the provisional measure will present considerable challenges. Its extension by November 25 will be difficult, given that Lula faces opposition of unprecedented magnitude. The PL, Bolsonaro's party, holds significant support across both chambers, presenting a formidable hurdle.
Current indications suggest a limited potential for the return of betting activities, focusing solely on sports betting while excluding online casinos. Future deliberations will revolve around the invalid licenses post October 25, with Congress needing to decide if new applications for licenses are necessary for activities to resume.
