1 History of and overall attitudes to gambling
1.1 How prevalent are different types of gambling in your jurisdiction? For example, does the current law reflect: (a) Religious or moral objections to gambling? (b) A permissive approach which also seeks to address the social consequences of gambling? and (c) The promotion of gambling as an ‘export' industry?
(a) Religious or moral objections to gambling?
Yes. The outdated legislation of the 1940s that prohibits gambling throughout the Brazilian territory is strongly based on morals and religiousness.
Games of chance are treated as misdemeanours, which are recognised by law as offences punishable by minor penalties (Article 61 of Law 9,099/1995). In other words, a misdemeanour is a lesser offensive crime when compared to a criminal violation of Brazilian law. The term ‘misdemeanour' is related to ‘public morality', which, according to Professor Humberto José da Nova, includes "safeguarding morality" in order to "prevent certain illegal and vicious acts, or defend certain moral sentiments regarded as indispensable to harmonious social coexistence, the effects of which are harmful to the interests of the collectivity".
While morals have traditionally played a significant role in the Brazilian context, religious objections have become more prevalent on political grounds of late, especially among evangelist groups at the National Congress – including current President Jair Bolsonaro, who is now working against gambling legalisation.
(b) A permissive approach that also seeks to address the social consequences of gambling?
Yes. As lotteries remain the main gambling modality authorised and regulated by law, it is possible to detect an explicit link between the respective permissiveness and the social consequences of gambling revenue. For instance, Decree-Law 204/1967 states in its preamble that "the operation of lottery constitutes an exception to the norms of criminal law, being admitted only in the sense of redistributing its profits with social purpose in national terms"; and that the proceeds will be used to provide medical assistance to underprivileged populations.
(c) The promotion of gambling as an ‘export' industry?
No. Current laws do not deal with the promotion of gambling in cross-border jurisdictions.
2 Legal and regulatory framework
2.1 Which legislative and regulatory provisions govern gambling in your jurisdiction?
Brazil adopts a restrictive approach to gambling in general. The prohibition is set forth in Article 50 of the Misdemeanour Criminal Act (Decree-Law 3,688/1941), which imposes penalties of imprisonment for between three months and one year and a fine on those who establish or exploit games of chance in a public place or a place accessible to the public, by means of payment of an entry fee or otherwise.
Lotteries are an exception to the aforementioned rule. They are operated by Caixa Econômica Federal (CAIXA) and are regulated by several laws and decrees – primarily the following:
- Decree-Law 6,259/1944 governs the lottery service and other measures;
- Decree-Law 204/1967 governs the operation of lotteries and other arrangements;
- Law 6,717/1979 authorises the modality of the federal lottery governed by Decree-Law 204/1967 and other measures;
- Law 11,345/2006 governs the establishment of a lottery modality for the development of sports practice, the participation of football sports entities in these contests and the instalment of tax debts, as well as amending Laws 8,212/1991 and 10,522/2002 (and other provisions); and.
- Decree 6,187/2007 regulates Law 11,345/2006 and establishes the lottery modality called Timemania.
The Loteria Instantânea Exclusiva instant lottery was established by Law 13,155/2015, was amended by Law 13,756/2018 and is regulated by Decree 9,327/2018.
Horse racing betting is another exception to the restrictive regulation and is regulated by Law 7,291/1984 and Decree 96,993/1988.
Fixed-odds sports betting was legalised by Law 13,756/2018, as amended by Law 14,183/2021.
In September 2022, Law 14,455/2022 was enacted after Bill of Law 1,561/2020 was approved by Congress. It allows for the creation of temporary lotteries whose revenues will be earmarked for health and tourism.
2.2 Which bodies are responsible for regulating and enforcing the applicable laws and regulations? What powers do they have?
Until April 2022, the Secretariat of Evaluation, Planning, Energy and Lottery (SECAP) was in charge of regulating lotteries, including fixed-odds sports betting lotteries (the regulation that will govern fixed-odds sports-betting lotteries is currently being drafted). Presidential Decree 11,036/2022 established the new Ministry of Economy after many of its activities were reassigned to the newly recreated Ministry of Labour. As part of these organisational changes, SECAP was dissolved and reorganised as the Special Secretariat for Productivity and Competitiveness (SEPEC). Further in August 2022, Presidential Decree 11,159/2022 established the Undersecretariat of Betting and Commercial Promotion as part of SEPEC's structure; this is now the regulatory body in charge of regulating, authorising and overseeing activities relating to:
- the free distribution of prizes for marketing purposes;
- sweepstakes and other lottery modalities promoted by horse-riding entities; and
- any other lottery modalities.
The Ministry of Agriculture, Livestock and Food Supply is responsible for the regulation of horse racing betting.
2.3 What is the regulators' general approach in regulating the gambling sector?
In general, Brazilian regulation tends to be prescriptive. Consumer and data protection rules, on the other hand, are more risk based, with the operator being held liable for negative effects on consumers and data subjects, even if the prescriptive regulations have been complied with.
3 Definitions and scope of gambling
3.1 How is ‘gambling' defined in your jurisdiction?
In Brazil, there is no legal definition of ‘gambling'. In fact, the word ‘gambling' does not have a perfect translation into Portuguese. The word can mean a bet or a game involving a consideration, a prize and chance.
However, games of chance are prohibited under Article 50 of the Misdemeanour Criminal Act. They are defined as:
- games in which winning or losing depends exclusively or predominantly on chance;
- bets on horse races outside the racetrack or other authorised venues; and
- bets on any other sporting competition.
By contrast, ‘skill-based games' are those – such as poker – in which the results depend on the ability of the player more than on luck. These games are legal in Brazil.
3.2 What different types of activities are defined in the gambling legislation and what specific requirements apply to each? Please consider: (a) Betting (fixed odds/pool and spread)/betting on lotteries; (b) Gaming (house and ring games); (c) Lotteries/scratch cards and (d) The interface with financial products (if relevant).
Gambling legislation (the Misdemeanour Criminal Act) mentions ‘games of chance' and ‘bets'. The subtle difference between a ‘game' and a ‘bet' is that the result of a game depends on the actions of the parties; while the result of a bet depends on facts unrelated to the parties' will. However, these legal definitions have been construed by judicial precedent and are not expressly set forth by law, even though they are widely accepted and applied by the Brazilian courts.
(a) Betting (fixed odds/pool and spread)/betting on lotteries
A ‘bet' is a contract type that can be defined as a legal transaction in which two or more people with different opinions on a certain event promise to perform a particular action (in general, with monetary content) to the benefit of the party whose opinion prevails. Hence, in the bet, there is no requirement for the active participation of any party (called a ‘bettor') to influence the outcome of the event, but rather only the expression of the parties' personal opinions.
(b) Gaming (house and ring games)
A ‘game' is a contract type that can be defined as a legal transaction whereby two or more people hold a particular promise (usually with pecuniary content) in favour of the person who achieves a favourable result in the performance of an act in which the parties participate. The game – and thus the success or failure of each party – necessarily depend on the performance of each party (called a ‘player'), whether by intelligence, skill, strength or pure luck.
A ‘lottery' is defined by the Misdemeanour Criminal Act as any operation that, through the distribution of tickets, lists, coupons, vouchers, signs, symbols or similar means, makes the obtaining of a prize in money or goods of another nature dependent on a draw (Article 51, Paragraph 2 of the Misdemeanour Criminal Act).
Scratchcards – organised by Loteria Instantânea Exclusiva (LOTEX) – are defined by Decree 9,327/2018, Article 1 as a lottery operated in both physical and virtual channels in which bettors will immediately know the result of their bet without having to wait for a draw or the results of a lottery contest. According to Law 13,155/2015, which established LOTEX, combined with Decree 9,327/2018, LOTEX can present the brands, emblems, anthems, symbols, shields and similar insignia relating to football entities, or other insignia associated with popular events, in order to increase the commercial attractiveness of the product.
(e) The interface with financial products (if relevant).
3.3 What are the main mechanisms and features of the control of gambling in your jurisdiction? What are the consequences of breach of the regulations, both for operators and for players?
According to Article 50 of the Misdemeanour Criminal Act, a person is guilty of illegal betting if he or she ‘establishes' or ‘explores' games of chance. This offence is punishable by imprisonment for between three months and a year, and a fine. Anyone who is found taking part in a game of chance – including via the Internet or any other means of communication – as a cashier or bettor is subject to a fine ranging from BRL 2,000 to BRL 200,000.
Currently, all prosecution cases relating to Article 50 have been suspended until the Brazilian Supreme Court rules on Extraordinary Appeal 966,177. The scope of that judgment will be to determine whether Article 50 of the Misdemeanour Criminal Act complies with the constitutional precepts concerning free enterprise and fundamental freedoms, as provided for in Articles 1, IV; 5, XLI; and 170 of the Federal Constitution.
Other games, notwithstanding being dependent on luck, are subject to more specific provisions and restrictions. That is the case of lottery games. Lotteries have traditionally been run by the state with different arrangements and used as a source of revenue to address social outcomes. They have always been granted an exemption from the closed gambling market; and although some of their products – such as LOTEX and sports betting (considered in the Brazilian legal framework as a lottery by-product) – have been or will be offered to the private sector and sports betting, a more detailed legal system applies in terms of public law due to their characterisation as a public service. In terms of criminal law, a number of rules apply to lottery ticket sales, advertising and offers to the Brazilian market, as set forth by Articles 51 to 57 of Misdemeanour Criminal Act. These provisions prohibit the following activities:
- promoting, selling, offering, having in custody for the purpose of sale, introducing or attempting to introduce or drawing lotteries without legal authorisation (Article 51);
- introducing in the country, selling, offering to sale, having in custody, introducing or attempting to introduce, for the purpose of commerce, a foreign lottery ticket, raffle or tombola (Article 52);
- showing or having in custody a foreign lottery drawing list (Article 54);
- printing or posting any ticketing services, drawing lists, notices or posters related to lotteries in places where they cannot legally circulate (Article 55); and
- distributing or transporting posters, sweepstakes lists or lottery notices where they cannot legally circulate (Article 56).
Operators that infringe these provisions may be punished by imprisonment for between one month and two years and/or a fine.
4 Issues of jurisdiction
4.1 What approach do the courts take to the issue of jurisdiction? Where an operator which is physically outside the jurisdiction offers services to individuals within the jurisdiction, is such gambling treated as taking place offshore and outside the control of the authorities? If not, what triggers establish when such gambling is subject to the laws and control of your jurisdiction?
The courts have not been active in pronouncing on issues related to jurisdiction, as operators situated overseas have not been targeted by Brazilian enforcement bodies.
In terms of gambling services offered by offshore operators, according to Article 2 of the Misdemeanour Criminal Act, Brazilian law applies only to a misdemeanour committed in the Brazilian territory. Therefore, cross-border operators can currently offer (‘establish' or ‘exploit' games of chance, according to Article 50 of Misdemeanour Criminal Act) general gambling services to Brazilian residents, subject to the provisions of criminal law.
On civil grounds, as online gambling bets and games are types of contracts according to the Civil Code (Law 10,406/2002), one of the generally applicable rules is that a contract by and between absent parties is deemed executed in the place of the proponent. This is set forth by Article 9, paragraph 2 of the Law on Introduction to the Brazilian Rules of Law (Decree-Law 4,657/1942) and repeated in Article 435 of the Civil Code. Hence, if an offshore operator's website is hosted in another jurisdiction where gambling is authorised, the contract between the Brazilian client and that operator is valid and subject to the law in the operator's jurisdiction, and is thus outside the scope of the Misdemeanour Criminal Act.
Similarly, in relation to land-based gambling, Brazilians are allowed to participate in games of chance internationally, since the Misdemeanour Criminal Act does not preclude them from engaging in such activities where they are legal.
These contracts, having passed through the appropriate judicial procedure (exequatur), are enforceable and any debts can be collected in Brazil.
Additional legal consequences can emerge from cross-border activities relating to consumer and data protection laws and anti-money laundering provisions and, as result, entail criminal liability.
4.2 Can foreign operators provide remote gambling services in your jurisdiction without obtaining a licence? Can licensed domestic operators provide services overseas?
Brazilian law does not deal expressly with the provision of remote gambling services in Brazil by foreign operators. If the operations are based overseas, the Misdemeanour Criminal Act is not applicable.
In relation to licensed domestic operations, currently, Caixa Econômica Federal does not provide services overseas and turf entities provide physical and online betting services only in the Brazilian territory. There are no legal or regulatory provisions on the provision of gambling overseas.
5 Remote versus non-remote gambling
5.1 Does the gambling regime in your jurisdiction distinguish between remote and non-remote gambling? If so, how are these defined?
The Misdemeanour Criminal Act does not distinguish between online and land-based activities.
Decree 9,327/2018, which regulates Loteria Instantânea Exclusiva, defines:
- ‘physical bets' as those made by the client upon purchase of a printed ticket; and
- ‘virtual bets' as those made by the client via electronic channels.
Law 13,756/2018, which introduced fixed-odds sports betting as a lottery modality, provides that this can be offered by both land-based and online operators.
5.2 Are there any restrictions on the media through which gambling can be provided (eg, internet/mobile telephony)?
There are no specific restrictions on the media through which gambling can be provided. Rules apply across the board, irrespective of the media channels involved.
6.1 What types of licences are available? Please consider: (a) Operators; (b) Activities (if relevant); (c) Premises; (d) Key individuals (if relevant) and (e) Equipment (if relevant).
Currently, only horse racing betting licences, issued by the Ministry of Agriculture, Livestock and Food Supply (MAPA), are ordinarily available. State-owned lotteries at the federal level are run through Caixa Econômica Federal (CAIXA) under an exclusive model; and the Brazilian states are still working on the best approach to delegate lottery services to the private sector.
Specifically, at the state level, the states of Rio de Janeiro, Maranhão and São Paulo are more advanced in their implementation processes for delegating lottery services to private operators. However, one public bidding procedure has already been halted by the Audit Court of the state of Rio de Janeiro for allegedly imposing disproportionately stringent requirements that would hinder competition. Another similar case, in the state of Maranhão, was temporarily suspended by the Superior Court of Justice in February 2021 on the grounds that competitiveness was being restricted, which goes against the public interest. However, this was a temporary decision and the Court of Appeals of the state of Maranhão reached the opposite conclusion in its final decision of the writ in May 2022, ruling in favour of the legality of the tender. As a result, another decision by the higher court is expected to be issued in the short term. In the state of São Paulo, the public notice to call interested stakeholders was presented in March 2022, under an exclusive model for a 20-year concession period. However, the exclusivity model adopted by the state proved controversial among both stakeholders and experts, and four different companies filed complaints against the tender with the Audit Court of the state of São Paulo. On 28 March 2022, the court granted the request of the interested companies and suspended the public tender.
In relation to sports betting at the federal level, according to an unofficial draft version of the decree to be enacted by the regulator, this is likely to follow an authorisation model, without a pre-defined number of licences to be issued. For other gaming methods, the licensing requirements are still dependent on forthcoming legislation and regulations that remain to be enacted.
6.2 Which bodies award and oversee such licences?
As from April 2022, the Special Secretariat for Productivity and Competitiveness has overseen activities concerning lotteries at the federal level, while MAPA oversees licences in relation to horse racing betting.
6.3 What are the key features of such licences (eg, term/renewal/any limit on overall numbers/change of control)?
Horse racing betting licences are indefinite in duration.
Lotteries run by CAIXA are based on exclusivity and as such are also indefinite in duration
At the state lottery level, the duration of each contract with each state will depend on the rules defined in the public procurement process.
6.4 What are the substantive requirements to obtain a licence (eg, company established in the jurisdiction/physical presence/capitalisation?)
To provide horse racing betting services, the applicant must be a non-profit entity legally incorporated in Brazil. In terms of capitalisation, the aspiring operator must demonstrate the economic feasibility of the proposed operations.
6.5 What are the formal and documentary requirements to obtain a licence?
Additional requirements to be a horse betting operator include the following:
- Own or have the rights to use a racetrack;
- Demonstrate the technical and economic viability of the weekly racing schedule;
- Present the floor plan of the race field; and
- Present the draft of a general betting plan (which includes the rules applicable for each game to be run by the operator, such as the prize, ticket value, minimum and maximum betting amounts, and pay-out).
6.6 What is the typical timetable for obtaining a licence?
Usually within 90 days.
6.7 What costs are typically incurred in obtaining a licence?
No information has been provided in this regard.
However, after operations are authorised, the current costs – besides ordinary taxation – are proportionate to the betting general turnover, calculated on a monthly basis, and involve payment of a compulsory contribution varying from 0.5% to 1.5% (Article 11 of Law 7,291/1984).
7 Ongoing compliance
7.1 What are the operator's rights and obligations under the licence?
Turf entities must send the National Horse Breeding Coordinating Commission (CCCCN) a monthly report with the following information:
- the number of races held;
- the total bets and contests of each meeting;
- the total premiums paid at each meeting, separately, to:
- breeders; and
- turf professionals;
- the percentage of the General Betting Movement (ie, the turnover, including the amounts generated by race transmissions and broadcasts) that is distributed in prizes;
- the percentage of withdrawals made, in each type of betting, by the race promoter;
- the total contribution to be paid to the CCCCN; and
- additional clarifications, where requested.
Authorised horse racing betting also includes contests, lottery games and betting auctions. The operation of additional betting modalities not included in the general betting plan may be authorised by the CCCN, on an experimental basis, for a period not exceeding 180 days. Those entities may maintain agencies and agents accredited in other states or municipalities, through contracts registered with the CCCCN.
7.2 Can licences be transferred? If so, how? What restrictions apply?
There are no provisions allowing licences to be transferred.
7.3 What requirements and restrictions apply to the different types of gambling facilities in your jurisdiction?
Currently, only horse racing betting licences are ordinarily available. State-owned lotteries at the federal level are run through Caixa Econômica Federal under an exclusive model and states are still working on the best approach to delegate lottery services to the private sector.
8 Penalties and sanctions
8.1 What penalties and sanctions are available to the authorities for breach of the gambling legislation?
An unlawful gambling operator can be penalised with imprisonment for between three months and a year, and a fine. Players and punters involved in unlawful gambling are subject to fines ranging between BRL 2,000 and BRL 200,000.
9 Advertising and marketing of gambling
9.1 What requirements and restrictions apply to the advertising and marketing of physical and remote gambling in your jurisdiction? Do these vary depending on the type or location of the activity, or the medium through which it is carried out?
Currently, the only criminal provision on gambling advertising is the prohibition on the promotion of illegal lotteries set out in Article 51 of the Misdemeanour Criminal Act.
Article 57 of the Misdemeanour Criminal Act expressly provides that publishing – even if indirectly – the operations or results of unauthorised lotteries in newspapers, on the radio or any other format is a contravention which is punishable by a fine. As regards other forms of gambling, there is no express reference to advertising restrictions in criminal law.
As a result of these rules, the actions sanctioned by Brazilian law in relation to lotteries – a public service that until recently was not subject to private interference – have increased significantly and involve more than simply ‘establishing' or ‘exploring' games of chance, as set forth in the general restrictive gambling framework (Article 50 of the Misdemeanour Criminal Act).
Decree-Law 57,690/1966 and Decree 4,563/2002 regulate advertising in Brazil. According to the latter, all advertisements in Brazil must comply with the rules set forth by the Standard Rules Executive Council (CENP). The CENP is responsible for regulating the commercial relations between advertisers and agencies; while the Brazilian Advertising Self-Regulation Authority (CONAR) is responsible for ensuring ethics in advertising content.
CONAR's restrictions on gambling advertising are based on the rule set forth in Article 21 of CONAR's Self-Regulation Code, whereby advertising content must not induce criminal or illegal activities or encourage, stimulate or incite such activities.
If the website from which advertising originates is hosted overseas, it will not be subject to the Misdemeanour Criminal Act and thus the advertising cannot be classified as illegal, based on the territoriality rule. However, different conclusions may be reached taking into account consumer and data protection laws (and involving lottery by-products). This is because laws and regulations have implicit and explicit extraterritorial effects on consumer and data protection matters.
However, in relation to sports betting, since this activity is no longer illegal, even before licences have been issued, international operators are already advertising in Brazil and sponsoring football teams.
During the fixed-odds sports betting regulation process, it is expected that a new criminal provision will be established to penalise the advertising of unlicensed operators.
10 Consumer protection
10.1 What social responsibility obligations apply to land-based and remote gambling operators in your jurisdiction? Do these vary depending on the type or location of the activity, or the medium through which it is carried out?
The Consumer Code (Law 8,078/1990), which aims to protect consumers as vulnerable parties, allows for the application of Brazilian law, but has no specific rules dealing with extraterritorial effects and jurisdiction in relation to the Internet.
Under the code, the place where a service or product is hosted, offered or sold, or the medium through which this is carried out, does not matter as much as long as the consumer is a Brazilian consumer, in which case he or she will be protected by the code.
The recently enacted General Personal Data Protection Law (LGPD) (13,709/2018) also applies to remote gambling operations. According to Article 3, the LGPD applies, among other things, to any processing operation of personal data:
- aimed at the offer or provision of goods or services to individuals located in Brazil; or
- collected in the Brazilian national territory.
In other terms, any controller processing personal data from individuals located in Brazil or whose data was collected in Brazil must comply with the LGPD. The LGPD will apply where operations are conducted in relation to:
- Brazilian customers who are located in Brazil; and
- other individuals whose personal data is collected in Brazil.
Consequently, in order to be considered lawful, a data processing operation must comply with the principles set forth in Article 6 of the LGPD relating to the following:
- free access;
- quality of the data;
- non-discrimination; and
10.2 What other general consumer protection requirements are of relevance for gambling operators in your jurisdiction?
There are no explicit social responsibility requirements for gambling activities. However, Caixa Econômica Federal, the federal lottery operator, has voluntarily established a responsible gambling programme aimed at aligning its lottery practices with best practices worldwide.
Broadly speaking, the general provisions of the Consumer Code (Law 8,078/1990) prescribe that suppliers (including gambling operators) must comply with:
- general principles of:
- good faith;
- fair terms; and
- good practices; and
- further principles that ensure fairness in consumer relations – that it is, not taking advantage of consumers' weaknesses and vulnerabilities.
11 Financial crime
11.1 How does the gambling regime interface with money laundering/terrorist financing/proceeds of crime legislation in your jurisdiction?
Law 9,613/1998, as amended by Law 12,683/2012, defines the anti-money laundering (AML) legal framework in Brazil. Pursuant to Article 1, ‘money laundering' under Brazilian law is the act of hiding or disguising the nature, origin, location, disposition, remittance or ownership of property, goods, rights or values arising directly or indirectly from a criminal offence. This law created the Council for Financial Activities Control (COAF), the regulatory body in charge of pursuing, investigating and sanctioning any activity relating to money laundering. COAF issues directives to regulate activities in industries that could facilitate money laundering, such as gambling.
Ministry of Finance Ruling GM/MF 537/2013 establishes the procedures to be followed by entities that distribute money or goods through the operation of lotteries, for the purpose of preventing money laundering and terrorist financing. All prize winners must be identified and all prizes recorded, including:
- a prize description;
- the related amounts;
- the handover dates; and
- the winners' names, identification documents and personal addresses.
Given that most activities relating to bets are made internationally, it is not only COAF that oversees them, but also the Brazilian Central Bank (BCB), since they also involve remittance transactions.
Recently, the National Monetary Council of Brazil and the BCB announced new measures to align the domestic financial regulatory framework with innovative technologies and new business models of payment worldwide. As such, under BCB Resolution 137/2021, financial institutions and payment institutions authorised to operate by the BCB can allow alternative methods of payment to be used by Brazilian customers in international transactions. The new set of rules reinforces the know-your-customer principle (Article 32-A combined with Article 18 of BCB Circular 3,691/2013) and the need to comply not only with exchange market regulations, but also with the AML legislation (Article 35).
12 Non-gambling activities/social gambling
12.1 What specific activities, if any, are exempted from the gambling regime in your jurisdiction (eg, prize contests/sweepstakes/free prize draws/e-sports)?
Contest regulation is subject to federal jurisdiction in Brazil: whenever a contest is held to promote the sale of products or to promote brands, this is deemed a prize promotion which is subject to Law 5,768/1971, Decree 70,951/1972 and Law 13,756/2018. The following ordinances also apply:
- Technical Note 11/2018/COGPS/SUFIL/SEFEL-MF provides an explanatory list of cases in which the free distribution of prizes depends on the prior authorisation of the Secretariat of Evaluation, Planning, Energy and Lottery (SECAP);
- Ordinance MF 67/2017 provides that all authorisation requests addressed to SECAP must be made online through the Prize Promotion Control System;
- Ordinance MF 422/2013 establishes the cases in which contests are not deemed exclusively artistic, cultural, sporting or recreational for the purposes of the distribution of free prizes or awards; and
- Ordinance MF 41/2008 regulates the free distribution of prizes for advertising purposes when performed by raffles, gift certificates, contests or similar operations.
The four methods for the free distribution of prizes to consumers are as follows:
- Raffle: Raffle tickets which are numbered in series are distributed and prizes are awarded based on the results of a draw from the federal lottery or a combination of numbers from such results.
- Gift certificates: Gift certificates are randomly hidden inside a product or its packaging, and can be exchanged for prizes at exchange stations.
- Contests: Contests are based on forecasts, calculations, intelligence testing, games of skill or other competitions of any nature.
- Similar operations: These might involve a combination of factors common to the other types of prize promotions, while preserving the original concepts for the qualification of competitors and verification of winners. The event may be presented as ‘similar to contest', ‘similar to gift certificate' or ‘similar to raffle'.
Contests for advertising purposes must be authorised by the Special Secretariat for Productivity and Competitiveness. In order to avoid fraud or confusion between cultural contests and prize promotions, the Ministry of Economy has defined some procedures to assess whether a contest is considered to be a prize promotion. Ordinance MF 422/2013 sets out the circumstances in which a contest loses its exclusive artistic, cultural, sporting or recreational aspect and becomes a prize promotion (subject to the applicable rules and previous authorisation).
E-sports are not regulated and do not require a specific licence.
12.2 How is ‘social gambling' defined in your jurisdiction and how is it regulated (if at all)?
‘Social gambling' is not defined in Brazil and thus is not regulated.
13 Disputes and legal enforceability
13.1 Are gambling contracts enforceable as a matter of law?
Gambling debts are not enforceable as long as the gambling facilities were provided locally. Once paid, however, they cannot be reclaimed or refunded. Debts are unlikely to arise from lotteries or horse racing betting, as the tickets must be paid in advance as a condition for the betting to take place. Alternatively, if a Brazilian player owes gambling debts in another jurisdiction where gambling is legal, those debts are enforceable after proper recognition (exequatur) of the payment order by the Superior Court of Justice.
13.2 In which forums are gambling disputes typically heard in your jurisdiction? What issues do such disputes typically involve?
As gambling remains a misdemeanour rather than a crime, there are several constraints in terms of enforcement. Lawsuits are more generally related to criminal law. Therefore, when gambling offences are discovered alongside other crimes, the chances of prosecution and enforcement are significantly increased.
The most significant operation in the gambling space to date concerned the restriction of commercial bingo activities in the early 2000s. The practice was allowed for a short period from the 1990s until the 2000s, but mismanagement in terms of governmental control and continual shifts in the regulatory framework resulted in judicial uncertainty, lost investments and a number of crimes, from money laundering to corruption. Police and taskforces raided bingo houses, interviewed operators and players and demanded the provision of documents as part of a widescale investigatory procedure initiated in the National Congress. The scandals uncovered led to the closure of the market.
Currently, disputes relating to illegal gambling, when they do arise, generally involve infringements of consumer law, such as:
- lack of information and assistance;
- unfair terms;
- loss of funds; and
- the ‘right to regret' or cooling-off period.
More recently, two consumer protection bodies (PROCONs) of the states of Rio de Janeiro and Mato Grosso do Sul initiated preliminary investigations against websites that are allegedly offering federal lottery tickets sales on their channels – an activity that is prohibited by the Misdemeanour Criminal Act and subject to the exclusivity of Caixa Econômica Federal. If confirmed, those illegal practices may result in fines of up to BRL 12 million. The names of the investigated companies were released by the PROCON-RJ and include the following domains:
- www.sorteonline.com.br; and
13.3 Have there been any recent cases of note?
In 2015, the Court of Appeals of the state of Rio Grande do Sul held that gambling is not prohibited because the prohibition set out in Article 50 of the Misdemeanour Criminal Act was unconstitutional. The public attorney appealed that decision and the case is now pending judgment at the Brazilian Supreme Court (RE 966177), where it has been granted ‘general repercussion' effects, which means that the decision will be binding on all other similar cases in the country.
Judgment was expected in April 2022, but has been postponed indefinitely. In the meantime, the effects of the prior decision of the Rio Grande do Sul court remain in force, and all prosecution cases relating to Article 50 have been halted until the Brazilian Supreme Court renders a final opinion. More recently, a criminal court in the state of São Paulo reached a similar conclusion, adopting the same reasoning as the Rio Grande do Sul court; it thereby dismissed accusations against an individual who was suspected of hosting games of chance.
On 30 September 2020, the Brazilian Supreme Court held that the federal monopoly on lottery operations (ADPF 492, ADPF 493 and ADI 4,986) is unconstitutional. As a result, states were found to have the right to operate the same lottery modalities as created by the federal law. The federal government retains exclusive constitutional competence to legislate on lottery issues, while the states and the union share the right to operate the games.
This latest ruling has a direct impact on sports betting, which was established as a lottery modality by Law 13,756/2018, since all states will be able to operate sports betting within their territories. The decision makes clear the possibility for states to partner with private actors in future operations. In sum, the federal government will be able to issue federal licences that allow federal licensees to operate both online and retail businesses throughout the national territory, regardless of any state licence. At the same time, each state will be able to operate sports betting within its borders, directly or with a private operator as a partner. As making a state lottery available outside the respective state territory is a criminal misdemeanour in Brazil, there will be much discussion on how the place where the online bet is made will be determined.
14 Trends and predictions
14.1 How would you describe the current gambling landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
The coming months should be promising for gaming in Brazil.
Regulations governing fixed-odds sports betting are likely to be released by the executive branch during the first half of 2023. Rumours relating to the regulatory framework suggest that an accreditation model is about to be adopted, without a previously defined and determined number of licences and with the general features of a regulatory sandbox – a trend inaugurated by the Brazilian financial system in specific industries (eg, banking, securities and insurance) that could be of great use to the emerging gambling industry in the country.
At the state level, the market is moving quickly. Most of the 26 states and the Federal District are trying to create or reactivate their lottery operations, albeit without any formal guidance from the Ministry of Economy on the operation of state lotteries. Several opportunities for operators in the states will arise during the year, starting with the public tender already in place – albeit temporarily suspended – in Brazil's biggest market, São Paulo.
On the legislative front, a new draft Bill 442/1991 was approved by the Chamber of Deputies, after discussions held by the Working Group of the Gambling Regulatory Framework. It focuses on casinos, bingo, video bingo, games of chance, horse-racing betting and online gaming, leaving fixed-odds sports betting regulation to be covered by the existing Law 13,756/2018. Other betting modalities besides horse racing, such as pari-mutuel and direct bets, remain outside the scope of the draft and thus undefined. After the final vote at the chamber, the bill was sent to the Senate in March 2022, where it was renumbered as Bill of Law 2,234/2022.
As the gambling legislation in Brazil is currently piecemeal, the renumbered bill of law seeks to establish a unified regulatory regime by introducing, among other things:
- basic terminologies and general principles that should apply across the whole industry (except for the state-run lotteries, which are outside the scope of the draft); and
- systems that should facilitate better governance and proper oversight of gambling activities.
Although horse racing entities are already regulated by specific provisions, their inclusion in the draft is more in relation to the other gambling modalities that can now be run at their locations (eg, bingo and casinos) than an attempt to modify any aspect of the existing legislation (Law 7,291/1984 and Decree 96,993/1998), or the requirements or regulatory activities developed by the specific regulator (the Ministry of Agriculture, Livestock and Food Supply).
Finally, in the judicial domain, on 7 April 2022 the Brazilian Supreme Court was scheduled to rule on Extraordinary Appeal 966,177 and confirm whether the gambling ban set forth by Article 50 of the Misdemeanour Criminal Act is constitutional. The judgment session has been postponed indefinitely; but depending on how the court rules, all gaming activities – from bingo to casinos, both land-based and online – could become legal and unregulated across the whole country.
15 Tips and traps
15.1 What are your top tips for gambling operators in your jurisdiction and what potential sticking points would you highlight?
Gambling providers should be aware of two important imminent regulations on gambling. The first, relating to sports betting, is expected to be released in the next few months. Alongside regulation, politicians have been active in addressing the need to criminalise unauthorised betting so that the market can effectively operate and licences can be priced proportionately.
The second is Bill of Law 2,234/2022 (see question 14.1). The bill, also known as the ‘Brazilian Gambling Regulatory Framework', has been discussed in the Chamber of Deputies for over 30 years and has received a lot of attention recently. The bill is now subject to approval at the Senate, where further corrections and amendments may potentially be led. The draft bill will have a significant impact on stakeholders interested in doing business in Brazil, given its current content and development. If major modifications to the bill are made, it will return to the Chamber of Deputies. The bill will then be subject to the president's sanction. If the bill is vetoed, it can still return to the Chamber of Deputies to be overturned.
In addition, operators should be aware that small claims litigation is extremely common in the Brazilian consumer market. Since there are no costs involved in filing a claim, dissatisfied clients are often eager to seek some kind of deal or indemnification. Even if they fail, they will have incurred no expenses, while the company must bear the costs of its lawyers, so there is always a loss for the company. This kind of cost must be accounted for before starting to do business in Brazil.
Finally, special attention should be paid to the methods used by payment services overseas, especially when making cross-border payments, since irregular remittance risks being construed as money laundering. On the other hand, while payment services are becoming more accessible and cheaper by the day, the costs of having a payment service provider can be avoided altogether by having a local presence.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.