Graduated in Law, MBA and Master in Economic Law, Fernando has 25+ years of career working as a legal executive in large corporations. Likewise, he is an expert in the management of relevant legal issues. Recently, he participated in an interesting webinar organized by G&M News regarding the possible scenario of the gaming sector and its regulation with the new Government of Luiz Inacio ‘Lula’ da Silva. Here, he was ready for a deep and affable dialogue that clarifies and updates the Brazilian landscape for our readers.
The Gaming Law Project in Brazil covers many verticals that, in first place, if only sports betting were approved, would be left aside: land-based casinos, bingos, virtual games, slot machines, online gaming, etc. Do you think it will be possible to gradually advance on these issues in 2023 or do you see regulation as difficult in the short and medium term?
First of all, I must point out that the fixed odds betting subject would be addressed by the Decree that should regulate Law 13,756/18. It’s important to recall that the term of this regulation ends on 12-12-2022, as established by the Law itself. Therefore, chronologically, the regulation of fixed odds betting should come first. General regulation of all gaming verticals considered by PL 442/1991 was approved by the Chamber of Deputies in February of this year, and is now being processed in the Senate. In my opinion, the understanding of operations in the gaming and betting market has already reached a level of maturity in the country and, together with the fact that the estimated volume of participation of Brazilians in foreign operators could reach a few tens of thousands of million reais, it seems reasonable to me to think that the topic can gain speed, mainly from the point of view of collection. One of the great challenges of the new Government will be to find additional sources of income to finance projects, and the gaming regulation (and consequent taxation) of this market is an excellent opportunity to achieve this objective. Finally, I do not see major structural differences between one modality and another that justify excluding some of them, since the key discussion would be over: recognizing gambling as legal and, therefore, the best thing to do would be to adopt all verticals.
Related to this, there was a rapid approval in Congress of the bill that regulates the segments of electronic sports and fantasy sports in Brazil. Although the text does not consider both sectors as games of chance, reality says that there are online bets for these modalities. What will happen to these segments, of great expansion in the country?
PL 2796/2021 was approved in the Chamber of Deputies and still needs approval in the Senate. Since the approach to this modality in PL was based on games of skill and not chance, the discussion seems less controversial to me. The PL does not bring any prognosis regarding the exploration of bets related to this modality, so I understand that we will still have to wait for the regulation on this point.
Topics such as the fight against illegal gambling and money laundering, the promotion of responsible gambing and the integrity of sports, and the limits on gambling advertising, once online activity will be regulated, seem not to have been discussed in depth during the gaming regulation process in Brazil. How should they be analyzed to include more specific articles in the law on these issues?
We must remember that, once the regulation is approved, gambling and betting activities will be considered legal in the country. This will allow some secondary layers of regulation to be better developed by the respective regulatory entities (regulator of new licenses, Central Bank, COAF, Revenue, etc.). Therefore, this apparent lack of depth will (or should) be supplied by those authorities. It seems to me that the most important thing is the approval of the legal framework, to have a starting point to build a healthy ecosystem for this market. The role of all stakeholders in the gaming ecosystem (operators, platforms, payment companies) will be essential in developing the most detailed aspects of regulation in their respective areas of activity, and a participatory stance in interactions with regulators usually brings benefits in terms of practical effectiveness of regulation.
At the same time, there seems to be a tug of war between the Ministry of Justice and the Ministry of Economy to decide which entity will be in charge of coordinating the regulation of the sector. What do you think of this new source of conflict?
I think this is extremely detrimental to the regulatory process and contrary to history and practice, since, traditionally, the Ministry of Economy has been working on these issues and would accumulate better experience in the sector. In addition, a forced transfer of this subject to the Ministry of Justice does not seem to correspond to the priorities and objectives of that body. This is precisely the problem of the delay in the approval of a regulatory framework, since it opens space for discussions, legislative projects that superficially address parts of the issue, etc.
What are the prospects for the gaming industry two years from now and how can gambling and tourism connect to increase revenue for both sectors?
I believe that, in this time perspective, non-regulation would represent a disadvantage for Brazil; mainly, a loss of the opportunity to insert into the economy an activity capable of generating new jobs, stimulating income and even minimizing illegal betting. Regarding the growth of tourism, my impression is positive. In several countries, the association of the exploitation of land-based gaming such as casinos in strategic places for tourism has shown to be capable of causing localized development that, in the case of Brazil, could be of great importance in certain regions.