Homem de Carvalho: “Government should not exploit gambling, but only act as a regulator”

We share here an exclusive, very interesting interview with one of the main actors of current gambling legislation scenario in Brazil: Daniel Homem de Carvalho. Among his various positions and occupations, he is a lawyer, Professor of Law, Legal VP of the Commercial Association of Rio de Janeiro, Counselor of the Regulatory Law Commission of the Brazilian Lawyer Association (OAB/RJ) and president of the OAB/RJ Regulation Commission of games of chance, administered by the private sector in Brazil.

A prestigious professional of the sector in Brazil, he believes that gambling should be regulated as fast as possible. He also insists that legal certainty must be provided to investors, with clear rules and adaptation to the virtual world.
A prestigious professional of the sector in Brazil, he believes that gambling should be regulated as fast as possible. He also insists that legal certainty must be provided to investors, with clear rules and adaptation to the virtual world.

There are many good lawyers who, like you, have gaming and entertainment legislation in Brazil as one of their specialties. What made you decide to dedicate to this industry? What are the contributions that lawyers can make to speed up processes and define a comprehensive regulation of land-based and online gambling in your country?

I think there is a lot of discussion around the legal issue of gambling in Brazil. Lawyers have played a very important role, producing doctrinal content and working to make our legal system adapt to this virtual economy that has redefined the paradigms of the entertainment industry in the world.

Despite the benefits that gaming legalization has shown worldwide, Brazil continues resisting its approval, mainly due to political, social and ecclesial sectors’ pressure. How to convince these opposition groups? Why did the various Brazilian governments not move forward in their decision to favor the regulation of the activity?

Gambling has never been banned in Brazil. All restrictive legislation, especially penal one, aimed at guaranteeing the State a monopoly on the exploitation of the activity. The ban has always been directed at the private sector.

You were president of Loterj, Rio de Janeiro’s State Lottery. What is your opinion about the next bidding process that this lottery has established?

The market is waiting for the Public Notice. I think the Lottery initiative is very commendable. States need to take the lead in the regulatory process, especially since the recent Supreme Court decision.

Imagining a future regulated market, what should be the proper system for implementing land-based and online gaming in order to maintain a balance between the participation of public and private sectors? Do you agree to apply a concession model and not an authorization model? What tools should be used to favor a controlled foreign investment in the industry and a healthy competition in the market?

The world is moving towards virtual relationships. Government should not exploit gambling. The State’s role in this sector should be only that of a regulator. Both, the concession and authorization models, have advantages and disadvantages. I don’t think there is a single formula for all gaming modalities. It is necessary to take time to study case by case.

As a result of technological innovation, new types of betting have emerged, including those on mobile devices: virtual games, Esports, fantasy sports, live casinos. How to consider these new modalities in the legislation? How to protect the identity of gamblers on the Internet and avoid the participation of minors in games of chance? In which way can companies effectively guarantee the integrity of sports betting in real competitions?

Legislation must adapt to this virtual world. If law does not have this capacity, this technological phenomenon will go on without legislation, and Government will continue to lose tax revenue. The restriction on underage gambling is easily solved with the technological tools that are currently being used by jurisdictions around the world. In order to guarantee the integrity of sports, it is necessary to have an authority that has legal prerogatives to act rigorously and punish evildoers exemplarily.

What are the advantages that the entry of sports betting in the Investment Association Program (PPI) and in the National Privatization Program (PND) can represent?

Investors will have legal certainty to place their investment. At the same time, by creating clear rules, the State will assure an increase in revenue and employment. The PND seal is a guarantee of a mature and stable process.

In the context of a pandemic and a global health crisis, do you think that the gambling issue will be considered non-priority in 2021, or you consider that, as estimated, it will be addressed before July 2021?

I believe a rapid regulation could be a source of revenue to address the challenges that governments are facing to overcome this difficult phase.