Gambling Laws in Brazil

(Population: 200.4 million)

Having crossed the 200 million mark in terms of population, Brazil is the 5th
largest country in the world by that metric, and by far the leader within Latin
America.

But among the so-called Group of 20 nations, which collectively represent the
20 strongest economies on Earth, Brazil is the only non-Muslim nation to lack a
legalized and regulated gambling industry. And while Saudi Arabia and Indonesia
are both home to people who largely avoid gambling out of respect for their
religious practice, Brazil has no such reason to ban the activity.

The Brazilian people are famously enthusiastic about gambling in many forms,
with lottery style games like Jogo de bicho, the animal game, dating
back more than 120 years. Bingo halls have proliferated in Brazil’s major
metropolitan areas for decades, betting on dog and horse racing is rampant, and
of course, futbol, or soccer to Westerners, matches are made more
exciting with informal wagers between buddies.

Today, poker has also taken root here, and successful Brazilian pros like
André Akkari are now joined by soccer superstars Ronaldo and Neymar Jr. on the
felt.

Even so, for several generations now, Brazilians have been forced to enjoy
their various hobbies in unregulated markets, as the country’s longstanding
legal policy has made gambling expressly forbidden.

When the impact of colonial influence, a protracted war of revolution, and
decades of experimentation with democratic governance are factored in,
deciphering the motivation behind Brazil’s gambling ban becomes an enormously
complex task.

As surprising as Brazil’s official stance on gambling is, the laws against
games of chance are actually in keeping with the country’s outdated legal
interpretations. You wouldn’t know it during a trip there, but activities like
hunting wild game, smoking cigarettes in public view, and even sunbathing with
your top removed are all illegal under federal law.

Of course, that doesn’t stop Brazilians from lighting up outside of the bar
or baring it all on the beach, and the same holds true for gambling. Although
it’s technically illegal, millions of Brazilians do it every single day.

The federal statute on the books at the moment, known as the Criminal
Convention Act (CCA), dates all the way back to 1941. The law was written to ban
all games of chance, which it defines as “a game in which winning or losing
depends exclusively or principally on luck; bets on horses outside of the
racetrack; or bets on any sports competition.” The CCA overturned a 1930 law
which allowed games of chance to be played freely.

At the time, the states of Rio de Janeiro, São Paulo, and Minas Gerais were
considered to be the casino capitals of Brazil, with cities like Poços de Caldas
and Petrópolis boasting world-class casino venues.

When the Quitandinha Palace opened for business in Petrópolis in 1944, it
stood as the largest gambling establishment in all of South and Central America
combined. Celebrities like
Greta Garbo, Carmen
Miranda, Walt Disney, and
Bing Crosby, were
patrons of Quitandinha Palace during its brief heyday. Other major casinos in
Brazil during the pre-prohibition era included the Copacabana Palace, Hotel
Atlântico, and Hotel Parque Balneário

Unfortunately for fans of Brazil’s eclectic casino scene, incoming president
Eurico Gaspar Dutra enacted the country’s fifth constitution in 1946, and among
his package of reforms was Law Decree 9215. This presidential decree called for
the immediate closure of all casinos in the country, ending the run of
Quitandinha Palace after only two years, while consigning casino gambling to the
realm of illegality to this day. All licenses and contracts awarded to casino
operators were rescinded on the spot, while properties were shuttered and gaming
equipment was confiscated.

Although president Dutra’s term is recognized today as a pivotal shift toward
positive democratic reforms in Brazil’s history, Law Decree 9215 is the reason a
nation with more than 200 million residents is home to just a pair of casino
properties in 2017.

Lottery

Exactly 50 years ago, Brazil’s federal government issued Law Decree 204,
establishing a national lottery system which has flourished ever since. In
total, nine federally operated lottery programs can be played completely
legally:

• Federal Lottery
• Instant Lottery
• Mega-Sena
• Double-Sena
• Quina
• Lotomania
• Lotogol
• Loteca
• Lotofácil

Control of the finances for these lottery programs is maintained by Caixa
Econômica Federal, a state-controlled bank which is second only to Banco de
Brazil in all of Latin America.

Additionally, 17 of the 27 states and districts in Brazil run their own
lottery programs to fund local government projects.

Bingo and Slot Machines

In 1993 a bill known as the “Zico Law,” or Law Decree 981, was passed to
permit the operation of electronic gaming machines throughout Brazil. This
legalized slot machines by giving individual states and districts autonomy over
these sectors of the gambling industry. The Zico Law pledged to revitalize
national sports teams by devoting portions of bingo and slot tax revenue to
infrastructure and development.

Soon enough bingo halls with attached slot parlors were widespread throughout
Brazil, and in 1998 the “Pelé Law,” or Law Decree 2.574, was added to strengthen
federal oversight. Each bingo hall was permitted to house up to 400 slot
machines, and both gambling games became increasingly popular among the local
population.

In 2000 another Law Decree, 9.981, was passed to cut off all further
licensing of bingo halls and slot machines. That effectively ended any further
growth for this segment of Brazil’s gambling industry.

By 2004, the tide turned regarding bingo and slot machines, as the Supreme
Federal Tribunal – Brazil’s equivalent of the Supreme Court – ruled that state
autonomy over the regulation of gambling only extended to lotteries. Both the
Zico Law and the Pelé Law were abolished, and in 2007 the “Súmula Vinculante 2”
(or second Binding Summary) ordered by the Tribunal led to the closure of all
official bingo halls and slot parlors.

Today, the industry operates on an underground basis, with illicit bingo
games springing up and attracting players until attention from authorities
forces them to move.

Horse Racing

Fortunately for fans of horse racing and related pursuits, the “sport of
kings” was never mentioned within the CCA of 1941, and thus it was never banned
by federal law.

Today, the Comissão Coordenadora da Criação do Cavalo Nacional (CCCCN) is in
charge of supervising all horse racing, wagering, and related activities. The
two major venues in Brazil are the Hipódromo da Gávea in Rio de Janeiro, and the
Hipódromo do Cristal in Rio Grande do Sul.

Until 2005 pari-mutuel wagering was only permitted on locally ran races, but
a 2005 revision by the Ministry of Agriculture, known as Normative Instructive
Number 27, allowed pari-mutuel bets to be placed on national and international
events. A Spanish company called Codere, which operates racetracks and gambling
facilities all over the world, entered into a 10-year agreement with the
Brazilian government soon afterward.

Since then, Codere has partnered with the Brazilian Jockey Club and the Rio
Grande do Sul Jockey Club to open several simulcasting parlors in which punters
can place bets on any race in the world at a moment’s notice.

Online Gambling

Because the CCA of 1941 could obviously have never covered the concept of
internet-based gambling, the online arena is quite murky in Brazil. Technically
speaking, operating an online casino from within Brazil would be quite illegal
under the CCA, as it would involve games of chance – but playing as a
customer of an online casino wouldn’t violate any laws.

Accordingly, many of the major online casino software servicers in the world
– companies like Betsoft, IGT, Microgaming, Playtech, and NetEnt – make sure to
allow Brazilian residents access to their servers. Rather than blocking these
players, like they’re forced to do for American customers, the major online
casino platforms can let Brazilians into the game because no local laws are on
the books prohibiting them from doing so.

The rise of Brazil’s internet-user base has been well-documented, as more
than 100 million people there count as active online participants, and the
online gambling industry is keen on keeping the financial flow open. With online
poker experiencing a second boom in Brazil, thanks in large part to
PokerStars-sponsored “SportsStars” like national soccer team heroes Ronaldo and
Neymar Jr., even the political class has been forced to accept the inevitable.

Rather than forfeit hundreds of millions of dollars in revenue to offshore
operators – estimates recently tabbed the country’s online gambling output at
USD$875 million – Brazil’s Special Committee on National Development (CEDN)
approved Bill 186-2014 in December of 2015.

This comprehensive gambling legalization bill proposes the construction of 35
land-based casinos, 1,200 bingo halls, 600,000 electronic gaming terminals, and
the regulation of online gambling.

Status of Bill 186-2014

With the Brazilian economy experiencing a drastic downturn in recent years,
the impetus to pass Bill 186-2014 became increasingly clear after it was
introduced. Simply put, Brazil couldn’t afford to continue letting the lucrative
gambling market operate in an underground, and therefore untaxed, fashion.

With an estimated 20 million Brazilians wagering upwards of USD$3.75 billion
on jogo do biche, USD$1.1 billion in slot parlors, USD $900 million
through online gambling, and countless millions more on sports betting, the
government appeared to have every intention of signing the sweeping reforms into
law.

Unfortunately, when president Dilma Rousseff was entangled in a lengthy
impeachment proceeding shortly after Bill 186-2014 was introduced, passing
gambling law went to Brazil’s political backburner. The impeachment drama
dragged on until August of 2016, when Rousseff was removed from office by a
61-20 vote in the Senate.

Not coincidentally, the end of impeachment proceedings coupled with the
installation of vice president Michel Temer to the presidency ended the
political logjam. That same month, Senator Fernando Bezerra Coelho issued a
comprehensive report examining the logistics of Bill 186-2014, in which he
called for an open bidding process to invite well-funded international
operators, and a 30 percent tax on player winnings, among other tweaks to the
legislation.

Two months later, the Senate’s Special Committee on National Development
approved the bill’s statutory language, setting the stage for a pivotal Senate
vote in December of 2016. That vote took place on December 14th, but rather than
passing or tossing out Bill 186-2014, the Senate decided to refer the
legislation for further constitutional review.

Senator Magno Malta, who also works as a pastor in his home state of Bahia,
put forth a motion to move the gambling bill down to the Senate’s Constitution
and Justice Commission (CCJ), a move which ostensibly delays a final vote for
the foreseeable future. Malta is widely recognized as the leading detractor and
political opponent of Bill 186-2014.

According to Edgar Lenzi, president of the BetConsult gambling industry
consultancy based in Curitiba, the delay shouldn’t be viewed as the death knell
for Bill 286-2014. As he told CDC Gaming Reports, the CCJ won’t be examining the
merits of gambling regulation, but rather the strict constitutionality of the
law as written:

Magno Jose de Souza, president of the Institute for Legal Gaming, echoed that
sentiment by pointing out that the 44-19 vote to refer the bill downward is
simply part of lawmaking procedure:

A competing gambling bill has been introduced in Brazil’s lower house, known
as the Chamber of Deputies, with Bill 442-1991 keeping the land-based gambling
reforms intact – but expressly banning all online gambling.

With Bill 186-2014 consistently stalling out in the Senate, many Brazilian
political observers believe online gambling to be the primary sticking point,
and Bill 442-1991 is viewed as a dark horse candidate to be the legislation
which crosses the proverbial finish line first.

Today, both bills are stuck at the committee level once again, and Senator
Coelho has gone on record as saying that a final vote is likely to be delayed
until “March, April, (so) we can gather support necessary for the activity of
gambling to be legalized in Brazil.”

The country’s powerful religious lobby, led by the Catholic Church has also
jumped into the fray, urging the faithful to reject any gambling reforms that
would remove current restrictions.

Conclusion

As the leading economy in South America, Brazil has every reason to make a
bet on legalized gambling, but the country’s tangled political system resembles
that of the United States. And just as Americans remain stuck in limbo waiting
for online gambling, sports betting, and daily fantasy sports (DFS) legislation
to be finalized, Brazilian bettors will be forced to the underground until the
country’s Senate gets its act together.

Fortunately, with two bills currently in the mix, land based gambling reform
appears to be a foregone conclusion here. Casinos, racetracks, bingo halls, slot
parlors, and sports books should all be a regulated aspect of the Brazilian
economy sometime in 2017, barring unforeseen developments.

As for online gambling, America has proven that societal divides on this
segment of the market still run deep, so it wouldn’t be all that surprising to
see Bill 442-1991 and its online gambling ban beat our Bill 186-2014 and its
more modernized approach.