The ban on betting creates distrust towards Brazil

In an interview with iGaming Business during SBC Lisbon, Luiz Felipe Maia of Maia Yoshiyasu Advogados has criticised the ban on betting in Brazil, announced by the nation’s president in late September.

He classifies the measure as politically motivated, warning it interrupts the maturation of a legalised, regulated and supervised market.

Felipe Maia highlights the quality of the rules implemented by the Secretariat of Prizes and Bets (SPA), including identification and compliance mechanisms, and warns the change could increase the perception of legal uncertainty in the country among investors.

Felipe Maia believes the National Congress and the Judiciary could reverse the decision, citing risks of compensation claims against licensed companies, an estimated annual loss of BRL15 billion ($2.99 billion) in revenue and the migration of bettors to the illegal market.

He also contests the action by the Attorney General’s Office, in seeking compensation and reimbursement to the SUS (Brazilian Public Health System), arguing the operators acted within the law and that the amounts presented do not demonstrate, in his assessment, a proven relationship between betting, indebtedness and damage to public health.

What is your assessment of the current situation in Brazil with the ban on betting?

Luiz Felipe Maia (LFM): It’s hard to believe we’re going through this right now, after all the effort made to have a market that is not only legalised, but regulated. We’re talking about a public service where companies paid BRL30 million for a licence. It was an act with a clearly electoral character, attempting to destroy an industry that had been consolidating and maturing.

It’s very sad to see this and to witness people’s reactions around the world. I was recently at events in France and Portugal, and everyone’s reaction was one of disbelief. Nobody believes what happened. And this generates a great deal of distrust towards Brazil. How will the country guarantee stability, not only for our sector, but for any sector of the economy?

Many believe the SPA did an excellent job in the regulation, with a series of rules to ensure the safety of the activity and the bettor. Did it all fall apart?

LFM: Brazil has done a very good job of regulation. Brazilian regulation today is among the best in the world. And I think that if we continue, and I believe we will continue, Brazil could become a benchmark in terms of regulation and compliance worldwide.

If you compare the market before 2025, when regulation was implemented, with the period in which it operated under SPA rules, you will see that there has been very rapid and significant maturation. I think it’s a shame that things have followed the path of prohibition, because I believe that the Brazilian market has the potential to become a benchmark for the entire world.

President Lula had been saying that if the activity didn’t develop properly, he would ban betting. Was that an electioneering decision?

LFM: Absolutely. The timing shows it. Having issued a provisional measure without even a fiscal impact study demonstrates that. And no, it’s not about toeing the line. If that were the case, he would have to end everything.

So, are we going to end mining in Brazil? Because some people didn’t toe the line and environmental disasters happened. Are we going to end the beverage industry and shut down Ambev [a Brazilian brewing company]? Because, excuse me, many more people die in Brazil from car accidents caused by drunk drivers. And from cirrhosis and other alcohol-related diseases.

The president gave a dramatic speech – which is very sad – about people who had committed suicide because of debt. He never bothered to look at these people to see if the debt was really due to gambling or if there were other causes. I think banning betting was very cheap opportunism.

This will have very serious consequences for Brazil, not just for the betting sector. Brazil’s perceived risk in the world will be divided into before and after this ban. Because if the Brazilian government is willing to do this with a regulated activity, what can’t it do with any other?

Are you optimistic or realistic about the return of the betting sector?

LFM: I think I’m being realistic. Legally, we have many arguments to reject this provisional measure. We have actions before the Judiciary, and I also believe that the National Congress will not accept this. The parliamentarians will make a state decision and not an opportunistic electoral solution.

Will parliamentarians overturn the ban, given the electioneering rhetoric focusing on addiction and excessive debt?

LFM: I believe in the maturity of the National Congress. I believe that parliamentarians will look at this not from the perspective invented by President Lula’s campaign, but rather from the perspective that we have an economic activity in Brazil that has been legalised, regulated, licensed, authorised and heavily monitored.

You will see that Brazil needs to honour its commitments and that the Brazilian state would be subject to significant compensation claims if it fails to comply with the contracts. I also believe that the discussion will revolve around the understanding that there is no such thing as “no gambling”. That this decision simply gifts 30 million gamblers to organised crime.

They’ve already realised that the economic outcome of this decision wasn’t to eliminate the debt. The economic outcome is foregoing BRL15 billion in annual revenue without creating additional income. And it’s channelling those resources to organised crime.

What is your assessment of the action taken by the Attorney General’s Office, in seeking BRL1 billion in compensation for collective moral damages and BRL2.6 billion for reimbursement to the SUS?

LFM: It’s very strange that we have a lawsuit like this on the eve of the election. It shocks me greatly to see the Attorney General’s Office lending itself to this service of requesting compensation when there is no compensable damage.

There is no illegal act. The [betting] companies acted in accordance with the law, in accordance with the regulations. There is no illegal act that generates compensable damage. This is without even mentioning the way these amounts are calculated. For me, it’s an irresponsible action, at the very least, and I don’t believe it will succeed. I think the Judiciary will reject this claim.

Reimbursement to the SUS is also absurd, especially since the regulations themselves provided for resources for healthcare. I think there’s another issue. How did they arrive at that number? We look at those numbers and they’re fantastical.

Basically, you had a leave of absence from work. Are you a gambler? Then you were absent because of gambling. That’s the discourse used to blame the sector. We had that whole post-COVID period with a positive movement regarding mental health. And now they want to point out that the problems are related to gambling. So, it’s very difficult to trust these numbers and this discourse against our industry.

I insist, there was no illegal act. We had a legal, regulated activity. Anything that was not in accordance with the regulations was subject to the SPA’s sanctioning process.