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as Brazil’s official stance on gambling is, the laws against games of chance are actually in keeping with the country’s outdated legal interpretations.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.