Brazil government prepares provisional measure to ban bets, sources say

The federal government is preparing a Provisional Measure to prohibit bets in Brazil, according to people who attended a meeting at the Palácio do Alvorada on Wednesday, 23/9. For PSPs, acquirers, and operators, the immediate issue is not just market access: the state is signaling that the R$ 30 million license fees already paid for five-year authorizations will not be refunded.

1. The measure could be signed as early as this week, according to participants in the meeting. President Luiz Inácio Lula da Silva had reportedly considered banning only online casinos while keeping sports betting alive, but the internal discussion moved to a broader shutdown.
2. The trigger, as described by one member of the discussion group, was the view that the government needed to “cut the problem at the root.” Lula reportedly asked Finance Minister Dario Durigan to deliver, within 24 hours, a full estimate of the budgetary impact of the ban. Durigan also called a meeting with the Secretariat of Prizes and Betting to deal with the issue.
3. The decision directly affects companies that paid R$ 30 million in outorgas to operate in the country for five years. The government is ruling out any return of part of that amount. In practical terms, that is the kind of regulatory move that turns licensing spend into sunk cost overnight.
4. The administration is also looking at ways to make operators responsible for debts incurred by heavily indebted users. One option under review is a lawsuit to collect those amounts directly from the operators.
5. At the same time, the AGU (Attorney General’s Office) and the Ministry of Justice are working on measures to stop illegal gambling from filling the gap left by licensed bets. Among the options is tougher punishment for those who promote illegal games. Under the current law, set out in the Lei de Contravenções Penais, operating games of chance in a public place or one accessible to the public carries simple imprisonment of three months to one year, plus a fine.

Football clubs are also in the line of fire. Since Lula signaled he wanted to end bets, sports entities have pushed the government to negotiate, and officials now plan to propose a negotiation table with club representatives. The refund question, though, is off the table: as one government source put it, “It was a bet the companies made, they already made a lot, and now they lost.”