Brazil Faces Legal Action Over Betting Operator Exclusions

Brazil's Department of Prizes and Betting (SPA) is currently embroiled in legal disputes with numerous betting companies after releasing a list of approved operators eligible to continue their operations until the end of 2024. Unveiled in early October, this contentious list includes 96 companies alongside 210 associated brands, marking those that have either applied for federal licenses or existing within Brazil's ambiguous market preceding the SPA's deadline on September 30. Predictably, this has sparked discontent among operators neglected from this roster, who now find themselves resorting to legal remedies to challenge what they perceive as unfair exclusion. At present, eight lawsuits have been directed against the Ministry of Finance, the governing body responsible for SPA.

Government Crackdown on Unlicensed Betting

In anticipation of launching a fully regulated betting market by January 1, 2025, the Brazilian government is intensifying efforts to dismantle unlicensed gambling operations. As a key part of this endeavor, the SPA has mandated regulatory action against over 2,000 websites deemed illegally operational, including major brands like Betfred and BoyleSports. Enforcement has been delegated to Brazil's National Telecommunications Agency (Anatel), reinforcing governmental determination to sanitize the market before full regulation takes effect. Notably, operators absent from the approved list must pause all operations until acquiring adequate federal permission, a measure that has stirred significant dissatisfaction, culminating in ongoing legal battles.

Legal Disputes and Broader Impacts

A noteworthy legal challenge comes from Zeroumbet, a betting platform owned by lawyer and influencer Deolane Bezerra. Although Zeroumbet applied for a federal betting license in August 2024, its exclusion from the SPA's approved list stems from the ongoing Operation Integration investigation involving Bezerra. This probe concerns allegations of illegal gambling and money laundering, with Bezerra purportedly using Zeroumbet to cleanse illicit funds. In defense, Zeroumbet’s legal representatives contend that the platform is not implicated in these allegations, arguing that "in this case, the one who would be punished would be Deolane Bezerra and not the company." Their lawsuit aims to allow Zeroumbet’s continued operations until the resolution of these allegations. Despite these assertions, SPA maintains that excluding Zeroumbet serves to protect the public interest and preserve market integrity. The Ministry of Finance has sought Zeroumbet's response within five days, adding layers to the ongoing dispute.

Meanwhile, other operators like Esportes da Sorte have explored alternative strategies to remain operable. Though left off the federal list, they've secured a license through Rio de Janeiro’s state lottery authority, Loterj, by acquiring interest in Loterj-licensed ST Soft. However, this workaround has spurred a separate legal confrontation between federal and state authorities. The Brazilian administration has since approached the Supreme Federal Court (STF) to address whether state licenses should permit national-level service provision. The ruling could set the stage for future betting regulation policy in Brazil.

Concerns have escalated as legal disputes underscore broader regulatory challenges within Brazil's rapidly expanding gambling market. Betting legalization since 2018 has not translated into a seamless regulatory framework, leading to operator and governmental frustration. The Lula administration's attempts to establish comprehensive regulations have proceeded sluggishly, compounded by these legal pressures.

Further compounding these issues, another company, Sportvip Group International Apostas, also omitted from the federal list, claims severe financial and reputational risks due to their perceived unjust exclusion. Although their initial lawsuit has not yielded court favor, the legal process remains contentious. Additionally, a report from Brazil’s Central Bank disclosed that around R$3 billion was transferred to betting sites in August via Pix by individuals in the Bolsa Família welfare program. This revelation emphasizes heightened social and economic concerns and amplifies pressure on the government for swift regulatory intervention.

Source: Source: "Governo Já Enfrenta Ações Sobre Lista de Bets e Empresa de Deolane Tenta Liberação", folha.uol.com.br, October 16, 2024. By GamesAndCasino