the scenario of sports betting in Brazil

A Operation Maximum Penalty I and II and the MP in the hands of Lula became one of the most talked about subjects after the match-fixing scandal in Brazilian football. Over the last few weeks, around 16 players have become defendants and five more are in the crosshairs of the Public Ministry for possible investigations. Other than that, about nine men are also considered to be the main responsible for forming a gang that has changed the order of the most practiced sport in the country.

In this way, the sportbuzz interviewed Udo Seckelmann, master in sports law, and who brought details of the consequences that Operation Maximum Penalty I and II can bring to the defendants, clubs and also common bettors. Other than that, the Provisional Measure sent to the Federal Government was the subject of debate.

According to Seckelmann, sports betting houses are some of the biggest victims of the scheme that exposed a great fragility in Brazilian football. According to him, there is a great myth regarding the interest of these companies in wanting to profit from manipulated results, something that they fight against and even end up with millionaire losses.

“This is what I call the number one myth in the sports betting market regarding people thinking that bookmakers are interested in fixing results. This is not true if we stop to analyze it coldly. What is the bookmaker’s business? It sells the uncertainties of the results. Based on that, it offers bettors odds. When a bettor decides to manipulate a result, he approaches the player, offers an ‘x value’ and the bettor himself offers a very high amount on top of an odd. If this is not identified, the bookmaker is obliged to pay this amount to the bettor. So, this bettor injected a lot of money into the odd, and the bookmaker is a direct victim in this regard.“, he said in an exclusive interview with Athletistic.

Udo Seckelmann even brought the details of how these bookmakers operate to try to avoid match fixing: “The bookmaker is interested in combating manipulation as it loses more and more money. It also invests money in monitoring bets and the volume at which they are placed. It hires outside companies for this purpose, which analyze the volume of bets in all markets and, if any odds are above normal, it turns on the yellow signal for investigation. If there is no plausible justification for that bet, it suspends, returns the bettors’ money and this company sends an alert to the bookmaker and the federation to carry out a deeper investigation. So, the bookmaker invests in this and with the regulation it is possible for this type of monitoring practice to gain even more strength“.

But what about players who are defendants in Operation Maximum Penalty I and II? What can happen to them?

“This is a problem that affects the whole world. In Brazil, there are two different spheres of punishment. There is a punishment in the associative environment of the sport, in which in soccer specifically, there is the CBJD, which defines the penalties for those caught involved in the manipulation of results. Whether manager, player or referee, they can be punished with a fine or suspension. The second sphere of penalty is stipulated in the fan’s statute, which defines match-fixing as a crime, which included imprisonment of up to six years for the athlete. So when the athlete is found manipulating a sporting event, he can be punished both in the sporting sphere and also in the criminal sphere, with custodial sentences. The athlete can respond in these two spheres and the person who solicits the athlete can also respond in the criminal sphere.“.

What can we expect from the sports betting MP?

“In 2018 we had the legalization of sports betting with fixed odds. This was legalized to be exploited by the private sector through authorization from the public sector. It is necessary to obtain an authorization from the Ministry of Finance to operate in the national territory, this is the rule. However, this 2018 law legalizes this activity, but does not regulate the activities of these companies in the country. The law provided for a period of four years for this regulation and that ended in December 2022. Nothing was done. Now the new government has come in and this issue has started to accelerate. Now we have this MP to change some aspects of the 2018 law, mainly of a tax nature, and provide some clarifications in relation to certain points that are a bit dubious.

This PM is a complement to clarify certain points. After this provisional measure, according to what has been disclosed, several ordinances will come out to regulate this activity. The betting market is not regulated in Brazil. What happened was a change with the MP and new ordinances will emerge from it that will then start these effective regulations in the market. With clear rules for exploring the market, when they will pay for licensing, etc.“.

What are the main points that the MP addresses?

“The MP is changing some aspects of the 2018 law, specifically taxation. The betting company will pay a percentage of around 16% for the amount it collects minus the prize it distributes to bettors. In addition to all the tax burden that exists for ordinary companies, they will also pay an additional 16%. Considering all this, this percentage exceeds 30% of total taxation on top of bookmakers and is something that is considered high, if we consider good international practices.

Second point, there is also taxation on the gambler. This is a very delicate subject that has been debated. Taxation is currently on top of each prize that the gambler receives above the exemption ceiling, which is around 2100 reais. 30% of this will be withheld at source by the operator. The problem is precisely that taxation is used in lotteries. So if I play in the mega sena and win, 30% is withheld from the source by Caixa and 70% is distributed to the winners, and then the tax is included. Sports betting is not a lottery, it is a totally different modality, which involves a high or low average ticket, but a very high recurrence of bets. The gambler does not place a bet every one or two months and the prize is not five thousand times what he bets either, there are specific odds for that. So the recurrence is very large. So what happens, if I am the gambler and I make ten bets in one day and, in total, in one bet I win five thousand reais and in the other nine I lose a total of ten thousand reais. In total for that day, I have a loss of five thousand reais and, even with that, I will still have 30% of the five thousand reais I earned retained. So, the claim made by gamblers is that they agree to pay tax as long as it is on top of their actual profit, not on the prize. In this case, for example, I would have to have some kind of amortization on my losses and, if by chance, at the end of the month I made a profit, then I will have this tax withheld from this source.

This is worrying, because if taxation is this high by the operator, which in the end will be reverted to the bettors, the person will have more expenses, I will have to reduce the premium I pay to the bettors and with that are worse products and bettors are less attracted to the licensed market. In addition, the licensed market will also take 30% from the bettor and this will open the way for the bettor to look to the offshore market, in the market that is not licensed, as I will not have 30% withholding and the odds are better. This is a point of great concern in relation to our regulation.

The MP also brought an important aspect in relation to the unlicensed market. It will continue to exist abroad, but we have to create ways to discourage Brazilian bettors from going abroad and betting on these foreign sites.“.

What are the main flaws in Brazilian legislation regarding sports betting?

“Our legislation already includes penalties involving match-fixing. For us to combat match-fixing, legislation alone is not enough. What we have to do is prevention, detection and punishment. Pillar number one, which is prevention, is something that is very lacking in Brazil. Without the certainty of results there will be no sport, there will be no fans and without that there will be nothing. Prevention is something that is necessary. Brazil does not invest as it should in this area. When we talk about it, it is the implementation of integrity issues and the implementation of education for participants.

We say this because many athletes, for the most part, come from a low level of education, from a humbler family, etc., they are not aware of the specific rules about this. So he doesn’t know how to differentiate when he’s in the youth team, aged 12, in a precarious condition, he gets a boot from his agent, and he doesn’t know how to differentiate between what is a gift from his agent or the value of five thousand reais from a close friend who asked to take a card on departure. So, there is this lack of education regarding the rules, what athletes can and cannot do in relation to betting. They don’t know what the consequences of all this will be.

Many times, the athlete thinks that the yellow card will not influence the match, but there is a problem. The regulation is clear about it, the punishments are tough about it. You can be suspended and you can be arrested. Providing this type of education to raise awareness among athletes and referees is something that has to be disseminated. This has been invested by the big leagues for a long time. The Premier League, La Liga, the NFL… Everyone invests and I think Brazil will start to invest in that. There will always be bettors to try to benefit from results and athletes will always be approached to do that. It is up to us to invest in preventing athletes and referees from accepting bribes. This is the first step, which is fundamental“.