The Growing Role of Sports Betting in Brazilian Football
With foreign investors taking over domestic football clubs and the proposal to create new, big-budgeted competitions backing the game, Brazilian football has never been more entangled with money. However, with the explosion of sports betting that occurred after its legalization in 2018, the country experienced more than it bargained for. The country’s 20 top-division clubs are now sponsored by bookmakers, and based on H2 Gambling Capital’s projections, Brazil is expected to have R$83 billion ($17 billion) in wagering by 2023. However, there is a lack of regulation which has resulted in the absence of control of criminal activities, such as the conspiracy to bribe players for specific actions on the field, manipulate matches, and launder money in the sports betting market.
The Controversy
The recent controversy arose surrounding Brazilian football after an investigation by Rio de Janeiro’s Public Prosecutor’s office into a group of alleged criminals who bribed players for specific actions in both Brazilian and Argentine football leagues. According to the Brazilian police, the ten arrested individuals funded their illegal activities with the sports betting market. The culprits allegedly hacked WhatsApp messages between footballers and their agents to monitor their conversations and offer bribes for card accumulation, penalties, among other deliberate actions. Although the websites used for betting are not accused, the scandal has prompted the international conversation on the implications of the growth of sports betting in the domestic game.
Brazilian sports officials fear that the manipulation of matches could damage the integrity of the sport, making fans lose faith in the game, and allegations surfaced over top-flight teams’ integrity after bookmakers placed bets on at least eight matches in the domestic leagues being manipulated.
The Growing Role of Sports Betting in Brazilian Football
Sports betting is undoubtedly one of the fastest-growing industries globally, and as predicted, Brazil is expected to find a trading volume of BRL83 billion ($16.3 billion) by 2023. Most of this growth is attributed to the popularity of sports betting that coincided with its legalization in 2018.
With high levels of foreign investment in domestic football, and with the law permitting betting on sports events, multiple sportsbooks are sponsoring clubs within Brazil’s professional league system. Sports betting has grown in importance and has brought significant revenues to the game, however, it has also generated the growth of illegal betting. The lack of regulation in the Brazilian sports betting industry has made it difficult to apprehend illegal bettors and those stoking illegal marketplaces or to enforce existing laws and regulations.
Regulations
Betting on football in Brazil’s professional league system is legal, but the sports betting industry remains highly unregulated. Since the sports betting market’s main contributors are offshore companies, Brazil fails to collect taxes that could help the Brazilian government fund various projects. Brazil would have difficulty investigating criminal activities in this industry since the offshore bookmakers aren’t subject to Brazil’s national rules and regulations. The law was created for situations where a bookmaker receives money from a Brazilian-based bank, leaving delinquent offshore bookies outside the reach of Brazilian law.
Unlike the UK, where the Gambling Commission is focused on ensuring fairness and transparency in the betting industry, Brazil has no regulatory institution to investigate gambling within the country. The National Financial System Regulation Authority (CRSFN) oversees the Brazilian football club’s financial operations and denies employee involvement in the manipulation allegations. According to many operators, the country’s current legislative environment around gambling is unclear, creating uncertainty for companies seeking to invest in Brazil. The truth is that few legal requirements exist regarding football bets.
Industry insiders do not expect draconian regulatory measures in response to the controversy. Betting companies will soon be required to apply for licenses, or they will face limitations on advertising and payment processing, according to sources. These regulations would allow the Brazilian government to supervise betting activities within the nation, increasing transparency and helping the government keep track of gambling activity-related money laundering.
The Future of Sports Betting in Brazil
The controversy surrounding sports betting may result in lawmakers regulating the market, for instance, by lifting the illegality of operatingvirtual blackjack, roulette, and slot machines. This brings up the question of what will happen to gambling in this country if betting regulation passes through the Senate. With the legality of gambling already under discussion in Brazil’s Congress, the scandal might instigate debates on the matter and bring it onto the legislative agenda.
Moreover, the political attention and the resistance from some religious groups the sport faces threaten the government’s efforts to legalize casinos and rank them on par with other major tourist destinations. Brazilian casinos are projected to generate foreign currency, offer employment opportunities, and increase national and international tourism as the country’s economy diversifies beyond agricultural and industrial production. However, the bill’s enactment is expected to be slowed due to the controversy surrounding sports betting.
Conclusion:
The Brazilian football industry is not new to misconceptions, and the latest intrigue that has sported a 21stor digital twist has raised some questions about the consequence of collaboration with bookmakers with no rules governing their activities. With foreign investment in the domestic game, the scandals have prompted a conversation about the growing role of sport gambling at a time of critical commercial developments in football. It is up to the Brazilian government to pass legislation that will regulate the industry and alleviate the fraud that comes with illegal sports betting while ensuring the sport’s integrity.
Summary:
Brazil’s top-flight football clubs’ sponsors while international brands such as Bet365, Betano, and Sportingbet aim at Brazilian sports betting market after it was legalized in 2018. The industry has grown tremendously to project a total stake of R$83 billion ($17 billion) with only one club not sponsored by bookmakers. However, there is no regulation to control betting activities, leaving offshore bookmakers to escape Brazilian law without a way to investigate criminal activities within the country. Recent allegations regarding football players accepting bribes for certain actions in football games have raised questions concerning the sport’s integrity and the role sports betting plays. The country’s hope of legalizing casino gambling now faces stigma from evangelical Christians, and political attention may slow down the administrative efforts of the government. Furthermore, delays could arise even if legalizing casinos becomes a reality, taking work to make this happen.
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From bent referees and inflated stadium contracts to the theft of the old World Cup trophy, Brazilian football is no stranger to scandal.
The latest intrigue has a 21st century digital twist. More than a dozen players are suspected of having taken bribes for deliberate acts, such as receiving yellow cards or handing out fines, from a criminal gang who placed online bets on the incidents.
None of the websites through which the bets were made are accused of involvement. Prosecutors are treating them as victims, as they paid for the scams. But the controversy has prompted a debate about the growing role of sport gamble at a time of critical commercial developments in the domestic game.
With foreign capital takeovers of teams and proposals afoot to create a new competition backed by big bucks, the manipulation of at least eight top-flight matches has even called into question the integrity of the sport.
“Whether it’s investors in clubs, leagues or media companies buying up the broadcasting rights, it’s bad for everyone,” says Eduardo Bandeira de Mello, a federal lawmaker and former president of Rio de Janeiro side Flamengo.
Sports betting has exploded in popularity since its legalization in 2018 in the soccer-loving South American nation, with international online brands Bet365, Betano and Sportingbet among the hundreds targeting bettors.
Nineteen of the 20 top division clubs are sponsored by such sites. Consulting firm H2 Gambling Capital expects R$83 billion ($17 billion) of wagering in 2023, with R$5.82 billion in gross gaming revenue, expected to roughly double in the next few years.
Yet there is an absence of regulation. As a result, Internet bookmakers operated from foreign jurisdictions are not subject to Brazilian rules or taxes. Andre Gelfi, president of Brazil’s Institute for Responsible Gambling and local executive of Swedish group Betsson, believes this was the root cause behind the fraud. “Without regulation, you cannot achieve international best practice,” he says. “The more formalized the market, the more effective is the control of criminal activities”.
The new administration in Brasilia was already reworking rules drafted but not approved by its predecessor, so the story could give new impetus.
However, one concern is that the political attention it has attracted could slow the process. Government support in Congress is weak and some believe ministers will wait until after a parliamentary inquiry into the scandal. The continued uncertainty is bad for businesses and consumers who have little recourse for claims in Brazil, says Neil Montgomery, a lawyer specializing in the area.
“It is very difficult for serious operators to set long-term plans because the final legal framework is not in place,” he adds.
Industry insiders do not expect draconian regulatory measures in response to the controversy. Businesses will have to apply for licenses or face restrictions on advertising and payment processing.
“The concern for international operators in the medium term is minus match-fixing, that’s what will happen to the market when the regulations are in place,” says Jon Moss of 34 Consulting and former head of international development at Bet365.
In his view, some aspects of the proposed rules risk pushing consumers towards unregulated portals. These include a 30% tax on winnings over R$2,112 and the fact that virtual blackjack, roulette and slot machines – a large source of income and popular with players – remain illegal when operated in Brazil, so they will have to be removed from legitimate sites.
Even if sports betting isn’t overly tainted by the fraud racket, lobbyists fear setbacks to a broader campaign to fully liberalize gambling and allow casinos in Brazil.
The Senate was expected to vote in the coming months on a bill to lift the blanket ban on gambling from the 1940s. Yet the furor has fueled opposition from evangelical Christian politicians, who say it demonstrates the dangers of addiction.
Operators say it’s in their best interest to prevent fraud and have pledged increased action to detect and report suspicious activity, along with education for bettors. Sports clubs and authorities are under pressure to do the same for athletes. With major changes going on in the business side of o jogo bonito – the beautiful game – there is a lot at stake.
“The implications will be extremely serious if we do not treat this matter with the seriousness it deserves. If it is a weak response, it could generate a crisis of credibility in football,” says Bandeira de Mello.
michael.pooler@ft.com
https://www.ft.com/content/d8e6e28a-247b-4d6e-8177-61cf56a3c309
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