Gambling Comparative Guide

• Published date: 26 October 2022
• Subject Matter: Media, Telecoms, IT, Entertainment, Media & Entertainment Law, Gaming
• Law Firm: Maia Yoshiyasu Advogados
• Author: Mr Luiz Maia and Flavio Augusto Picchi

1 History of and overall attitudes to gambling

1.1 How prevalent are different types of gambling in your jurisdiction? For example, does the current law reflect: (a) Religious or moral objections to gambling? (b) A permissive approach which also seeks to address the social consequences of gambling? and (c) The promotion of gambling as an 'export' industry?

(a) Religious or moral objections to gambling?

Yes. The outdated legislation of the 1940s that prohibits gambling throughout the Brazilian territory is strongly based on morals and religiousness.

Games of chance are treated as misdemeanours, which are recognised by law as offences punishable by minor penalties (Article 61 of Law 9,099/1995). In other words, a misdemeanour is a lesser offensive crime when compared to a criminal violation of Brazilian law. The term 'misdemeanour' is related to 'public morality', which, according to Professor Humberto José da Nova, includes "safeguarding morality" in order to "prevent certain illegal and vicious acts, or defend certain moral sentiments regarded as indispensable to harmonious social coexistence, the effects of which are harmful to the interests of the collectivity".

While morals have traditionally played a significant role in the Brazilian context, religious objections have become more prevalent on political grounds of late, especially among evangelist groups at the National Congress - including current President Jair Bolsonaro, who is now working against gambling legalisation.

(b) A permissive approach that also seeks to address the social consequences of gambling?

Yes. As lotteries remain the main gambling modality authorised and regulated by law, it is possible to detect an explicit link between the respective permissiveness and the social consequences of gambling revenue. For instance, Decree-Law 204/1967 states in its preamble that "the operation of lottery constitutes an exception to the norms of criminal law, being admitted only in the sense of redistributing its profits with social purpose in national terms"; and that the proceeds will be used to provide medical assistance to underprivileged populations.

(c) The promotion of gambling as an 'export' industry?

No. Current laws do not deal with the promotion of gambling in cross-border jurisdictions.

2 Legal and regulatory framework

2.1 Which legislative and regulatory provisions govern gambling in your jurisdiction?

Brazil adopts a restrictive approach to gambling in general. The prohibition is set forth in Article 50 of the Misdemeanour Criminal Act (Decree-Law 3,688/1941), which imposes penalties of imprisonment for between three months and one year and a fine on those who establish or exploit games of chance in a public place or a place accessible to the public, by means of payment of an entry fee or otherwise.

Lotteries are an exception to the aforementioned rule. They are operated by Caixa Econ'mica Federal (CAIXA) and are regulated by several laws and decrees - primarily the following:

• Decree-Law 6,259/1944 governs the lottery service and other measures;
• Decree-Law 204/1967 governs the operation of lotteries and other arrangements;
• Law 6,717/1979 authorises the modality of the federal lottery governed by Decree-Law 204/1967 and other measures;
• Law 11,345/2006 governs the establishment of a lottery modality for the development of sports practice, the participation of football sports entities in these contests and the instalment of tax debts, as well as amending Laws 8,212/1991 and 10,522/2002 (and other provisions); and.
• Decree 6,187/2007 regulates Law 11,345/2006 and establishes the lottery modality called Timemania.

The Loteria Instant'nea Exclusiva instant lottery was established by Law 13,155/2015, was amended by Law 13,756/2018 and is regulated by Decree 9,327/2018.

Horse racing betting is another exception to the restrictive regulation and is regulated by Law 7,291/1984 and Decree 96,993/1988.

Fixed-odds sports betting was legalised by Law 13,756/2018, as amended by Law 14,183/2021.

In September 2022, Law 14,455/2022 was enacted after Bill of Law 1,561/2020 was approved by Congress. It allows for the creation of temporary lotteries whose revenues will be earmarked for health and tourism.

2.2 Which bodies are responsible for regulating and enforcing the applicable laws and regulations? What powers do they have?

Until April 2022, the Secretariat of Evaluation, Planning, Energy and Lottery (SECAP) was in charge of regulating lotteries, including fixed-odds sports betting lotteries (the regulation that will govern fixed-odds sports-betting lotteries is currently being drafted). Presidential Decree 11,036/2022 established the new Ministry of Economy after many of its activities were reassigned to the newly recreated Ministry of Labour. As part of these organisational changes, SECAP was dissolved and reorganised as the Special Secretariat for Productivity and Competitiveness (SEPEC). Further in August 2022, Presidential Decree 11,159/2022 established the Undersecretariat of Betting and Commercial Promotion as part of SEPEC's structure; this is now the regulatory body in charge of regulating, authorising and overseeing activities relating to:

• the free distribution of prizes for marketing purposes;
• sweepstakes and other lottery modalities promoted by horse-riding entities; and
• any other lottery modalities.

The Ministry of Agriculture, Livestock and Food Supply is responsible for the regulation of horse racing betting.

2.3 What is the regulators' general approach in regulating the gambling sector?

In general, Brazilian regulation tends to be prescriptive. Consumer and data protection rules, on the other hand, are more risk based, with the operator being held liable for negative effects on consumers and data subjects, even if the prescriptive regulations have been complied with.

3 Definitions and scope of gambling

3.1 How is 'gambling' defined in your jurisdiction?

In Brazil, there is no legal definition of 'gambling'. In fact, the word 'gambling' does not have a perfect translation into Portuguese. The word can mean a bet or a game involving a consideration, a prize and chance.

However, games of chance are prohibited under Article 50 of the Misdemeanour Criminal Act. They are defined as:

• games in which winning or losing depends exclusively or predominantly on chance;
• bets on horse races outside the racetrack or other authorised venues; and
• bets on any other sporting competition.

By contrast, 'skill-based games' are those - such as poker - in which the results depend on the ability of the player more than on luck. These games are legal in Brazil.

3.2 What different types of activities are defined in the gambling legislation and what specific requirements apply to each? Please consider: (a) Betting (fixed odds/pool and spread)/betting on lotteries; (b) Gaming (house and ring games); (c) Lotteries/scratch cards and (d) The interface with financial products (if relevant).

Gambling legislation (the Misdemeanour Criminal Act) mentions 'games of chance' and 'bets'. The subtle difference between a 'game' and a 'bet' is that the result of a game depends on the actions of the parties; while the result of a bet depends on facts unrelated to the parties' will. However, these legal definitions have been construed by judicial precedent and are not expressly set forth by law, even though they are widely accepted and applied by the Brazilian courts.

(a) Betting (fixed odds/pool and spread)/betting on lotteries

A 'bet' is a contract type that can be defined as a legal transaction in which two or more people with different opinions on a certain event promise to perform a particular action (in general, with monetary content) to the benefit of the party whose opinion prevails. Hence, in the bet, there is no requirement for the active participation of any party (called a 'bettor') to influence the outcome of the event, but rather only the expression of the parties' personal opinions.

(b) Gaming (house and ring games)

A 'game' is a contract type that can be defined as a legal transaction whereby two or more people hold a particular promise (usually with pecuniary content) in favour of the person who achieves a favourable result in the performance of an act in which the parties participate. The game - and thus the success or failure of each party - necessarily depend on the performance of each party (called a 'player'), whether by intelligence, skill, strength or pure luck.

(c) Lotteries

A 'lottery' is defined by the Misdemeanour Criminal Act as any operation that, through the distribution of tickets, lists, coupons, vouchers, signs, symbols or similar means, makes the obtaining of a prize in money or goods of another nature dependent on a draw (Article 51, Paragraph 2 of the Misdemeanour Criminal Act).

(d) Scratchcards

Scratchcards - organised by Loteria Instant'nea Exclusiva (LOTEX) - are defined by Decree 9,327/2018, Article 1 as a lottery operated in both physical and virtual channels in which bettors will immediately know the result of their bet without having to wait for a draw or the results of a lottery contest. According to Law 13,155/2015, which established LOTEX, combined with Decree 9,327/2018, LOTEX can present the brands, emblems, anthems, symbols, shields and similar insignia relating to football entities, or other insignia associated with popular events...