On 11 November Brazil’s Federal Supreme Court (STF) initiated a two-day hearing investigating the effects of betting in Brazil. On day one of the session, both the federal and state regulators spoke on the value of the sector, sharing concerns on the black market and how overturning the betting law could increase illegal betting activity.

The session was called after the country’s third biggest trade union, the National Confederation of Trade in Goods, Services and Tourism (CNC) requested betting laws No 14,790/2023 and 13,756/2018 be declared unconstitutional. The body filed an ADI (Ação Direta de Inconstitucionalidade), a legal action in Brazil that aims to overturn a law that acts against the nation’s Constitution.

Minister Luis Fux, the rapporteur of the CNC’s ADI, says the constitutionality of Law No 14,790/2023, which legalised sports betting and igaming in Brazil, must be assessed over the first half of 2025.

Numerous key industry figures spoke at the STF hearing on Monday 12 November, including Regis Dudena, head of betting regulator Secretariat of Prizes and Bets. The onshore online market is still expecting to go live on 1 January 2025, despite constant pushback from politicians and various sectors since regulations were published in July.

Dudena warned reversing betting laws could lead to a rise in black market activity, a statement the industry trade body National Association of Games and Lotteries (ANJL) also shared at the hearing.

“The demand for the service is real and any eventual declaration of unconstitutionality of the law will only direct Brazilians to an illegal, unsafe market with harmful effects, such as fraud, money laundering and the exploitation of bettors,” Dudena told the hearing.

“[These illegal sites] tend to worsen increasing mental and financial health problems, such as being in financial debt.”

Have the delays led to the ongoing issues in Brazil?

Brazil’s National Congress first approved legislation for online betting in November 2018, with outgoing president Michel Temer signing the legislation into law in the following month.

However, it took until December 2023 for the Chamber of Deputies to give it the final green light, and many in the betting industry feel that delay has led to a proliferation of illegal sites and subsequent harmful activities like problem gambling,

The SPA, which sits within the Ministry of Finance, shares those thoughts.

“All [my] concerns are also from the Ministry of Finance,” Dudena explained. “The diagnosis is that a lack of regulation since the first legalisation [in 2018] has brought growth in the activity and a lack of control.”

Dudena and the SPA believe formal regulation will alleviate the growing concern that betting is impacting consumer spending and the welfare of bettors.

“Regulation is the best means of state presence in the sector. This presence will only be full, effective and efficient if the constitutionality of Law No 14,790 is recognised by this Supreme Court,” Dudena continued.

Loterj has its say

Another prevalent name to speak at the hearing on Monday was Hazenclever Lopes Cançado, president of the state regulator Rio de Janeiro State Lottery (Loterj).

Loterj is currently embroiled in a legal battle with the federal government over whether it has the jurisdiction to grant licensees federal licenses.

Earlier this month, Loterj issued a release promoting the importance of regulation and explaining how its licensed brands are helping to establish a “safe and conscious” environment for gambling in Brazil.

At the STF hearing, Loterj reiterated its support for regulations and defended the constitutionality of the betting laws.

“Federal Law No 14,790/2023 consists of a legitimate political option,” Cançado said. “Every day [the law] proves to be more relevant and indispensable for the fulfilment of the fundamental objectives of the Republic, such as national development, the eradication of poverty and the construction of a fair and supportive society.”

Lottopar, the state lottery in Paraná, was in agreeance with its Rio de Janeiro counterpart over the benefits of regulations, pointing to the law’s restrictions on advertising as crucial for protecting bettors in Brazil. As per these regulations operators will not be able to use influencer marketing and social media advertising will be restricted.

“Law No 14,790 is essential to guarantee a safe and responsible betting environment by imposing consumer protection standards, promoting transparency and necessary preventive actions,” Lottopar technical director Rafael Halila Neves said.

“Another important point of the law is the discipline of advertising, curbing irresponsible practices, especially by influencers who present betting as a source of income.”