Brazil is dealing with a wave of legal action from betting companies following the release of an approved list of operators allowed to continue operating in the country. This list, published by the country’s Department of Prizes and Betting (SPA) in early October, features 96 companies, along with 210 affiliated brands, eligible to operate between October 1 and December 31, 2024. However, several companies excluded from the list have filed lawsuits against the Ministry of Finance, sparking controversy over the approval process.
SPA’s Crackdown on Illegal Betting Sites
The creation of the approved list was prompted by increased pressure from both the industry and the government to regulate the market ahead of Brazil’s licensed gambling market launch, set for January 1, 2025. The government is determined to crack down on illegal betting operators in the meantime. As part of this effort, the National Telecommunications Agency (Anatel) was tasked with blocking 2,040 websites deemed illegal, including prominent names such as Betfred and BoyleSports.
While the approved list allows licensed operators to continue functioning, companies not on the list must cease operations until they obtain federal authorization. This restriction has led to significant backlash from several betting operators, with at least eight lawsuits filed in the federal courts.
Lawsuits from Excluded Operators
One of the prominent lawsuits comes from Zeroumbet, a betting platform owned by lawyer and social media influencer Deolane Bezerra. The company submitted its federal betting license application on August 20, 2024, but was left off the approved list due to an ongoing federal investigation into illegal gambling and money laundering. The investigation, known as ‘Operation Integration,’ is centered on Bezerra, arrested twice in September. However, Zeroumbet’s legal team argues that the investigation should target Bezerra as an individual and not impact the company’s operations. “In this case, the one who would be punished would be Deolane Bezerra and not the company,” the lawsuit contends.
In response to the lawsuit, the SPA maintained that Zeroumbet was excluded to protect public interest and ensure the integrity of bettors, given the ongoing investigation. Zeroumbet is seeking a court ruling to allow the company to resume operations despite the investigation, which could have significant financial and reputational implications for the platform.
State-Level Authorizations and Federal Disputes
Other operators, such as Esportes da Sorte, have taken a different route to stay in the market. Although Esportes da Sorte was also excluded from the SPA’s approved list, the company secured authorization from Rio de Janeiro’s state lottery regulator, Loterj, by acquiring controlling shares in the Loterj-licensed company ST Soft. This allowed the company to continue offering betting services at the state level, despite its exclusion from the federal list.
However, Rio’s stance has drawn criticism from the federal government, challenging the legality of allowing Loterj-accredited betting sites to operate nationwide. The federal government has taken the issue to Brazil’s Supreme Federal Court (STF), arguing that state-level licenses should not bypass federal regulations.
Wider Implications for the Lula Government
The Lula administration is facing significant pressure as it seeks to regulate Brazil’s gambling market. Betting has been legal in Brazil since 2018, but until recently, there was no regulation in place for operators. The government began implementing rules last year with the goal of collecting taxes and ensuring compliance. Despite these efforts, the Ministry of Finance has already faced a series of lawsuits, and more legal challenges are expected as excluded companies continue to contest the SPA’s decisions.
For companies like Sportvip Group International Apostas, the legal battle is seen as crucial to their financial survival. The company recently had its preliminary injunction request denied, but the court is still considering the full case. Sportvip, like many others, argues that being left off the list could result in “incalculable financial and reputational losses.”
The controversy has also been fueled by revelations from a Central Bank report, which indicated that people covered by Brazil’s social welfare program, Bolsa Família, transferred R$3 billion to betting platforms in August alone through the Pix payment system. This discovery has intensified scrutiny of the industry, particularly regarding unregulated platforms operating in the country.
As the lawsuits progress, the Brazilian government’s efforts to regulate the market and safeguard public interest will continue to face challenges from operators pushing for inclusion in the newly regulated space.
Source:
“Governo Já Enfrenta Ações Sobre Lista de Bets e Empresa de Deolane Tenta Liberação“, jornaldebrasilia.com.br, October 16, 2024.