The definition of Fantasy in the Legal Framework for Games
Last month, the Plenary of the Chamber of Deputies approved the substitute for Bill No. 2796/2021 , which establishes the "Legal Framework for the Electronic Games Industry and Fantasy Games". The approval of this framework represents a huge step forward for the Fantasy Sports industry, a modality that gains its formal recognition and legal delimitation from this legislative proposal, which is still under consideration.
The Bill arose from an initiative to regulate the electronic games market and, primarily, to separate these games from games of chance. The legislator's purpose is quite clear in paragraph 2 of article 2 of the substitute bill approved in the Chamber, which expressly indicates that slot machines and other games of chance cannot be considered electronic games. This differentiation is also of paramount importance for the proper development of the Fantasy Sports industry.
The definition of Fantasy originated from the suggestion of Amendment No. 2 , whose content was eventually incorporated into the substitute bill, and brings with it elements outlining the activity that were based on foreign regulations, especially US legislation, which in the Unlawful Internet Gambling Enforcement Act of 2006, makes clear the differentiation between Fantasy and sports betting (Subchapter IV, §5362, 1, E, ix).
In the Brazilian Legal Framework for Games, the legislator defines Fantasy as "disputes that take place in a virtual environment, based on the performance of athletes in real sporting events" and adopts four main criteria for an activity to be classified as such: I – that the result depends on the user's technique in forming their virtual team, that is, stemming primarily from their knowledge, strategy, and skills; II – that the rules of the virtual competition are pre-established; III – that the prize money is predetermined; and IV – that the results are not based on the performance of a single team or a single athlete in a real-world sporting event (§ 3 of article 2 of the substitute approved in the Chamber).
This legal delimitation of the Fantasy category ensures the safety of this type of business, which is sometimes confused with other activities.
Paragraph I of the substitute bill differentiates Fantasy from games of chance. Brazilian Criminal Contravention Law (article 50 of Decree-Law No. 3.688/1941) defines games of chance as those whose winnings or losses depend exclusively or mainly on luck. In this respect, the legislator was careful to emphasize that in Fantasy, the player's success stems primarily from their skills. Luck may play a role, but it is not the determining factor in achieving a positive result. What matters in Fantasy is the skill, knowledge, strategy, and study of each participant.
The elements introduced by the Legislature in the Legal Framework for Games are also important to differentiate Fantasy from lotteries. As provided for in Article 40 of Decree-Law No. 6.259/1944, a lottery is characterized by the placement of tickets, lists, coupons, vouchers, papers, manuscripts, signs, symbols, or any means of distributing numbers. This characteristic, as can be seen from the definition provided in the substitute bill, is not present in Fantasy, which has its result based on the player's performance, not depending on a randomly assigned number.
Among the lottery modalities are fixed-odds bets, popularly known as sports bets, which, because they are based on sports, are often (mistakenly) confused with Fantasy. At this point, the Legislative proposal is once again fundamental. In defining the differentiating requirements of Fantasy in the substitute bill to Bill No. 2796/2021 , the legislator stipulated in item IV of the text approved by the Chamber of Deputies that in Fantasy the outcome of the game depends on a combination of events, the joint actions of more than one player and others from a team, which distinguishes it from sports betting, where it can result from the action of only one player or a single team.
The advancements suggested by the Legal Framework for Games in defining Fantasy Games also contribute to differentiating them from another type of activity: commercial promotions. A commercial promotion consists of the free distribution of prizes. In these promotions, consumers compete for prizes through a raffle, a contest, or a gift voucher. The main purpose of a commercial promotion is to promote a brand or product. It is a means to an end. In Fantasy Games, and in this respect the legislator has once again acted correctly, it is clear from the defining elements brought in the substitute bill that it is an activity that does not seek to promote a brand or product, as it is an end in itself. That is, the main objective of Fantasy Games is the game itself and the entertainment it generates for its users; the game does not seek to leverage other activities, such as the sale of advertising space or other products.
Based on everything presented, the importance of the legal definition contained in the Legal Framework regarding what constitutes Fantasy is clear. The substitute bill approved by the Chamber of Deputies is not only timely, as its approval by the Federal Senate should boost the industry's growth, but it is also important to dispel existing uncertainties about what the activity actually entails.
The substitute bill for Bill No. 2796/2021 is under review by the revising chamber of the National Congress and depends on subsequent presidential approval. But, even with these legislative steps pending, the industry already has high expectations based on the progress of this legal framework. Now it's a matter of following the next steps with the hope of better days.
(*) Bárbara Teles is a Regulatory and Public Affairs lawyer at Rei do Pitaco, with a postgraduate degree in Law and Government Relations. Rafael Marchetti Marcondes is a professor of Sports and Tax Law. He holds a PhD and Master's degree in Tax Law from PUC/SP. He has a Master's degree in Sports Management from ISDE/FC Barcelona. He is a specialist in Tax Law from FGV/SP. He holds a Bachelor's degree in Law from PUC/SP. He is a member of the Brazilian Institute of Sports Law (IBDD). He is a lawyer in São Paulo. The article above was published in Lei em Campo.
