Betting houses are 'entering the field' in Brazilian football, but the activity faces dilemmas. Understand why!
There are still a few rounds left before the Série A and B of the Brazilian Championship are decided, but the 2021 edition of both competitions already marks a major milestone in the market involving national football: the definitive "invasion" of... BookmakersEven without concrete support from Brazilian legislation, currently 33 out of 40 clubs have companies that invest in this sector among their sponsors.
The most recent to join was Vasco. Last Thursday (21), Cruz-Maltino officially announced PixBet as its main sponsor. The company, which already invested in Ponte Preta, América-MG and Goiás, will disburse R$ 9 million until December 2022. The evolution of betting houses in Brazilian clubs, however, still brings some dilemmas.
Area awaiting clear regulation.
On December 12, 2018, then-President Michel Temer signed Law No. 13.756 (approved by the Senate the previous month). In addition to allocating a portion of the funds raised from federal lotteries to public security, the change provided for regulations for sports betting in Brazil.
According to the text, "the fixed-odds betting lottery will be authorized or granted by the Ministry of Finance" within a period of two years, extendable for another two years to make the activity viable.
Regulation was the starting point for around 450 betting companies to set up shop in the country, generating R$ 12 billion annually (according to data from H2 Gambling, a consulting firm in the sector). Many of these brands (Sportsbet.Io, Galera.Bet, Betano, among others) found in football a way to gain visibility.
There was a new surge thanks to Law No. 14.183, sanctioned in July 2021 by the current President of the Republic, Jair Bolsonaro. This law altered the taxation and distribution of revenue from these bets. Flávio Sanches, a partner specializing in Tax Law at CSMV Advogados, sees the new legislation as "a driver of the betting market."
– In short, the major change was the alteration of the tax base for the operation of betting houses established in Brazil. Until the middle of this year, the entire betting volume was the tax base. With the change, prizes to be paid, income tax on prizes (30% of the prize), and social security contributions paid on total revenue were excluded from this tax base – and he highlighted:
– This corrected a distortion in the eyes of those who operate the betting, since they do not consider the prize as their own revenue, but rather something that momentarily circulates in a flow that comes from the bettors and returns to them. It is the net prize value with the respective Income Tax, in addition to the social security contribution, that becomes the taxable base for betting houses, adjusting the total tax burden by approximately 20%, which is the tax burden we find in other countries – he added.
Lawyer Eduardo Carlezzo warns of the urgent need for clear legislation regarding the sector, with the aim of bringing foreign currency to Brazil.
"The Brazilian market, to be honest, is already being exploited, albeit in a 'gray' way, by the vast majority of operators. However, some major operators will only enter the market in force when it is 100% legalized, and this will certainly bring economic benefits to the clubs because we will have more large companies with greater investment potential in Brazilian football," he said.
'Meanders' for houses to enter Brazil
The impasse in Brazilian legislation did not prevent betting companies from entering the country. Some of them are based in other countries, where there is no risk of them being exposed to the Law of Criminal Offenses (Law No. 3.688 of 1941), which prohibits the operation and establishment of gambling establishments.
– We are already used to many betting companies operating in the Brazilian market. The issue is that many compete here from foreign jurisdictions, due to local taxation – said Flávio Sanches, a tax law specialist at CSMV Advogados.
Sportingbet is based in London. Dafabet, for example, is located in the Philippines.
Football as a 'flagship' option for bettors
Brazilians' passion for football has influenced investment by many betting companies. Ricardo Rosada, Vice President of Marketing and Communications at Galera.bet, which has contracts with Corinthians, Sport, and Cruzeiro, explained this in detail.
– When a company reaches a sponsorship agreement, it's a two-way street. It's about the trust that their brand will receive strong exposure and, in addition, that the audience has the potential to bring profits to their company – and he emphasized:
"Football is the main driver of betting and contributes significantly to the activity of so many sports betting sites," he added.
Rosada highlighted another aspect that makes investing in football attractive.
"Not all fans like to gamble, but the public that does gamble likes football, just as there are bettors on other sports like basketball and tennis," he said.
The agreement with the clubs includes prominent brand placement on jerseys and other media, such as advertising boards during matches and even in commercials.
Ricardo Rosada, vice president of marketing and communication at Galera.bet, points out how clearer regulation of betting could change the sector.
– Part of our operation takes place abroad, with a very high level of compliance. As soon as the law is passed in Brazil, the betting market here could grow up to five times – he predicts.
'Boom' is viewed with enthusiasm in football.
The new route was well received by Brazilian clubs. Jorge Avancini, vice president of marketing for Internacional, a club that signed a contract with Betsul, sees the activity as an alternative that is gaining ground.
"I see the arrival of these new players as very important. They came to fill the gap left by other sponsors and they're here to stay. Inter made an agreement with Betsul and I believe in a two-way partnership, as the clubs also earn percentages from these bets, in addition to activations with the fans," he said.
In the eyes of the Colorado club's leader, this initial partnership demonstrates the potential of betting companies for the economy.
"It's an innovative market that generates favorable opportunities and drives the economy. All of this, of course, provided it's fully legalized and transparent, and that's why short-term regulation will be a fundamental step for this sector," he stated.
Options for 'Fan-Bettors'!
The diversity of the sponsorship sector in football became more evident at Juventude. Marsbet, which had been featured on the Caxias do Sul team's shorts since August, now has the "company" of PixBet.
PixBet will be featured on the bottom front of the game jerseys. The agreement also allows for visibility on interview backdrops, social media cards, the website, and signage at the training center.
Fábio Pizzamiglio, vice-president of administration and marketing at Juventude, sees the presence of the two betting companies on the club's uniform as a natural occurrence.
"There were no problems with the agreement. Marsbet is a Turkish company focused on the international market, while PixBet is geared towards the domestic market," he stated.
Pizzamiglio is enthusiastic about the law on gambling coming into effect.
"We believe this is positive, as it could further increase revenue for the clubs, in addition to nationalizing the dividends from betting," he said.
Market scrutiny extends to Serie B.
After the "parceling out" of space on the uniforms of Serie A clubs (only Cuiabá does not have a sponsor in this sector), betting companies have turned their attention to Serie B. Currently, 14 clubs display online gaming brands.
Botafogo's business director, Lênin Franco, who closed the deal with Estrela.Bet, says that this series of sponsorships is not surprising.
"Besides being the market that has invested the most in football for obvious reasons, this Série B is historic because it has a large number of Brazilian champions competing. In other words, it increases the audience and the level of the Second Division," he stated.
Franco offers a counterpoint regarding the current lack of regulation surrounding the betting market.
– The lack of regulation actually fosters a greater number of companies in the market; it doesn't create obstacles. But, from the moment it is regulated, the number of companies will decrease, because not all will be able to become compliant – and he clarified:
"Today, what we have is a dispute over market share, that is, securing space on the shirts to prevent the competitor from taking over," he added.
A 2022 filled with expectations.
The law enacted by former President Michel Temer stipulated a two-year period, extendable for another two years, until clear regulations for the activity were established, and who would be responsible for granting and authorizing lotteries and betting (physical or virtual) was determined. Therefore, 2022 becomes a crucial year for the activity.
Lawyer Eduardo Carlezzo warns of the urgent need to define the activities of betting houses.
– The federal government is missing a great opportunity to have a betting regulation system in place that would finally allow the legalization of operations in the country and, with that, enjoy all the benefits that legitimate businesses can bring. The delay in presenting the final regulation is incomprehensible – and he stressed:
"There are dozens of countries that have been regulating this issue for a long time and have therefore already tested the viability of the rules in practice. Therefore, we don't need to invent anything, but simply copy the best experiences," he concluded.
Tax law expert Flávio Sanches sees at least one good omen for the sector to begin establishing itself.
"With this taxation being in line with that of countries that usually attract betting companies, and considering that the Brazilian market is naturally considered by them, it is reasonable to conclude that more betting companies will make the move to effectively establish themselves in the country, generating jobs, income and revenue that might previously have been diverted abroad," he said.
Sanches makes a reservation immediately afterwards.
"It's clear that the tax burden isn't the only deciding factor when opening a business in the country, but it's certainly one of the fundamental points. At least in terms of tax burden, we've been more competitive since mid-July," he emphasized.
Beware of gambling addiction.
The spread of gambling, however, triggers a social concern. Jorge Jaber, a professor of postgraduate studies in Psychiatry at PUC-Rio, clarifies the need to discuss the risks of disorders surrounding gambling, such as addiction and other psychological problems.
"Of course, there's resistance to anything new, and it's impossible to generalize that online betting, via cell phone or computer, is inherently negative. However, people who already have this compulsion or a tendency towards this compulsive disorder may be exposed to new risks. A diagnosis of the disorder is made. Then, medication and mood stabilizers are prescribed to try and curb it. But this isn't ideal. First and foremost, psychological support is necessary for those who feel dependent," he stated.
Jaber pointed out that all areas are important in providing psychological support to those who play.
– There are some casinos and gambling venues abroad that have support groups for gambling addicts. Mutual aid groups are crucial in these cases – and he also highlighted the importance of advertising:
– We cannot suppress information within a democratic framework. Beyond simply advertising a betting site, it's necessary to provide an address and a phone number to help those experiencing emotional distress due to gambling. And this can be done through advertising. It's a very significant contribution, a form of social guidance – he concluded.Throw! – Vinícius Faustini)
