Bill banning betting in Brazil creates legal uncertainty and risk of lawsuits.
Provisional Measure (MP) No. 1.394, issued by the federal government to prohibit the operation of sports betting companies, the so-called "bets," is generating legal uncertainty in the country's business environment. Experts believe the companies should be compensated for the abrupt cessation of their activities, since they invested in the sector based on official regulations.
The issue was analyzed by lawyers and economists interviewed by Valor, who identified, in addition to the legal risk, a political component in the enactment of the measure during a pre-election period. The prevailing assessment is that the provisional measure may be a "showcase measure," without concrete implementation.
Legal risk and compensation
Lawyer and economist Elena Landau argues that the closure of the betting companies' economic activity, as it was conducted, is equivalent to expropriation. According to her, the companies came to Brazil and invested based on regulations created by the government itself. "Without any warning or negotiation, a Provisional Measure comes along and breaks the agreement," she said.
Landau compares the situation to a concession contract in another regulated sector. "There would be the same legal and regulatory risk if a concession were granted to an energy distributor for a specific period, and the government decided to break the contract," she stated. According to her, terminating the activity without compensation "is tantamount to expropriation."
Lawyer Leonardo Roesler, a specialist in business law and partner at RCA Advogados, acknowledges the government's legitimacy to tighten oversight and restrict harmful activities. However, shutting down a previously authorized market "requires consistent justification, proportionality, and adequate treatment of the economic and legal consequences," according to him.
For Roesler, closing the platforms represents an extreme measure. “The risk is a migration to clandestine platforms. Demand will not disappear, and the government will lose some of its control capacity,” he stated. The expert added that “the State must answer both for the failures of the model it authorized and for the consequences of the solution it intends to adopt.”
Impact on the investment environment
Luiz Felipe Maia, a partner at the law firm MyLaw Advogados, broadens the scope of the criticism by highlighting the effect of the Provisional Measure on Brazil's attractiveness to investors in general, not just in the betting sector. "If the State induces investment and then radically changes the rules soon after, its future guarantees of stability lose credibility," Maia stated.
Landau also points to the political dimension of the measure. According to her, the provisional measure was signed on the eve of the elections and released "in a challenging tone," signaling to the market that assets can be seized without compensation. The expert questions whether the constitutional requirement of urgency for issuing provisional measures has been met. "The relevance of the issue undoubtedly exists, but the only urgency is the election. We see a president of the Republic using a provisional measure as an electoral tool," she stated.
She points out alternatives that the government could adopt without breaking contracts: prohibiting betting advertising during football matches, including warnings similar to those for smoking, or removing Pix as a form of payment accepted by the platforms.
Legal Actions
On Monday (September 28), the Attorney General's Office (AGU) filed a public civil action against 17 online betting operators for damages caused to the health of the population. Among the requests are the reimbursement of expenses to the Unified Health System (SUS) and compensation for collective moral damages of at least R$ 1 billion.
The National Association of Games and Lotteries (ANJL), which brings together companies in the sector, filed a lawsuit this week with the Supreme Federal Court (STF) against the Provisional Measure. Landau believes that the measure will hardly be converted into law within the constitutional deadline of 120 days, considering the electoral calendar and the Judiciary's recess.
