See the differences in betting regulations between Brazil, the United States, and Europe.
Brazil and other countries that have chosen the path of regulating online gambling need to strike a balance: combating the harmful effects of gambling without making illegal sites more attractive than regulated ones, according to a report in Folha de S.Paulo.
This threshold, however, is difficult to find, according to lawyers specializing in the subject. In the most restrictive European countries, the regulated and taxed market struggles to attract players, who continue to use obscure portals to avoid taxes. In the United States, on the other hand, uncontrolled advertising and reports of indebted young people are rampant.
In Brazil, the final text of the betting regulation, comprised of a law approved last December and ordinances published by the Ministry of Finance up to August, drew from these sources and is dividing society.
Members of the Outpatient Program for Pathological Gambling (PRO-AMJO) at the Institute of Psychiatry of USP (University of São Paulo) state that restrictions regarding advertising and gambling hours in the country are insufficient compared to what is seen in Europe.
Researchers at the Institute of Psychiatry also criticize the lack of investment in healthcare: starting in 2025, betting companies will have to pay a 12,5% tax on the profits they earn from betting, of which 2,5% will be dedicated to the treatment of ludopathy—the addiction to gambling.
Betting associations, in turn, claim that high taxation and strict rules will scare away companies interested in operating seriously, paving the way for illegal sites.
“In the United States, the parallel market is practically nonexistent because there are firm actions against illegality and, at the same time, there is a flexibility that favors the operator who really wants to work correctly,” says Leonardo Benites, communications director of ANJL (National Association of Games and Lotteries).
A study conducted by the economics department at the University of Leipzig, in Germany, showed that 50,9% of bets in the country end up on unauthorized websites.
American laws regarding online gambling vary among the seven states that license betting operations. For example, some states prohibit online slot machines, such as the "Tiger Game," but it is currently possible to operate in 38 states and the District of Columbia with a local license.
In the European Union, there are basic rules for sharing information between countries, but each member of the bloc can formulate its own rules. Australia and England are among the pioneers of the regulated betting market and have chosen more liberal approaches.
ADVERTISING REGULATION
The rules for advertising are among those that vary the most from territory to territory.
Moldova, for example, prohibits advertising for betting companies on television and the internet. Other countries, such as Germany, Portugal, the Netherlands, and Belgium, ban advertisements at certain times—generally, they are only allowed late at night or in the early morning.
Other members of the bloc only prohibit advertising made by or directed at minors and institute a liability regime, in an approach similar to that of the United States, England, Australia and now Brazil.
Here, betting companies will have legal responsibility for complying with the rules and will be under the supervision of the Prizes and Betting Secretariat of the Ministry of Finance. They will also be legally responsible for the message of their affiliates—a kind of third-party reseller of the brand. In the case of advertising, influencers who promote betting companies will share responsibility.
In Germany, it is prohibited to promote gambling through influencer marketing, affiliate programs, or paid advertisements in newspapers.
RETURN TO PLAYER
Another concern of Brazilian legislation was the establishment of a minimum return-to-player rate (RTP). This is the percentage of the money wagered that returns to the bettor if they play indefinitely (the Treasury set the minimum rate at 85%). In this case, for every R$100 wagered, R$85 would return to the bettor, on average across all games.
Since betting is a random event, each person can have a very different individual experience from this average return. Some players may win money and others may lose everything. In Europe and Australia, there are legal accusations that RTP is misleading advertising.
In England and some US states, there is no definition of a minimum player return.
“In the Brazilian parallel market, there is no control whatsoever regarding the RTP practiced, and some operators who haven't applied for licensing use RTPs that are much worse than 85%, because they don't have a long-term market maintenance vision,” says Benites, from the gaming association. According to him, the indicator provides transparency to the player.
MONEY LAUNDRY
To combat money laundering, two approaches are necessary. Betting companies in Brazil must have a corporate structure with an unblemished reputation, as well as a clean criminal record and administrative history. They must also implement customer monitoring strategies to detect suspicious transactions. For example, any bet exceeding R$10 must be reported to COAF (Council for the Control of Financial Activities).
According to USP law professor Gustavo Badaró, monitoring money movements works similarly in almost every country in the world—each has a financial monitoring unit, like Brazil's COAF, and these bodies cooperate with each other. Today, there are 215 nations associated with the FATF (Financial Action Task Force), which coordinates this activity worldwide.
RULES AGAINST COMPULSIVE GAMBLING
Monitoring transactions linked to an individual, which in Brazil will be done using their CPF (Brazilian taxpayer ID), also serves to identify patterns of compulsive gambling and block the gambler's access to the platforms. Bets will have to be paid upfront, with the money going from the player's account to the betting site's account.
One of the recommendations from health professionals is to limit access to gambling during the early morning hours. In Italy, for example, betting is prohibited between 2 a.m. and 6 a.m. However, this measure is not included in Brazilian regulations, nor in those of other European countries or the United States.
The market is resistant to the measure, since most bets are placed after 22 pm. An executive told the reporter that this would be the prime time for betting.
SHAREHOLDER STRUCTURE
However, there is varying degrees of rigor in the criteria for betting site owners. In American states, as well as in Brazil, there is a requirement for a national partner to be behind the site. Some European countries waive this requirement, provided the platform is licensed by the competent authority.
In the initial version of the regulatory framework, issued by the Treasury as a provisional measure, there was also a requirement that 20% of the company's capital be retained in Brazil to facilitate the collection of taxes and compensation. However, this measure was overturned in the National Congress, according to Rubio Teixeira, a lawyer specializing in licensing betting websites.
According to Rubio Teixeira, it is necessary to wait and see how the oversight and implementation of the rules will be carried out before making comparisons. "The lack of clarity regarding some points of the legislation and the SPA's ability to effectively monitor the market create uncertainty for the future."
