Brazil’s Betting Ban Debate Enters a New Phase After Lula’s Re-election.
Brazil’s Superior Electoral Court (TSE) officially confirmed Lula’s re-election on Sunday. He secured nearly 52% of the vote, compared with just over 48% for Flávio Bolsonaro. The margin slightly more than 4.3 million votes, underscored how closely contested the race was.
Lula’s opposition to betting helped set the stage for Provisional Measure 1,394, which introduced a ban on gambling. His campaign team had described the election as a plebiscite on betting. Also the result may encourage him to maintain his criticism of the industry. Efforts to overturn the measure are expected to resume on Monday on two fronts: the Supreme Federal Court (STF) and the National Congress. Since the measure was enacted, Lula has repeatedly said the ban is intended to protect families struggling with debt. With his electoral victory, he may take a harder line on gambling, despite the role tax revenue plays in supporting public finances. On the eve of the runoff, Lula promised that betting would not return, though the decision is not his alone.
Supreme Federal Court: The First Test
The STF is expected to decide first whether the provisional measure is constitutional. Legal challenges have been filed by industry organizations and football clubs. The case’s rapporteur, Minister Luiz Fux, said he would issue a decision once the election was over.
Fux will need to assess whether the measure violates contracts, leads to widespread job losses and achieves its stated aim of ending gambling. A provisional measure or decree is unlikely to eliminate gambling in Brazil. Instead, critics warn, it could push bettors toward the illegal market. Given the concerns raised about the measure’s constitutionality, the court may consider suspending or overturning it.
Regardless of the court’s decision, the measure has already damaged Brazil’s reputation as a destination for investment. It has also disrupted operators that invested in the regulated market. They paid BRL30 million ($6 million) for five-year licences, plus BRL5 million in reserves, but were forced to suspend operations for more than 30 days. The resulting revenue loss is estimated at around BRL1.2 billion. The question now is who will bear the cost.
The government, meanwhile, has lost more than BRL400 million in tax revenue. That figure includes taxes on gross gaming revenue, as well as Corporate Income Tax, Social Contribution on Net Profit, PIS/Cofins and social security contributions.
The licences are due to expire on Sunday. If the STF overturns the measure, the cancellations could become invalid.
Congress: A Second Front
The National Congress will be the other key arena. The joint committee reviewing Provisional Measure 1,394 has appointed 12 senators and 13 representatives as full members, along with six senators and seven representatives as alternates. The full committee is made up of 26 senators and 26 representatives. However it has not yet been formally established, and its president and rapporteur have not been named.
Under the rules, Congress has until 25 November to consider the measure. The committee may request a 60-day extension. From 9 November, however, the measure is expected to block Congress’s agenda until lawmakers vote on it.
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During the previous semester, Lula was able to advance bills he supported in both houses through negotiations and exchanges of political backing with congressional leaders. With less room to manoeuvre after the election, keeping the measure in force may prove more difficult. Even if it survives, it is unlikely to be fully considered by 25 November.
Lula also faces a more challenging Congress. The PL, the party of his election rival, holds the largest blocs in both houses an obstacle for the president as he tries to secure support.
So far, the indication from Congress is that betting sites could resume operations for sports betting only, without online casino games. The unresolved issue is the licences, which became invalid on 25 October. Whether operators will need to submit new licence applications before returning to the market is a question Congress will have to settle
