Gaming Regulations Coming Soon in Brazil?
Somewhat unexpectedly, this week we have some expectation that the Brazilian market will be regulated.
Finally. At last. For Good?
Not really. I guess the most important ‘notion’ that needs to be understood by foreign investors here – of any industry – is that laws in Brazil can change a lot faster than in America, Europe and other mature markets like Australia or Japan.
If we see some news about the regulations, we need to see how the industry will take the bill. The problem we have now is several drafts of upcoming regulations circulated among operators of the grey market, and nothing saw the light of day.
So we have a lot of unpredictability even if the regulations come eventually. And yes, I’m sounding a lot less optimistic than many colleagues. The rumors are a bit different than usual, some people that didn’t ‘buy’ the previous rumors during the Bolsonaro government are more optimistic.
But not all of us are. As I like to say, in Brazil, when it comes to law and investments, I only believe in things that have already happened.
Longevity of Laws and Regulations in Brazil
We have several things that could impact the longevity of gaming regulations. Some rumors indicate a bad license model, with a cost in the house of 4m BRL ($778k). If the government really believes that the operators are that hungry for licenses, it’ll only stimulate the longevity of the land-based sports betting black market, illegal land-based casinos and other illegal enterprises like Jogo do Bicho the way it is today.
This industry is no joke when it comes to black markets. Something that many fail to see – and I mean the press and the public eye – is the fact that sometimes black market protagonists push their interests in a way that seem unlikely to many: they try to see the markets of interest regulated with unbearable taxation and license costs, which makes the market share of the black side of the force a lot bigger.
Even if the Industry Likes the Regulations… The Bill Can Fade Quickly
But let’s suppose that the industry likes the license model. Let’s suppose that in 2-3 years we see protagonists establishing companies in Brazil and everything is working like clockwork.
A new government with a different view could try to change the license situation.
Our industry is always a target of endless discussions regarding morals and potential regulations surely won’t remain in power for long without constant reviews and discussions.
International Licenses in Brazil: Keep them?
The licenses for the Brazilian market are still something to happen. And by that I mean, after the potential bill being approved, signed and coming into force, we’ll need to see if the operators will be able to adapt to the clauses forcing them to establish incorporated companies in Brazil and many other things.
What’s the talent available in the region? Will the salaries of executives living in the region rise too much as a consequence of the forced numbers of workers based in Brazil?
What about other costs beyond salaries and taxes, like legal fees in the form of the services of the few lawyers with experience in this industry in Brazil?
I guess the scenario will remain quite unpredictable for a while. If the regulations come, there’s a big gap between the regulations being approved and Brazil becoming a stable, regulated market like The UK, Sweden, Malta, Curaçau just to name a few.
Most operators that were consultancy clients of mine had plans to expand beyond Brazil, even if their first step is Brazil because of the citizenship and cultural background of the shareholders. So, if you’re investing in Brazil as a start and aim to operate globally, I wouldn’t advise to focus only in the Brazilian license, regardless the form it’ll come at first, and then again, if it comes any time soon.
