Brazilian administrations betting on the return of gambling

. Jan 30, 2020
Brazilian administrations betting on the return of gambling Photo: Welcomia/Shutterstock

In their search for new sources of revenue, all levels of Brazilian government are pursuing ways to raise tax collection while reducing the size of the state. One such proposal is the legalization of gambling, an idea floated since the beginning of the 2014 economic crisis, and which splits opinions within conservative and liberal segments of the population.

Gambling has been illegal in Brazil since 1946, following a decree from then-President Eurico Gaspar Dutra. The reasons given at the time were that the practice violated “Brazil’s legal and religious moral tradition” and constituted “abuses of morals and good habits.”

</p> <p>Before this, gambling had been legalized in 1920, but suffered from a number of different restrictions depending on the government in power. Nowadays, however, Brazilian law classifies gambling as a criminal offense, including <a href="">betting on sports events</a>, with the exception of gambling on horse racing within racetrack premises.</p> <p>One of the main targets of this crackdown on gambling is the so-called &#8220;<em>jogo do bicho,&#8221;</em> or &#8220;animal lottery.&#8221; The game consists of a daily draw in which the numbers 0 to 99 are represented by zoo animals, with players&#8217; guesses often involving a hefty dose of symbolism, mysticism, and dreams.</p> <p>The practice is widespread in Brazil, and while illegal, it can be easily found in cities around the country. There are an estimated 350,000 draws across Brazil, with no state more connected to the game than Rio de Janeiro.</p> <p>The animal lottery operators—known as <em>bicheiros</em>—were once powerful political brokers in Rio de Janeiro, often with links to the city&#8217;s famous samba schools, presiding over the organizations and using them as a front for their gambling revenues.</p> <p>Journalists Aloy Jupiara and Chico Otavio explored this underground history in their 2015 book <em>&#8220;Os Porões da Contravenção&#8221;</em> (The Basements of Contravention), showing how the <em>bicheiros</em> maintained certain <a href="">proximity with members of Brazil&#8217;s military regime of 1964–1985</a>, allowing them to further develop their businesses.</p> <h2>Games for everyone</h2> <p>Currently, over three-quarters of the United Nations member countries and over 70 percent of those in the World Tourism Organization have legalized gambling. In an attempt to avoid failing to profit from citizens wanting to wager money for prizes, Brazil created state and national lotteries.</p> <p>Administered by the government, these games are permitted, under the justification that they help fund sport in Brazil, and other social development activities. This gambling loophole is one of the arguments put forward by the gaming industry.</p> <p><a href="">Brazil&#8217;s federal lottery</a>, for instance, generates revenues of BRL 34 billion (USD 7.96 billion) per year. Data from the sector shows that legalizing all forms of gambling could create gross revenues of USD 15 billion per year, another USD 4.2 billion from taxes, and USD 1.7 billion on operating licenses alone.</p> <p>Also, investments to build casinos and gambling resorts would generate an estimated 700,000 direct and indirect jobs.&nbsp;</p> <p>It seems that the main push to legalize gambling in Brazil would be to link the practice to tourism, as is the case of a legislative bill submitted by Senator Ciro Nogueira, which proposes that gambling facilities could only be installed in regions where there is no other way to encourage economic activity.</p> <p>The text also delegates state governments the power to make this assessment and collect revenue from the activities. Of the total received by casinos and resorts, the bill earmarks 7 percent for state administrations and another 3 percent for municipalities.</p> <p>But, as it the case of everything in Brazil, the future of gambling is likely to be decided by the courts. There is pending case in the Supreme Court discussing the <a href="">decriminalization of gambling</a>, but its trial has not been scheduled yet.</p> <h2>Gambling outside the law</h2> <p>Even with the prohibitions and moral arguments against gambling, Brazilians continue to bet, and not only in the animal lottery. In 2018, the Michel Temer government enacted a law that allowed fixed-odds sports betting in the country. The objective was to tax a market that moves around BRL 4 billion per year in Brazil, according to data from Fundação Getúlio Vargas.</p> <p>The same study showed that Brazilians access 8,000 sports betting sites around the world, and, of that total, 500 allow bets on Brazilian football, and 40 of these have versions in Portuguese.</p> <p>The main advocate for legalizing gambling in Brazil, Instituto Jogo Legal, says that the ban has not prevented people from gambling and even caused the country to lose a source of revenue.</p> <p>According to a study by the institute, illegal bets move around BRL 26 billion annually in Brazil while official lotteries are only responsible for BRL 14.2 billion. In an <a href="">op-ed</a> published in newspaper <em>Estadão</em>, lawyer Leonardo Neri Candido de Azevedo argued that the return from games of chance in Brazil is meager compared to the rest of the globe.</p> <p>&#8220;In most parts of the world, the return on capital raised in gaming prizes is between 60 and 65 percent, while that of the Caixa Econômica Federal [which manages the lottery] varies between 45 and 55 percent,&#8221; wrote Mr. Azevedo. He also pointed out that the countries that legalized gambling stations closely monitor their games to curb fraud.</p> <p>But Brazil&#8217;s Prosecutor General&#8217;s office disagrees with this data, stating that they are overestimated and that comparisons with other countries do not consider the stage of Brazilian legislation. It also says that the Brazilian state doesn&#8217;t have the capability to oversee the activity in case of legalization, making the sector a fertile ground for money laundering and financing of criminal groups.

Brenno Grillo

The Brazilian Report's correspondent in Brasília, Brenno has worked as a journalist since 2012, specializing in coverage related to law and the justice system. He has worked for O Estado de S. Paulo, Portal Brasil, ConJur, and has experience in political campaigns.

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