Old Habits Die Hard: Brazil’s iGaming Regulation Process Stalls Sadly

Published July 24, 2017 by Lee R

Old Habits Die Hard: Brazil’s iGaming Regulation Process Stalls Sadly

Blocking has reared its ugly head in Brazil at the worst time.

Brazil is lapsing into a familiar and unpopular measure in its regulation process: payment-blocking. 

Payments Blocked

New reports reveal that Brazil has proposed specifically banning the use of credit cards and other forms of electronic payments to internationally licensed online gambling sites that do not hold licenses in yet-to-be regulated Brazil.

So Close, Yet So Far

Not weeks ago, it looked as if Brazil was on the verge of regulating, but the status of that process is on hold, with the two competing gambling bills that were the source of recent optimism now appearing to have competed one another into a stalemate stalling them both within their respective legislative chambers.

Losing Ground

The slowdown also allowed Columbia to swoop in and install the first regulated iGaming model in the history of Latin America.

Fatal Blow 

The loss of the legislative momentum of the Brazilian regulation model is embedded in the language of bill PLS 213/2017, reflecting a shifting of the focus of Brazilian senators back to preventing Brazilians from gambling online with sites from other countries. 

Wall Back Up

PLS 213 calls for Brazil to close the “legislative loophole” that currently enables Brazilian players within the jurisdiction to spend an estimated BRL 3b (US $951m) per year on international site play. 

Involving the Banks

In order to legislate away the loophole, the bill calls for the Brazilian Central Bank to intervene in order to implement the infamous blocking measure that the iGaming community was hoping Brazil would evolve away from. 

PLS 213 would empower the country’s Central Bank to enact guidelines preventing Brazilian punters from using any form of electronic payment to participate in games of chance on international gambling sites.

Uneaten Pie

Brazil’s reversal of momentum is a major let-down for private operators per se. Research from the Brazilian Legal Gaming Institute reports that some R$20 billion ($6.4 billion) in illegal and untaxed revenue is currently generated from illicit gambling activity per annum. In terms of direct wager volume the figure skyrockets to an estimated R$55 billion ($17.6 billion).

Everybody Hurts

Between the percentage of revenues that could be reinvested into social programming and the profits and local corporate reinvestment that licensed operators would be glad to pump back into the local Brazilian economy, the timing of this announcement is a bitter pill to swallow for a full range of stakeholders.

Grim Outlook

From the many advocates for social benefits through regulation within the Brazilian government, to prosperous and eager operators, to many suffering Brazilians, this turn of events is turning the notion of social benefits from iGaming into another statue of Jesus overlooking Rio: close enough to see, but much too far to reach.   

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