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Rio de Janeiro Awards First-Ever License for Sports Betting

As reported by Sigma News - In a landmark twist of events, Rede Loto has become Brazil's first operator to receive an inaugural sports betting license. The state lottery of Rio's accreditation will allow the São Paulo-based operator to operate fixed-odds sports betting across Rio de Janeiro. The license will cover an initial 5-year term which sets Rede Loto back R$5m (approximately US$1m) in upfront costs.

This decision has added even further complexity to the landscape regarding gambling legalization, with much-anticipated federal attempts to bring gambling in all its multi-faceted forms, which includes sports betting, to the entirety of the South American nation.

Legislative Landscape in Brazil

Due to the Misdemeanor Criminal Act (MCA), gambling in almost every form has been illegal since 1941 across Brazil's sizable territories.

Despite this, Brazil is an avid gambling nation, with sports and sports betting being incredibly popular aspects interwoven into Brazilian culture and society. In 2022, it was estimated that over 46% of Brazil's population, the 5th largest in the world was involved in some form of sports betting activities alone.

This sizeable industry, worth well over $6 billion annually, is only possible on this scale due to the emergence and dominance of online gambling operators who conduct their activities into the Brazilian market from bases off their shores.

This is not an illicit practice, as the MCA is applied to activities effective within Brazil from an operational standpoint. Operators outside Brazil must be within the legal limit of their jurisdictions to provide legal and valid gambling offerings to the Brazilian market.

Although this satisfies the appetites of the gambling population in Brazil, it also means a massive stream of tax revenue is being lost. Brazil houses perhaps the largest illicit market in the world, potentially one of the world's largest if legalization is achieved.

Legalization Efforts

Although the federal government in Brazil is currently making a considerable effort, there have been several hindrances and roadblocks causing unfortunate delays in recent weeks, with congressional leaders remaining in discussion to decide if sports betting should be regulated nationwide or state-specific.

The initial plan was considered a national regulation through a so-called provisional measure emergency decree. A more standardized bill with urgent requirements is being considered after a reassessment instead. This would be subject to a 90-day congressional approval process and subsequent ratification.

Luiz Felipe Maia, a gambling law expert and founding partner at Maia Yoshiyasu in São Paulo, has analyzed the pending situation, stating that he believes no federal licenses will be granted shortly. However, states such as Rio, Paraná, and Paraíba are moving quickly to grant licenses for operators to trade within state jurisdictions.

Maia explained, "On the other hand, we're going to have licenses in Rio, Paraná, Paraíba. That will be a very complicated situation for the government because, on the state level, things are moving quite quickly."

Paraná and Paraíba state closely follow Rio's lead and hope to implement similar systems to grant lotteries the right to include sports betting in their offerings.