Concerns Over Fragmented Representation in Brazil’s Gambling Sector Amidst Upcoming Ad Restrictions
As Brazil gears up for a new set of gambling advertising regulations, legal authorities are sounding alarms about the potential impacts of the sector’s disjointed representation from various trade associations. This fragmentation could pose a significant hurdle in the industry’s ability to address the looming challenges tied to these restrictions.
The recent approval of Senate Bill 2,985/2023 in May has set the stage for a fresh wave of limitations on gambling ads. Operators have already been navigating various challenges since the regulated online betting market launched on January 1. Although the bill’s rapporteur, Senator Carlos Portinho, has removed a sweeping ban on all gambling ads, the final proposal still prohibits such advertisements during live sports broadcasts and bans the use of celebrities and influencers in marketing efforts.
With this amended bill now moving to the Chamber of Deputies, concerns arise about the timeline for implementation, as experts estimate it may take effect around 2026. Udo Seckelmann, head of gambling and crypto at Bichara e Motta Advogados, expresses a sense of relief that the previously proposed blanket ban was avoided. However, he cautions that the push for additional restrictions lacks empirical backing.
Seckelmann emphasizes, “While intentions behind these regulations may be sincere, they must be balanced against tangible outcomes. Evidence suggests that informed and responsible regulatory frameworks are more effective than outright restrictions.”
Current Regulations: A Sufficient Safeguard?
Established guidelines under Normative Ordinance No 1,231, published by the Secretariat of Prizes and Bets (SPA) last July, delineate how licensed gambling operators can market their services. Current regulations already forbid portraying gambling as “socially attractive” and specifically target underage audiences.
Luiz Felipe Maia, a founding partner at Maia Yoshiyasu Advogados, argues that the existing restrictions are appropriate given the infancy of Brazil’s iGaming sector. He notes, “It’s crucial for newly regulated operators to have visibility and engage the public to differentiate themselves from unregulated markets.”
However, some industry leaders, like Betsul CEO Fernando Garita, seek more clearly defined advertising regulations. He advocates for a nuanced approach that promotes responsible messaging while allowing legitimate business activities to thrive.
A Need for Robust Enforcement
Despite general satisfaction with current ad regulations, voices across the sector are advocating for stricter enforcement, particularly concerning influencer marketing—a topic that has gained prominence since influencers promoting games have faced scrutiny for possible exploitation and fraud.
In the wake of controversies surrounding the "Fortune Tiger" game, where influencers were scrutinized for misleading advertising, the SPA has begun to ramp up regulations regarding influencer participation in gambling promotions. Felip Maia asserts the importance of accountability for influencers breaching advertising guidelines, noting that such measures could lead to improved industry practices.
The Risk of Overregulation
The Brazilian gambling market is not unique in grappling with advertising pressures; jurisdictions like Germany and Italy have enacted severe restrictions, resulting in high rates of black-market activity. Brazil, with its growing concern over illegal gambling operations, fears that additional restrictions will exacerbate these challenges rather than resolve them.
Garita points to experiences in Italy as cautionary tales of how excessive regulations and high taxes can backfire, noting that prohibitive measures can accelerate the black market’s growth.
Advertising as a Means of Legitimacy
Advertising serves as a critical differentiator between licensed operators and unauthorized entities, especially in a nascent market. By requiring operators to include an “18+” disclaimer and promote responsible gambling practices, current regulations help to solidify consumer trust.
“Advertising is one of our few public-facing avenues to demonstrate compliance with laws,” Garita explains, emphasizing its role in ensuring users are directed toward legal gaming options.
A Shifting Public Perception
After a tumultuous start to regulation in 2024, public sentiment around gambling appears to be shifting positively. A recent government-funded survey highlighted that approximately 60% of participants now support the legalization of land-based gambling in Brazil. Frustrations from the industry persist as many believe that political responses are shaped more by popular pressure than research-backed data.
Navigating Political and Cultural Challenges
Felipe Maia suggests that the negative political narrative surrounding gambling is often a reflection of specific interest groups. Some politicians, influenced by their constituents’ views, may express concerns that do not accurately resonate with the broader public mood.
This complexity is compounded by Brazil’s historical context of gambling prohibition, which has fostered significant misunderstandings about the industry and its potential contributions to the economy.
Toward a Unified Industry Response
As the Brazilian gambling industry prepares to face the imminent challenges posed by Bill 2,985/2023, the lack of coordinated representation from existing trade associations could hinder effective advocacy. Maia underscores that with five distinct associations vying for influence, consensus is difficult to achieve, weakening the sector’s attempt to combat overregulation.
Garita insists on the urgency of unified lobbying efforts. Collective action is vital for representing shared interests, particularly in light of the political challenges ahead.
During the recent Senate discussions regarding the bill, Senator Portinho highlighted the industry’s struggle to self-regulate effectively. Maia reinforces that adopting self-regulatory measures is essential to showcase the industry’s commitment to social responsibility.
A Pivotal Moment
As Seckelmann notes, the future of advertising regulations hinges on the gambling sector’s ability to present a constructive narrative to policymakers. The stakes are high; overly stringent ad restrictions could alienate consumers and drive them toward unregulated options.
As the Chamber of Deputies prepares to deliberate on Bill 2,985/2023, the Brazilian gambling sector must mobilize to advocate for its interests—emphasizing that responsible advertising is a pivotal mechanism for steering users to licensed operators while fending off illegal market forces.