"Prohibition leads to underground gaming and underground gaming leads to corruption"

Also a professor for the Business Communication Postgraduate Studies course at the Cândido Mendes University of Rio de Janeiro, the IJL chief told Yogonet International that the legalization of gambling will be a win-win situation for both "the State and the society." 

What are the real chances for Brazil to finally approve the legalization of gambling?

Considering all previous legalization attempts, we think this is the best opportunity to legalize gambling in our country. The project was thought trough gradually, positions became closer, the Brazilian Legal Gambling Institute (IJL) carried out some serious work and held talks with lawmakers to highlight the benefits of legalizing the activity and also to play down the position of those who oppose the legalization of gambling using old traditionalist reasons: that gambling can not be controlled, that it benefits money laundering, that it leads to pathological conditions and fosters organized crime.

Why are the projects currently in the Lower House and the Senate different?

Although both projects aim at the legalization of gambling, they are totally different.

The project at the Lower House seeks to establish a new control framework for gambling in Brazil. It has a broader scope and responds to demands by society to legalize and regulate the centenarian “jogo de bicho” game (to be exploited by the states and the Federal District), casinos, bingos and video bingos, online gambling, sports betting and slot machines. Furthermore, it allows racetracks to set up bingos and slots and it improves state lotteries functioning. The bill establishes as well the creation of a control agency to oversee such activities.

The project in the Senate, which has the signature of federal government experts, is pretty much restrictive, benefiting only some players. It only seeks the legalization of a part of the market that operates underground: casinos, bingos, sports betting, online gambling, machines (video bingos at bingo halls, and slots only at casinos) and the “Jogo de bicho” (to be run by the states and the Federal District). According to this bill, the body in charge of controlling these activities will be the Finance Ministry and the Federal Economic Agency.

The bill that was authored by senator Fernando Bezerra Coelho, says that only 174 bingo halls will be allowed in the country and that every six casios that are set in the South and South-East regions -the most populated areas-, there must be four casinos in the North, Northeast and Center-West areas. On the other hand, it sets high tax burdens which will really trim operators' profit margins.

How much money would the gambling industry account for if it is legalized and how much money does the black market account for now?

The black market represents around USD 6.1B annually against USD 4.2B of the legal market.

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Prohibition has not ended illegality: every 3 reales that are gambled in Brazil (USD 0.91), 1 real goes to legal gambling (USD 0.30)

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Studies by the IJL, carried out along with BNLData, show that tax and investment benefits could reach up to USD 6.1B.

Why do you think legalizing gambling in Brazil will be positive?

Brazil's gambling legislation has really fallen behind in what has to do with lotteries and gaming. 75 years have passed since the last law was enacted and still the matter of updating the legal framework for this activity is not addressed. Despite such gigantic historical backwardness, the IJL is enthusiastic about the possibility of having the federal government controliing the activity , hopefully resulting into an alternative for new taxes to be created.

In fact, betting is a way of paying taxes by playing. The first benefit will be that these operations will leave their "grey zone" to start operating legally; they will be controlled.

Immediate benefits would represent an increase in tax collection, money that will go back to society through social programs. Furthermore, new tourist attractions will be created in the cities.

The gaming industry has the capacity to create direct jobs. Its legalization will create thousands of new jobs.

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Brazil is losing opportunities that come from the sector's productive chain , such as employment and foreign currency revenue

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Bingos created 120,000 direct jobs when they were legalized, among them assistants, technicians, waitresses, administration positions and others. The job situation of thousands will be put in order. Depending on which project is passed, 450,000 jobs will be formalized in the “jogo de bicho” sector while 120,000 new jobs will be created.

How popular is the “jogo de bicho” game? How is it played?

More than 20 million people, that is 10 percent of Brazilians, play the “jogo de bicho”. It started on July 4, 1892 when baron João Batista Viana Drummond, following a suggestion by Mexican Manoel Ismael Zevada who had unsuccesfully launched the “jogo de flores”, decided to lead a campaign to rebuild a zoo in his Vila Isabel property in Rio de Janeiro. Drummond listed the 25 animals that were there and started the game that gives four numbers to each animal. It is a lottery game, similar to a betting pool.

How do you think the legalization of gambling could help the government face the economic crisis currently hitting Brazil?

Depending on the project that is approved, the gambling industry in Brazil could reach around USD 6.1M in taxes. Furthermore, gambling halls bid processes could also bring a similar amount in revenue.

What are the sectors that oppose legalization efforts? Why?

Over the past seven decades, several matters have sparked controversy in Brazil, among them, gambling legalization.

Religious, political, ideological and moral questions have hindered the debate. The long-standing ban on casinos has lasted for 75 years, turning it into a moral issue, like abortion or drugs. Gambling is legalized in most of Latin American countries. It is not easy for us to explain why in Brazil it is not because there are not specific facts that can justify the prohibition. Main responsible players for this chaotic scenario are the National Congress and media that refuse to address the illegal betting debate.

In your opinion, which tax system should be applied if gambling is legalized?

We think that Brazil should follow global trends and levy gambling considering the market reality, always seeking for a balance between the prizes that are offered, government revenue and operators' profit margins.

 In March 2014, along with Manuel San Román Benavente, the Director General of the Peru's gaming authority, I took part in the “Legal gambling. Experiences in the fight againts illegal gambling” debate during the “Defying the context” international seminar that was held in the city of Mar del Plata, in Buenos Aires, Argentina. San Román, who fought illegal gambling in Peru in a very competent way, listed the seven legal gambling commandments that we certainly agree with.

They are:

• To regulate instead of prohibiting
• Prohibition leads to underground gaming
• Underground gaming leads to corruption
• Gaming is a sensitive activity that demands transparency
• Keeping an open-door policy with operators
• It is not possible to regulate beyond reality
• Rules must be first released in order to allow reviews and comments

Some analysts say that if the Congress approves the legalization of gambling, international operators will run casinos while national companies will be handling the sports betting sector. Is that your opinion too?

I think that several operations will be in the hands of international companies, there will be also shared operations and only one will be administrated by Brazilians. For instance, casinos will be run by big international companies. Bingos, online gaming and sports betting will be shared between Brazilians and foreigners. But the “jogo de bicho” will be exclusively run by Brazilian bussinessmen. Some video bingo operators with Brazilian DNA technology will benefit becuase Brazilians enjoy this kind of game.

Considering the recent decision by the Senate of Brazil to impeach Dilma Rousseff, do you think such political scenario could have a negative impact on the parliamentary debate?

There were and there will be no changes in the gambling legalization debate coming from the Legislative or the Executive branches. The debate was not interrupted during or after the impeachment process. Truth is Brazil needs to grow up and face the question about gambling in a pragmatic way, without having moral or religious questions involved. With legal gambling it is the State and the society that win.