Brazil betting industry in uproar as Senate approves ad restrictions

The recent approval of new restrictions on gambling advertisements by the Brazilian Senate has sparked significant concern within the industry, with stakeholders warning that such measures may inadvertently bolster the black market.

In a pivotal decision, the Brazilian Senate has implemented sweeping restrictions aimed at gambling advertising, including a ban on celebrity endorsements, limitations on sports sponsorships, and the establishment of strict advertising watersheds.

On Wednesday, the Brazil Sports Commission endorsed a comprehensive proposal to strengthen regulations on betting advertisements. The subsequent action required a vote from the Communication and Digital Law Committee (CCDD); however, due to the committee’s current absence, Bill 2,985/2023 was urgently forwarded to the Senate Plenary, which subsequently voted in favor of the bill.

Senator Carlos Portinho played a crucial role in amending the bill by eliminating an initially proposed outright ban on gambling advertising. The revised legislation permits limited sponsorship deals for sports teams and facilities, alongside the provision of certain media advertising time slots.

Udo Seckelmann, head of gambling and crypto law at Brazilian firm Bichara e Motta Advogados, stated that these amendments were essential to alleviate backlash from the betting sector. “The original blanket ban on gambling advertising was disproportionate and disconnected from the regulatory landscape defined by Law No. 14.790/2023,” he noted.

“Such a ban could jeopardize the growth of the legal market, compelling bettors toward unregulated platforms and significantly harming stakeholders including sports entities, media outlets, and marketing agencies.”

Backlash Against the Brazilian Betting Bill

The Brazilian Institute for Responsible Gaming (IBJR) has expressed profound concern regarding Bill 2,985/2023, emphasizing that its “severe restrictions” could inadvertently sustain illicit market operations. The IBJR highlights that legal advertisements play a vital role in educating the public and enabling citizens to identify regulated platforms, thereby providing a safer gaming environment compared to black market alternatives.

“This proposal compromises the vital communication between legalized betting companies and bettors, which in turn threatens the sustainability of a regulated sector committed to responsible gaming,” the IBJR stated in a social media announcement.

Major football clubs in Brazil have also voiced their opposition, warning that the advertising restrictions could lead to significant economic ramifications. In a joint statement released through Games Magazine Brazil, several prominent clubs labeled the bill as “a prohibition disguised as a limitation,” projecting a loss of approximately BRL 1.6 billion (around $281 million) within the Brazilian sports sector.

“The proposed ban on brand exposure through static signage in sporting venues eliminates crucial revenue streams for clubs. The financial impact will be severe, even for the most prominent teams,” the statement asserted, adding that smaller clubs could face existential threats.

Furthermore, the clubs have cautioned that these new regulations could lead to more than just financial struggles; they may also trigger legal repercussions due to the ban on static advertising, as many teams have existing contracts with betting operators that need to be renegotiated or potentially terminated.

Implications of Limiting Communication

Seckelmann emphasized that if the CCDD version of the bill were enacted, it would impose further constraints on how betting operators can communicate with the public. Such limitations could adversely affect media partnerships and brand recognition, both of which are crucial for establishing a competitive yet regulated market.

“International examples indicate that overbearing restrictions fail to achieve the desired public health outcomes,” he argued, citing Italy’s 2018 Decreto Dignità, which imposed a blanket ban on gambling advertisements. Studies revealed no significant reduction in problem gambling rates; in fact, regulated operators suffered while illegal betting activity flourished.

Key Changes to the Bill Before the Brazilian Senate

Senator Portinho’s amended bill prohibits betting advertisements during live sports broadcasts. The use of celebrities, influencers, or athletes in promotional content is similarly restricted, with an exception for athletes whose careers have ended for a minimum of five years.

Moreover, betting advertisements will only be permitted on open and subscription media platforms between the hours of 7:30 PM and midnight. Radio promotions will be confined to between 9 AM-11 AM and 5 PM-7:30 PM.

However, there is a notable exception for betting operators who are official sponsors of stadiums or sports teams, allowing them to advertise, albeit limited to one promo per team on kits.

Senator Portinho asserted that these advertising restrictions are vital due to the betting sector’s failure to self-regulate responsibly. “One year after the passage of this law, our society is suffering from an addiction to betting,” Portinho stated. “Football clubs are entangled in this addiction, as are communication companies benefitting from betting-related advertising revenue. In light of the pandemic, it is imperative that we enforce discipline.”