Can Brazil push against looming gambling ad restrictions?

Legal experts are raising concerns that the fragmented representation of the gambling industry through various trade associations could hinder its defense against impending advertising restrictions.

Brazil is on the verge of implementing a new wave of gambling advertising regulations following the Senate’s approval of Bill 2,985/2023 in May. This development adds yet another layer of challenges for operators since the launch of Brazil’s regulated online betting market on January 1.

Udo Seckelmann, an expert in gambling and cryptocurrency at the law firm Bichara e Motta Advogados, cautions that the new advertising restrictions proposed lack empirical support.

Although Senator Carlos Portinho, the bill’s rapporteur, has removed a blanket ban on gambling ads, the legislation still prohibits betting advertisements during live sports broadcasts and bans the use of celebrities, influencers, and athletes in marketing campaigns—applying specifically to current players and those whose careers ended less than five years ago.

With the Sports Commission and Senate giving their approval to the amended bill, it is now set to be reviewed by the Chamber of Deputies.

According to Seckelmann, implementation of the new law is unlikely before 2026. While he welcomes the removal of the “disproportionate” blanket ban, he emphasizes that the drive for further restrictions is not founded on solid evidence.

“While the intentions may be noble, they must be weighed against real-world consequences. Evidence suggests that informed and responsible regulation is far more effective than outright prohibition,” he asserts.

Current Gambling Advertising Regulations in Brazil Are Adequate

In July 2022, the Secretariat of Prizes and Bets (SPA) introduced Normative Ordinance No. 1,231, outlining the principles governing how licensed operators can advertise their offerings. Key regulations prohibit operators from presenting betting as “socially appealing” or targeting minors in their campaigns.

Furthermore, all marketing from licensed operators is required to feature an “18+” symbol and adhere to guidelines for promoting responsible gambling.

Luiz Felipe Maia, founding partner of Maia Yoshiyasu Advogados, believes the existing advertising regulations are suitable, especially considering Brazil’s nascent iGaming sector. He explains, “Given that Brazil has only recently regulated its gambling market, it’s vital to allow licensed operators to advertise effectively to increase public awareness.”

Fellipe Fraga, Chief Business Officer at the licensed operator EstrelaBet, concurs: “The regulations are sufficient. It’s essential for policymakers to recognize that the market is functioning well and that advertising is a part of global trends in online betting.”

Conversely, Fernando Garita, CEO of Betsul, calls for greater clarity and consistency in advertising regulations. “We need a better balance that allows responsible messaging without impeding legitimate business activities,” he argues.

Enforcement Must Be the Central Focus

While the regulated sector generally supports current advertising restrictions, multiple stakeholders are advocating for stricter enforcement, particularly concerning influencer marketing—a topic that gained national attention last year.

The controversy surrounding the game “Fortune Tiger” highlighted this issue, as influencers faced investigations, and some were arrested for promoting the game alongside its enticing financial incentives. This resulted in numerous players losing significant sums on fraudulent platforms.

In response to this scandal, the SPA is intensifying regulations surrounding influencer marketing. Internet personality Virgínia Fonseca, for example, appeared before a parliamentary inquiry commission to explain her advertising practices related to gambling.

Maia maintains that the SPA should take a firmer stand against violators. “If influencers know they face liability, fines, or potential arrest for associating with illegal operators, they’ll change their behavior,” he insists.

Overregulation Risks Strengthening the Black Market

Brazil is not alone in grappling with gambling advertising pressures; established markets have faced similar challenges. In Germany, nearly half of all players are engaged with the black market due to regulations that restrict TV and online advertising during prime hours. Italy’s blanket ban on gambling ads has led to rampant black-market activities, while neighboring Argentina is following suit with potential bans on online betting advertisements.

Licensed operators in Brazil are already wary of the black market’s existence, fearing that stricter advertising regulations could further empower illegal entities, as evidenced by trends observed in other jurisdictions.

“Observations from countries like Italy show that excessive restrictions and high taxes backfire,” Garita points out. “Such blanket bans would significantly diminish the visibility of regulated operators, while illicit brands would flourish in uncontrolled environments like Telegram.”

“Countless restrictions hinder the legal market and inadvertently aid the black market,” Maia adds.

Advertising Helps Distinguish Legal Operators

Advertising serves a critical function for operators to validate their licensing and guide bettors towards legal avenues, particularly in the formative phase of a regulated market. This is especially relevant when competition among brands is fierce and player loyalty is yet to be established.

With licensed operators required to feature an “18+” symbol and communicate the risks associated with gambling addiction, Garita emphasizes the importance of advertising in differentiating legal from unlicensed operators. “It serves as one of our few public-facing tools to demonstrate compliance and build trust,” he states.

Even with these distinctions, markets like Sweden report that a significant percentage of players still struggle to recognize legal operators versus black-market ones.

Negative Public Perception: What Lies Beneath?

In 2024, Brazil’s gambling sector faced intense scrutiny during a pivotal period of regulatory development. A Supreme Federal Court hearing initiated by a major trade union challenged the constitutionality of new betting regulations, driven by concerns about addiction and financial distress.

However, recent data shows a positive shift in public sentiment, with a government-funded survey indicating that 60% of Brazilians now favor legalizing land-based gambling. Industry insiders express frustration, believing politicians respond to public pressures rather than relying on data or global experiences that demonstrate adverse impacts from overregulation.

Some politicians, particularly those backing the recent advertising restrictions, have continued to frame gambling negatively, suggesting it adversely affects public health and finances.

The Political Echo Chamber

Felipe Maia argues that the perceived negative public perception of gambling in Brazil is largely influenced by politicians echoing the beliefs of specific groups. “Legislators represent echo chambers formed by religious or conservative factions, leading to opportunistic rhetoric,” he explains.

Brazil’s longstanding gambling prohibition since 1946 has created a significant gap in political understanding of the industry’s potential contributions to societal and economic well-being. Fraga states, “We are in a continual process of educating politicians about what our industry can provide and dispelling misconceptions.”

Finding a Way Forward

The gambling sector’s effective response to Bill 2,985/2023 may be hampered by its fragmented representation. According to Maia, the presence of five different trade associations leads to coordination challenges, creating uncertainty among policymakers who struggle to identify a unified voice.

Collaboration is essential, as Garita agrees, stating that coordinated lobbying efforts among responsible operators and associations are imperative to safeguard collective interests. “Unity is crucial for effective advocacy,” he asserts.

During discussions surrounding Bill 2,985/2023 on May 28, Senator Portinho highlighted the industry’s failure to regulate its advertising practices effectively.

Maia encourages operators to self-regulate proactively to demonstrate their commitment to responsible practices. “Self-regulation showcases maturity and responsibility, allowing the industry to present viable solutions instead of reacting to regulatory measures that may not align with market realities,” he notes.

Approaching a Critical Juncture

Seckelmann advocates for a constructive, assertive approach to advertising regulations, suggesting that responsible marketing plays a key role in directing users towards licensed operators while steering them away from illegal platforms. “Properly regulated advertising can enhance market legitimacy,” he asserts.

The impending battle over stricter advertising controls illustrates the industry’s current inability to present a cohesive, data-driven response to the risks of overregulation, as seen in other countries.

The consensus within the sector is clear: excessive advertising restrictions at this critical juncture could derail the growth of Brazil’s licensed market and push players back into the shadows of unregulated offerings.

As the Chamber of Deputies prepares to weigh in on Bill 2,985/2023, the Brazilian betting sector must rally to address misconceptions that threaten the future of its legal market.