Will 2025 be the year Brazil finally legalises land-based gambling?

At the beginning of this year, Brazil embarked on a transformative journey as it launched its regulated online betting market, marking a new chapter in the nation’s gambling landscape. Nevertheless, the ongoing debate surrounding the legalization of land-based casinos remains a point of contention, though recent political shifts and changing attitudes suggest that progress could be on the horizon.

After enduring years of regulatory delays, Brazil initiated its legal online betting sector on January 1, 2024. Industry experts widely agree that it has the potential to emerge as one of the top three online gambling markets globally. With over BRL 2 billion (approximately £272.4 million/€326.1 million/$352.1 million) already generated from online licensing fees, the economic benefits for Brazil from regulated digital gambling are substantial.

Conversely, the legalization of land-based gambling is mired in delays reminiscent of Brazil’s protracted journey toward online regulation. Despite the Brazil Justice and Citizenship Committee’s approval of PL 2,234/2022 in June 2023—aimed at legalizing land-based casinos, bingo, jogo do bicho, and horse racing betting—the Senate vote has faced repeated postponements.

Nonetheless, optimism persists within the industry that the land-based bill will gain traction and receive final approval this year, especially following the election of pro-gambling Davi Alcolumbre as Senate President in February.

“Alcolumbre is a seasoned senator who understands the significance of legalizing land-based entertainment,” stated Alex Pariente, Corporate Senior Vice President of Casino and Hotel Operations at Hard Rock International. “His leadership fosters dialogue and collaboration, creating a positive environment conducive to advancement.”

However, not everyone shares this optimistic view. Ari Celia, Director at Brazilian payment company Pay4Fun, cautioned, “There are rumors that the Senate may consider voting on the bill during the first semester, but politics can be unpredictable. It might take longer than anticipated.”

Why This Attempt at Land-Based Legalization is Different

Gambling was officially outlawed in Brazil in 1946, with bingo experiencing a brief period of legality in the early 2000s. Since then, multiple attempts to pass land-based gambling legislation have faltered. With online gambling now a legal and thriving sector, industry stakeholders are advocating for brick-and-mortar locations to join the regulated framework.

Hugo Baungartner, Chief Commercial Officer of local operator Aposta Ganha, has extensive experience in the gambling field and has witnessed numerous attempts at land-based legalization. He posits that the recent acceptance of online regulation signifies a critical shift in public sentiment, which he believes will facilitate the legalization of traditional gambling venues by 2025.

“I am confident land-based regulation will happen this year because gambling is a reality in Brazil,” Baungartner emphasized. “The mindset has evolved significantly since the early 2000s. People are more informed, aware of what they encounter in global markets, and are starting to recognize the government’s capacity to regulate effectively.”

It is worth noting that despite the lack of regulation, land-based gambling persists in Brazil. The jogo do bicho, a game of chance with deep historical roots, remains immensely popular, even though it has been banned since 1946. Pariente remarked, “Jogo do bicho has been part of Brazilian culture for over a century. Failing to regulate this industry would be hypocritical when it is already thriving beneath the surface.”

Boosting Tourism in Brazil

In addition to enhancing player protection, the legalization of land-based gambling is poised to significantly impact Brazil’s tourism sector.

Pariente highlighted an ongoing “stagnation” in Brazilian tourism, which currently attracts approximately six million visitors annually. In stark contrast, the Dominican Republic surpasses ten million tourists yearly, despite its significantly smaller size.

Despite substantial investments made for sporting events in Brazil—such as the 2014 FIFA World Cup and the 2016 Olympic Games—Pariente argues that the country has yet to make meaningful strides in increasing foreign visitation.

He believes that Hard Rock’s potential investment in integrated resorts could significantly alter the tourism landscape in Brazil, creating jobs and bolstering economic growth. “We aim to develop an integrated resort that can become a tourist destination, thus supporting the government’s objective to amplify tourism. The estimated investment would amount to billions of dollars,” he explained.

Celia concurs that the legalization of land-based gambling would provide a significant economic boost, particularly for tourism. “The opportunities are immense,” Celia stated. “With Brazil’s stunning landscapes—from Rio de Janeiro to the breathtaking rainforests and idyllic beaches—it presents an untapped market that gaming could significantly enhance.”

The Online Effect

Could the discussions around online gaming foster hope for land-based legalization? The latter part of 2024 saw increasing scrutiny on Brazil’s newly regulated online sector, culminating in a Supreme Federal Court hearing to assess potential constitutional challenges to online betting laws.

Industry leaders largely believe the chances of dismantling online regulation are slim. Still, Brazil stands out for regulating online betting prior to land-based gambling, a situation Pariente likened to “building the roof before laying the foundation.” While negative sentiment surrounding online gambling has decreased since the market’s establishment, uncertainty still looms over land-based legislation.

Celia expressed his frustrations, noting, “Truthfully, I’m tired of this narrative. It’s common knowledge that less than one percent of the population is susceptible to gambling addiction. The majority of participants are financially responsible and know their limits.”

“Since launching the regulated market on January 1, I’ve observed a decline in pressure against gambling, and I hope this trend continues as it lacks any sensible foundation,” he argued.

Land-Based Potential for Brazil

The gap between Brazil’s initial approval of online gambling legislation in 2018 and its eventual implementation has led to the proliferation of unregulated betting sites. As consumer preferences shift towards online options, questions have arisen regarding the profitability prospects of regulated land-based gambling.

Nevertheless, Pariente believes that an omnichannel approach represents an optimal solution to alleviate concerns around market cannibalization. “Our operations in the U.S. have demonstrated that omnichannel strategies can effectively retain customers within the brand. I contend that the coexistence of online and land-based formats will benefit all involved,” Pariente remarked.

Shifts in consumer preferences are also evident in the brick-and-mortar segment since bingo’s legalization was revoked. “Historically, Brazil was primarily a bingo nation, constrained by outdated laws. Now, two decades later, the demographic landscape has evolved significantly, including the types of games preferred by Brazilians,” Baungartner noted, remaining hopeful for the resurgence of bingo alongside other gaming options.

Land-Based Timeline

Industry insiders Baungartner and Pariente project that land-based betting legalization is imminent. Minister of Tourism Celso Sabino previously indicated that a Senate vote could materialize in the first half of the year.

Once the Senate approves the bill, it will await the signature of President Luiz Inácio Lula da Silva, whose support is anticipated. Pariente highlighted the necessity for thorough regulatory frameworks to ensure a successful market entry for existing operators like Hard Rock.

“Our brand is prepared to mobilize quickly once the regulations are solid and fair,” Pariente stated. “Establishing a sound legal framework is crucial to facilitate sustainable projects that can thrive for decades in Brazil.”

He emphasized the importance of compliance, reiterating Hard Rock’s dedication to adhering to the regulations while simultaneously contributing to Brazil’s economic development and tourism enhancement.

“Our strategy includes exploring both land-based and digital opportunities, all within the guidelines of Brazilian regulations,” Pariente added.

Cautious Optimism Regarding Land-Based Legalization

Consensus within the industry leans toward optimism that Brazil will successfully reintegrate legal land-based gambling this year. The election of a pro-gambling Senate president and the promising early response to online regulations indicate a favorable climate for renewed efforts.

While Pariente’s metaphor of “building a roof before laying the foundation” reminds us of the hurdles that remain, the momentum surrounding gambling legalization appears to be building. Operators and stakeholders are eager to expedite the process, particularly to mitigate the challenges presented by unregulated grey markets.

“The complications we faced during the digital rollout should serve as a cautionary tale as we approach land-based legislation,” Pariente explained. “Our experience has illustrated that streamlining the regulatory process can produce benefits and insights that will inform a more efficient legal framework for land-based operations.”

Brazil stands on the brink of a significant economic shift, with the prospect of legal land-based gambling poised to attract tourism and create job opportunities. If the momentum continues, 2025 might very well be the year that solidifies Brazil’s status as a formidable player in the global gambling industry, bridgeing advancements in both digital and physical realms.