G2E: Not so fast when it comes to sports betting in Brazil, lawyer says

October 17, 2019 10:00 PM
  • Buck Wargo, CDC Gaming Reports
October 17, 2019 10:00 PM
  • Buck Wargo, CDC Gaming Reports

A lawyer with the Brazilian Bar Association who played a key role in the legalization of sports betting in that country 11 months ago says don’t be surprised if there’s a lengthy delay in its implementation. 

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Pedro Trengrouse, vice president of the Special Commission on Sports, Lottery and Entertainment Law with the Brazilian Bar Association, wasn’t optimistic about sports betting rolling out any time soon in Brazil, even though it was signed into law in December by outgoing President Michel Temer and the Ministry of Economy is currently working on regulations for online and land-based sports betting. 

Trengrouse said he nevertheless expects it will take more time and suggested some government officials and lawmakers are having second thoughts about the approval, which is creating some confusion. 

“We might have a longer road ahead of us,” Trengrouse said, expressing some frustration about Brazilian politics Monday during a panel discussion on “Gaming Expansion Rumors and Innuendo” at the Global Gaming Expo. The panel was moderated by attorney Edward Winkofsky.

As part of the talk, Trengrouse showed a video of current Brazilian President Jair Bolsonaro, who took office in January, talking about legalizing casinos in Brazil – but also indicating his willingness to leave it to the 27 individual Brazilian states to regulate. Trengrouse said the president displayed a lack of knowledge of the subject, and sounded pessimistic about the prospects of that changing soon. He is optimistic, however, about the long-term future, citing Las Vegas Sands CEO and chairman Sheldon Adelson’s recent statements that his company would be willing to invest up to $15 billion in developments in Brazil.

The country is missing out on the opportunities that gambling would create for tourism, Trengrouse said. 

“Brazil is too big to be ignored, even though we have taken too long to regulate gaming,” he said. “When it happens, it will be massive.” 

Winkofsky, an attorney with the firm GreenbergTraurig, said that large U.S. operators looking to South America are concerned about corruption and the lack of regulatory controls.

Operators’ licenses are the “lifeblood of our business,” Winkofsky said. “Corruption is a real concern. What needs to happen for those operators to feel comfortable that the marketplace is stable and they’re not putting their other licenses at risk?” 

Former Brazilian President Luiz Inacia Lula da Silva was jailed last year on charges of bribery and money laundering, and Trengrouse said that more needs to be done transparently in Brazil. He emphasized the need for more education regarding gambling, as well. 

“Maybe the American Gaming Association could (come) help us set up a BGA (Brazilian Gaming Association),” Trengrouse said. 

Richard Schwartz, president of online gaming provider Rush Street Interactive, spoke of a much different experience in Colombia, which legalized iGaming and sports betting in October 2016. 

Rush Street started in June 2018 and is one of 18 operators in the marketplace. Schwartz cited the political stability in Colombia and said he sees it as a “great launching pad for the rest of the region.” 

Schwartz said companies like Rush Street face challenges and obstacles in the region, due to unlicensed operators who not only don’t pay taxes but are then brought into the fold when the activity is legalized in a country. Those companies wind up with an inherent advantage due to their existing large customer databases.

“Companies doing it the right way fall behind everybody else,” he said. 

Schwartz said there are looming opportunities in Argentina, but those are likely delayed due to the country’s upcoming elections. Peru has also showed interest in a gambling expansion, but has political challenges right now, he said. 

Rush Street, meanwhile, is waiting for the opportunities they see coming in Brazil as well. 

“We’re awaiting around eagerly for that to happen,” Schwartz said. “It’s a very interesting region, and we’re investing a lot of energy and time in that area.”