The recent discovery of a sports betting manipulation scheme on websites has put the reputation of the sector in Brazil in check.
The scheme, now investigated by the Public Prosecutor's Office of Goiás under the name Operation Maximum Penalty, paid soccer players to change, on the field, the course of the matches - getting yellow cards, being expelled, or committing penalties, for example.
Although those involved in the manipulation of the results may face criminal charges, the act of betting on these sites, which have become increasingly popular, as well as making the bets available, is not considered a crime in Brazil.
WHAT IS THE DIFFERENCE BETWEEN GAMBLING AND SPORTS BETTING ON WEBSITES?
Recent changes in the Brazilian legislation differentiate gambling from sports betting made online - but, in the assessment of experts heard by BBC News Brazil, there are still loopholes that require specific rules.
"Originally, Brazilian legislation treated everyone equally. Article 50 of the Law of Criminal Contraventions establishes that placing bets is a criminal contravention, punishable by simple imprisonment from 15 days to 3 months, or a fine," says Fabiano Jantalia, a specialist in gaming and banking law.
The law considers gambling to be three types: games where winning or losing depends on luck; betting on horse racing; or betting on any other sports competition.
"With the creation of Law 13,756 in 2018, a new type of lottery was created, which brought about a change in the classification of fixed-quota betting in Brazil, which is actually sports betting, began to be framed as a lottery, which in Brazil is considered a public service. From then on a bifurcation was created," Jantalia points out.
"The problem is that this very law provided for the possibility of its exploitation, but conditioned this to a future regulation. And this regulation, to this day, has not occurred. Although they have been allowed, betting still cannot be exploited in Brazil due to the lack of specific regulation."
LACK OF SPECIFIC REGULATION
For lack of specific regulation, companies in the sector have found ways to avoid sanctions on Brazilian soil.
"Most of the betting sites are based abroad, making them unaware of Brazilian legislation, making it difficult to tax, supervise, and even guarantee users' rights," says Marcelo Mattoso Ferreira, a lawyer specializing in the eSports and gaming market, and partner at the law firm Barcellos Tucunduva Advogados.
Prosecutor Felipe Almeida Marques, coordinator of the Center for Cyber Crimes in the Mato Grosso Public Prosecutor's Office, explains that for other types of gambling companies to host companies in other countries is a commonly adopted maneuver.
"In addition to avoiding enforcement and punishment, lower taxation in tax havens has made these locations more attractive for setting up casinos and the like."
"In fact, this is a worldwide movement that Brazilian legislation is not keeping up with, and it is not possible to prohibit access and hosting of these sites locally. So, all that is left is regulation, taxation and inspection as a way to diminish possible negative impacts."
THE STATUS QUO
What the Brazilian government is now considering is the issue of a Provisional Measure that can fill the gap that exists today, which is the lack of regulation by the Ministry of Finance.
"From what it seems, the government is studying raising the issue to the level of a provisional measure, because it understands that improvements are needed in relation to sanction, and a series of administrative procedures, ranging from obtaining licenses and authorizations, to punishments and the possibility of a term of commitment and other administrative actions," says Jantalia.
The gaming law expert describes points that he feels are still missing from the legislation.
Taxation
"It is necessary to know how the taxation of the prizes given to the bettors who win will be, as well as what the taxation rules will be for the sportsbooks that will seek authorization to operate in Brazil," says Jantalia.
Authorization
Another point, explains the lawyer, is the need to define how much the company will need to pay to have the license that allows it to access this market and what types of documents it will need to present.
Rules on Responsible Gaming
The set of rules that will guide the actions of these agents must also be established by the Public Prosecutor's Office. "Money laundering prevention rules are needed that will need to observe an industry-specific discipline, and even self-exclusion procedures that aim to allow the gambler to voluntarily self-prohibit himself from gambling because he considers himself addicted."
Inspection
What administrative structure will be created to oversee this sector also remains in doubt.
"In the whole world, the gaming sector is one of the most regulated, even if compared, for example, to the financial sector, because it has a series of peculiarities that need to be observed. So, the great expectation is how this supervisory apparatus will be - if it will be a Secretariat, an agency, a national authority...", concludes Jantalia.
"It's obvious that there will always be attempts and schemes to corrupt the integrity of the players in that market, but the least one can do is to implement mechanisms to reduce this risk, and this, as a rule, only comes with efficient regulation," adds Ferreira.
Sources: Folha de S. Paulo and BBC News Brazil.