What is behind the latest and revealing debate in the Brazilian Sports Betting Regulation process

In recent days, to the already difficult process of gambling regulation in Brazil, an interesting confrontation between two weighty players has been added. We analyze the unexpected request of soccer clubs to increase their income and the forceful response of IBJR, the Instituto Brasileiro de Jogo Responsavel. A convenient debate that helps us understand how much is at stake in this kind of debate.
In recent days, the already difficult process of regulating gambling in Brazil has added an interesting confrontation between two actors who have a lot of weight in everything related to the Bill that aims to regulate sports betting and that will be the axis on which internet gambling legalization is based.

The protagonists: football clubs led by the Confederação Brasileira de Futebol (CBF) and sportsbetting operators, with the Instituto Brasileiro de Jogo Responsavel (IBJR) as spokesperson. Two entities that apparently should not be at odds since we have been seeing huge sponsorship investments by operators in Brazilian clubs and competitions for months.

What do football clubs demand?

The country's most important football clubs, including the best-known in Rio de Janeiro and São Paulo (Flamengo, São Paulo, Corinthians, Bahia, Vasco, Botafogo, Fluminense, Santos, and Palmeiras), first complained by letter and then in a meeting with the Minister of Finance, about their limited participation in the key aspects of Law 13.756/2018, sanctioned by former president Michel Temer.

A text setting a quota of 1.63% of the revenue generated by the state as direct payment to Brazilian sports clubs in exchange for the rights to use their names, brands, logos, and similar for the promotion of betting operators has surfaced. It is already known that the clubs would like to increase that percentage to 4%, which would mean a significant adjustment in the revenue allocations of two dozen public institutions and organizations.

In the convoluted scenario of the debate and advances in the regulation of sports betting in Brazil, the CBF (Confederação Brasileira de Futebol) appears as a new entity that opens a new front and presumably further delays the entire process. In a request that reminds us of the eternal debate about the percentage that Spanish football should receive from the Quiniela and the more recent one on the exploitation of image rights of footballers and clubs in video games such as FIFA, PES, or UFL.

The strong response from the Instituto Brasileiro de Jogo Responsavel

The Instituto Brasileiro de Jogo Responsavel (IBJR) argues that adhering to the club's demands would force the situation, weaken companies that must face enormous investments and license payments, and perhaps endanger the huge revenues that clubs are already receiving from sponsorships from sector operators, even before having a definitive regulation.

This attitude of "stretching the rope" of clubs "seeking an increase in sports betting remuneration for the right to use their image" would endanger the survival of the regulated sector, where operators have already been informed that they will have to pay a license of 30 million Reais, which will only be valid for five years.

Signed by the president of the entity, André Gelfi, the document that can be consulted HERE defends the IBJR's position with data, projections, and best international practices on the issue, expressing total disagreement with football clubs' request for their image rights revenue from sports betting companies.

The IBJR states that there would be only two alternatives to make this increase in what the clubs would receive viable, and both would not be suitable. One of them would be to reduce the allocation destined for the state, and the other would be to reduce the income of operating companies.

A convenient debate in light of a context

It is not necessary to wait to see who prevails in this debate to realize the folly of this challenge. The arguments on both sides are logical, and in most similar processes, there have been discussions of this type focused on revenue sharing.

What is surprising is that it has become public, and that two actors destined to understand and cooperate confront each other with just 48 hours difference from the announcement of the agreement between the Brazilian Football Confederation (CBF) and the leading market betting operator, Betano, to name the second division of the Serie B, which will officially be called Série Betano 2023.

In any case, we consider that this controversy highlights three interesting things:

1) It shows that many lobbies, including religious groups that vehemently opposed the process during Bolsonaro's time, have lost already the battle, and even before the regulated market, the marketing and sponsorship industry in the sector is already worth millions. Certainly, the law will demand a lot from operators, but an equitable distribution of the money collected to institutions of all kinds has also been defined, which explains why lobbies such as the religious or sports (there is a significant social contribution planned in Law 13.756/18 for sports in general) have not had prominence in recent months.

2) The entire football industry (clubs, agents, player associations, or public sports institutions) boasts about being able to close sponsorships with operators even on the eve of the start of the regulated market and when there are no licenses yet. Moreover, these sponsorships are extremely high in terms of investment.
In this scenario, as happens in Argentina and Mexico, sponsorships cover multiple objectives: from former footballers as ambassadors, to sponsorships with clubs, passing through agreements with employers and public and private organizations that regulate collectives such as referees, competitions, footballers, or clubs.

In fact, online betting companies are already responsible for a large part of the marketing revenue of clubs. For example, in the country's top football league, the Brasileirão 2023, only Cuiabá does not have a commercial association with a betting brand, and clubs such as Fluminense (Betano), Santos (PixBet), or São Paulo ( receive record revenue thanks to sponsorships from these three operators.

In the Serie B, the second division, all participating teams already have an association with a betting company. Finally, 65% of the teams in Serie C have sponsorship from some online company.

3) After the argued and quick response, it is shown that the Instituto Brasileiro de Jogo Responsavel acts de facto as the employer of most operators who have an advantage in obtaining licenses. In any case, there is also a significant division between the operators that are part of this association (bet365, Betfair, Betsson, Betway, Entain, KTO, Netbet, Rei do Pitaco, and Yolo Group) and those that are not (Betano, Pixbet, Sportsbet).

André Gelfi (Betsson(, as the president of the Instituto Brasileiro de Jogo Responsavel, represents operators with an international vocation, while those led by Betano are operators that bet on massive investment in advertising, as already demonstrated with the sponsorship of the 2022 World Cup by Betano, which was the first major agreement between a betting company and FIFA.

This division could harm the regulation process and the viability of the sector since two very different ways of working and two divisions at a strategic and marketing investment level are pointed out. We will talk about this issue in our next INFOPLAY SPECIAL about the REGULATED MARKET IN BRAZIL.

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