With Brazil’s Sports Commission tabling two bills to potentially change the state of play for gambling advertising, Affiliate Leaders looks at whether a ban is really the best solution for a newly-regulated market.
It wouldn’t be a normal week in the gambling industry without one market mulling over new regulations. This week, it’s Brazil that’s back in the spotlight.
The debate over gambling advertising in Brazil continues to rumble on. However, the heat was whacked up to the max this week as new proposals were tabled to curb gambling adverts even further.
As politicians debate bills PL 2,985/2023 and PL 3,405/2023, the industry finds itself staring down the barrel of even stricter limitations.
Authored by Senator Styvenson Valentim, PL 2,985/202 seeks to introduce a blanket ban on gambling advertisements across all channels by amending Article 33 of Law No 13,756/2018.
Meanwhile the second bill up for debate, PL3,406/2023, is arguably much less restrictive. However, it does still seek to ban advertisements that feature athletes and celebrities. This is in addition to a ban on sports teams and influencers from advertising with gambling brands.
The one thing that unifies both bits of proposed legislation is that they are based on concerns that current advertising is “predatory” and reaches unintended audiences. But is banning advertising, or at a minimum introducing severe restrictions on when and where a brand can market themselves, really the right approach? The evidence suggests otherwise.
While we’re sure that the legislation is shrouded in good intentions, as we’ve seen in markets like Sweden and the UK, the unintended consequence of advertising restrictions could be a surge in the unregulated market.
Given that Brazil has only just entered its fourth month of its regulated market, this isn’t a risk that industry stakeholders can really afford to take.
Lessons from other markets
The two bills took centre stage during a public hearing of Brazil’s Sports Commission earlier this week, with Senators and industry stakeholders questioning the effectiveness of the current measures in place.
As it stands, the regulator – Brazil’s Secretariat of Prizes and Bets – has already introduced a range of advertising restrictions designed to promote responsible gambling. Included in the current measures is a ban on misleading messaging, a ban on advertising to under-18s and a requirement for brands to clearly identify when they are being sponsored by a gambling company.
However, some lawmakers believe these measures do not go far enough. During the meeting, Senator Carlos Portinho said: “When I hear that the government has a restrictive ordinance [on advertising], I wonder what they are doing. The situation is getting worse: advertising is massive and is directed at people who are often not even the target audience, like children.”
A necessary channel for player education
Advertising plays a more crucial role than simply getting an operator’s brand in front of new audiences. It can help distinguish legal operators from unlicensed ones – something that is critical in the early days of regulation.
In an emerging market like Brazil, where the unregulated market continues to lurk in the background of all discussions surrounding the development of the gambling industry, restricting legal operators from advertising only serves to blur the line between regulated and illicit gambling.
This was a major concern highlighted by Pietro Cardia Lorenzoni, Legal Director of the National Association of Games and Lotteries (ANJL), during the hearing.
He said: “Brazilian consumers still don’t know what is legal and what is illegal. Advertising is a way of informing consumers about the legal market. [In Italy] the impacts of the ban were negative. Consumers were redirected to the illegal market. This means no consumer protection, no protection for children and adolescents, and no funding for public policies.”
Italy is just one cautionary tale. You just have to look at the likes of Sweden, the UK, Ontario or even states in the US to see that restricting advertising isn’t going to have the desired effect.
Brazil is already struggling with an estimated 20,000 illegal gambling sites. So, cutting off legitimate marketing channels will only make it harder for consumers to navigate the market safely.
Of course, this ban is going to have a knock-on effect for the affiliate industry who will likely struggle to direct players towards regulated sites if they’re restricted in their use of prominent figures – and even more so if there’s a blanket ban introduced. As a result, many affiliates may choose to down sticks and leave the market entirely, subsequently reducing the available information for players in Brazil.
The impact extends well beyond gambling companies too. Brazilian football clubs, many of which rely on sponsorship deals with betting firms, would also feel the squeeze. Banning sports sponsorships, as suggested in PL 3,405/2023, would strip these teams of a vital revenue stream at a time when financial stability is already precarious.
Addressing the issue at hand
The recent CEsp hearing raised a pertinent question as to whether advertising was the crux of the issue in Brazil, or whether larger forces were at play – namely, the growing threat of the unregulated market.
Rather than targeting the licensed sector, SuperBet Brazil CEO Alexandre Fonseca called on the regulator to shift its attention towards the black market which he believes is the greatest threat to consumer protection. He argued that resources should be directed towards combatting illegal operators rather than tightening the noose around regulatory compliant businesses.
He said: “We have 20,000 illegal websites operating in Brazil today, which is where gambling addicts end up finding shelter, where minors end up finding fertile ground to get involved in gambling. I think that today we have a much more serious problem, which is the fight against illegal betting.”
As with any regulated market, Brazil has the potential to generate significant tax revenue and create thousands of jobs. However, this will only happen if legitimate operators are allowed to compete on a level playing field.
Excessive advertising restrictions will not curb problem gambling. Instead, it’s much more likely to push players toward operators who have no obligation to promote responsible gaming or adhere to regulatory standards. If anything, this’ll simply fan the flames of problem gambling.
The debate over potential new restrictions will likely rumble on for quite some time into the future. But if lawmakers were to look further afield at mistakes made by other markets, they might realise that knee-jerk bans will simply amplify the problem at hand.
For affiliates, however, now is the time to start getting creative with content. Brazil is a golden opportunity for growth, but with these regulations potentially representing something of a death knell, it may be time to shift strategy and focus on more informative, educational content.
