Brazil’s government has restricted access to the documents used to justify its betting ban for five years, under a classification agreed a day before Provisional Measure (MP) 1.394 was signed.
Two government ministries say they produced no impact studies before President Lula signed the ban. To understand what the retriction means for the market, NEXT.io spoke to lawyers, an operator and a payments provider.
The question of exactly what the restriction protects, and why, goes to the heart of the legal fight over the ban. Licensed operators are challenging the MP at the Supreme Federal Court (STF) and preparing to seek the return of around R$2.5bn in licence fees.
The initial 60-day period to consider the measure in Congress ends on 23 November. If no vote has been taken on it by then, the deadline can be extended by another 60 days.
What we know
The restricted classification was signed on 24 September by Victor Oliveira Fernandes, the Ministry of Justice and Public Security’s (MJSP) Secretary for Digital Rights, as reported by JOTA and Poder360.
It covers every document used to draft the MP and only came to light this week, more than a month after the ban was signed, by which time industry associations had already taken the measure to the STF.
The ministry argues disclosure of the documents could endanger “the life, safety or health of the population” and pose a “high risk to the financial, economic or monetary stability of the country”, wording taken from Brazil’s Access to Information Law (LAI).
Since access to government information is the norm and restrictions on such information are an exception, ministries must formally justify any restrictions put in place under the LAI.
A second lock is also in place. BBC News Brasil reported that the presidency’s Chief of Staff’s Office refused its requests for the legal opinions behind the ban, citing attorney-client privilege, a separate restriction with no expiry date.
What has been classified?
Official responses from other parts of government raise doubts over exactly what information is being protected.
In a memorandum filed with the STF on 24 October, industry groups ABRAJOGO, Sindibets SP and AMIG cite a Ministry of Finance response to a freedom of information request stating that the “information does not exist”.
According to the document, the ministry’s technical departments found no studies or estimates on the economic, fiscal, regulatory or social impact of the ban.
The Ministry of Sport also told BNLData it found no record of being formally consulted before the MP was issued, and no studies on the ban’s effects on sports integrity.
Payment providers, which processed betting funds under Central Bank supervision, say the same. “We have never received any specific request from the government to provide data on betting flows to support the drafting of the provisional measure,” Leonardo Baptista, CEO of payments institution Pay4Fun, told NEXT.io.
Operators say they were given no warning either. The Secretariat of Prizes and Betting (SPA) held regular talks with licensees on responsible gambling and advertising, says Fellipe Fraga, CBO of Brazilian operator Stellar Gaming.
However, “what did not happen, as far as we know, was any consultation or prior signal that the government intended to adopt a ban of this scale, nor any presentation to operators of data justifying such a radical change of direction.”
None of this proves the files are empty. Whether the secrecy protects documents or the lack of them can only be established with access to the full process, says Felipe Crisafulli, a lawyer specialising in sport, entertainment, gaming and betting: “Any statement here, one way or the other, would be mere speculation.”
What is the government after?
On paper, the classification has a legal basis. But Crisafulli says the blanket, pre-emptive secrecy “departs from the legal and constitutional norm, which is transparency of administrative acts, even if it does not run counter to the law”. Implementing secrecy on the documents before the MP was published may have been justifiable, he adds, but “once the final text has been published, there may no longer be any logical basis for it”.
One lawyer working in the sector, speaking to NEXT.io on condition of anonymity, goes further. “The blanket classification of legal opinions, impact studies and economic documents would require a demonstration that full secrecy is necessary,” he said.
Although “it would not be rigorous to say there was illegality” without examining the files, in his view the purpose is clear: the secrecy “was designed to prevent operators from using these documents as evidence in ongoing lawsuits and future compensation claims“.
Crisafulli is more cautious about the motive. The government could dispel that reading, he says, by demonstrating “with rigorous reasoning” the risks it alleges.
That matters because a central question in the STF cases is whether an outright ban was proportionate. Without access to its technical basis, operators cannot test the government’s figures, either to overturn the ban or to seek compensation for the R$30m each paid for five-year licences.
José Frederico Cimino Manssur, a partner at Natal & Manssur Advogados specialising in contracts and betting regulation, sees the licence fee as a key point of dispute. “The government authorised operations for five years, received the payment and ended the activity before that period was over,” he said.
The MP expressly bars any refund, a retention Manssur considers open to challenge as “confiscatory”, and the Attorney General’s Office has already rejected compensation requests. In Manssur’s view, there are grounds to refund the portion of the fee covering the period in which companies were barred from operating.
“For companies that invested in Brazil under rules set by the government itself, the combination of early closure, retention of the licence fee and secrecy deepens legal uncertainty,” he said.
Meanwhile, the anonymous lawyer points to a route to unsealing the documents within the litigation itself. Under the law governing constitutional challenges, the rapporteur, Justice Luiz Fux, can order the government to provide additional information needed to resolve the dispute, and the ministry’s classification does not bind the courts.
Manssur, who is not involved in the case, agrees. “I consider a generic invocation of public security fragile, given the importance of the measure and its economic consequences,” he said.
For Crisafulli, such a request should also cover the alternatives the government considered before opting for a total ban – the only way to test whether it was proportionate. “If the reasoning exists, it must be confronted; if it does not, silence cannot be turned into a presumption of legitimacy,” he said.
Several challenges are already before Fux, including one filed by the National Association of Games and Lotteries (ANJL) together with the Brazilian Institute for Responsible Gaming (IBJR), whose members include international operators active in Brazil. ANJL and IBJR had not responded to NEXT.io’s questions on whether they would make such a request by the time of publication. Fraga said Stellar Gaming is still discussing with industry bodies how best to seek access to the documents.
The political calculation may point the same way. According to Folha de S.Paulo, the government is counting on the STF to strike down the 2018 law that legalised betting, avoiding a fight in Congress.
Fux himself argued at the court’s 3 November public hearing that online betting should be banned. If that strategy holds, the fate of the regulated market could be decided without the basis for the ban ever being made public.
The view from the market
For Fraga, the lack of transparency compounds the damage. As a fully Brazilian company, he says, one of Stellar Gaming’s challenges is to convince foreign suppliers and partners that it is worth investing in the country and adapting their products to local rules.
“The problem is not limited to gaming and betting: the message reaches any industry considering investing in Brazil,” he said. “A country needs transparency and legal certainty to grow. In this instance, I believe Brazil failed to offer either.”
Baptista, of Pay4Fun, makes a similar point. “How can we plan investments, preserve jobs or take on long-term commitments when we do not even fully know the technical elements behind such a radical change?” he said.
The Ministry of Justice and Public Security did not respond to NEXT.io’s request for comment by the time of publication.