Brazil Faces Legal Battles Over Betting Sites List and Crackdown on Unlicensed Operators

Operators-left-off-SPA-approved-list-initiate-lawsuits-against-the-regulatorBrazil is dealing with a wave of legal action from betting companies following the release of an approved list of operators allowed to continue operating in the country. This list, published by the country’s Department of Prizes and Betting (SPA) in early October, features 96 companies, along with 210 affiliated brands, eligible to operate between October 1 and December 31, 2024. However, several companies excluded from the list have filed lawsuits against the Ministry of Finance, sparking controversy over the approval process.

SPA’s Crackdown on Illegal Betting Sites

The creation of the approved list was prompted by increased pressure from both the industry and the government to regulate the market ahead of Brazil’s licensed gambling market launch, set for January 1, 2025. The government is determined to crack down on illegal betting operators in the meantime. As part of this effort, the National Telecommunications Agency (Anatel) was tasked with blocking 2,040 websites deemed illegal, including prominent names such as Betfred and BoyleSports.

While the approved list allows licensed operators to continue functioning, companies not on the list must cease operations until they obtain federal authorization. This restriction has led to significant backlash from several betting operators, with at least eight lawsuits filed in the federal courts.

Lawsuits from Excluded Operators

One of the prominent lawsuits comes from Zeroumbet, a betting platform owned by lawyer and social media influencer Deolane Bezerra. The company submitted its federal betting license application on August 20, 2024, but was left off the approved list due to an ongoing federal investigation into illegal gambling and money laundering. The investigation, known as ‘Operation Integration,’ is centered on Bezerra, arrested twice in September. However, Zeroumbet’s legal team argues that the investigation should target Bezerra as an individual and not impact the company’s operations. “In this case, the one who would be punished would be Deolane Bezerra and not the company,” the lawsuit contends.

In response to the lawsuit, the SPA maintained that Zeroumbet was excluded to protect public interest and ensure the integrity of bettors, given the ongoing investigation. Zeroumbet is seeking a court ruling to allow the company to resume operations despite the investigation, which could have significant financial and reputational implications for the platform.

State-Level Authorizations and Federal Disputes

Other operators, such as Esportes da Sorte, have taken a different route to stay in the market. Although Esportes da Sorte was also excluded from the SPA’s approved list, the company secured authorization from Rio de Janeiro’s state lottery regulator, Loterj, by acquiring controlling shares in the Loterj-licensed company ST Soft. This allowed the company to continue offering betting services at the state level, despite its exclusion from the federal list.

However, Rio’s stance has drawn criticism from the federal government, challenging the legality of allowing Loterj-accredited betting sites to operate nationwide. The federal government has taken the issue to Brazil’s Supreme Federal Court (STF), arguing that state-level licenses should not bypass federal regulations.

Wider Implications for the Lula Government

The Lula administration is facing significant pressure as it seeks to regulate Brazil’s gambling market. Betting has been legal in Brazil since 2018, but until recently, there was no regulation in place for operators. The government began implementing rules last year with the goal of collecting taxes and ensuring compliance. Despite these efforts, the Ministry of Finance has already faced a series of lawsuits, and more legal challenges are expected as excluded companies continue to contest the SPA’s decisions.

For companies like Sportvip Group International Apostas, the legal battle is seen as crucial to their financial survival. The company recently had its preliminary injunction request denied, but the court is still considering the full case. Sportvip, like many others, argues that being left off the list could result in “incalculable financial and reputational losses.”

The controversy has also been fueled by revelations from a Central Bank report, which indicated that people covered by Brazil’s social welfare program, Bolsa Família, transferred R$3 billion to betting platforms in August alone through the Pix payment system. This discovery has intensified scrutiny of the industry, particularly regarding unregulated platforms operating in the country.

As the lawsuits progress, the Brazilian government’s efforts to regulate the market and safeguard public interest will continue to face challenges from operators pushing for inclusion in the newly regulated space.

Source:

Governo Já Enfrenta Ações Sobre Lista de Bets e Empresa de Deolane Tenta Liberação, jornaldebrasilia.com.br, October 16, 2024.

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Another Judge Rules That Pennsylvania Skill Games are Legal in the Commonwealth

another_judge_rules_that_pennsylvania_skill_games_are_legal_in_the_commonwealthFor nearly a decade now, judge after judge has ruled that Pennsylvania skill games known by the Pace-O-Matic name are legal in the commonwealth. yet prosecutors and agents of the Pennsylvania Bureau of Liquor Control and Enforcement (BLCE) seem hell-bent on finding a jurist who will take their side in the matter of “Chance v. Skill” and stand behind the authorities when they raid a local gathering place and seize the machines and any cash or collateral equipment associated with them.

So far, Pace-O-Matic’s Skill Games have been found to be legal in the state by rulings in the following courts: Beaver, Dauphin, Monroe, and York counties. Clearfield County and Delaware County reviewed the law itself and case law as created by those decisions and returned seized games without the need to go to trial and determine the facts for themselves.

Games Deemed Legal Since 2014

The Beaver County Court of Common Pleas ruling that Pace-O-Matic’s Pennsylvania Skill games are legal and games of predominant skill have stood since 2014 (ruling .PDF)

Once again a judge has ruled in favor of game providers. This time in Monroe County where the DA’s office and the BLCE carried out a raid on a small business there in 2022 and held the devices in a secure location until the gambit played out in court – again. Judge Mark said in his recent ruling that the gaming “devices are games of skill and not games of chance.”

In the same county earlier this year, prosecutors caught an earful from Monroe County Common Pleas Judge Jennifer Harlacher Sibum who scolded them for not only prosecuting non-criminal behavior but for misconduct in the investigation and prosecutions themselves. In fact, she used the withholding of crucial evidence and misrepresentation of evidence by the prosecution side of the equation as reason to suppress the actual evidence from a court hearing as the case was dismissed.

The court finds that the Commonwealth improperly withheld and misrepresented material evidence relative to the issuance of the search warrant in this matter and that such conduct warrants the suppression of the seized property,” wrote Judge Sibum in her order dismissing the charges and ordering the return of the machines, cash, and other instruments to the rightful owners.

According to a report on G3 Newswire, Wednesday judges in York County and Dauphin County have ruled against prosecutors and the BLCE in other cases this year as well.

Pace-O-Matic got its machines, cash, and related equipment back from prosecutors in York County after it was improperly seized by the Bureau earlier in 2023. In Dauphin County, the “L” was chalked up to prosecutors there, and the “W” for POM.

In that case, Dauphin County Common Pleas Judge Andrew H. Dowling wrote, “Initially, it is this Court’s belief that the Commonwealth’s investigation shows case bias. The Commonwealth is seeking to make all machines like the POM Machines into illegal gambling devices, and their whole approach and intent is to shut down games regardless of the actual gameplay… Thus, the Commonwealth as a whole is biased against the games, and their approach lacks case credibility.

Pace-O-Matic lawyer, Matthew Haverstick of Kleinbard, LLC, stated: “Pace-O-Matic’s Pennsylvania Skill games are legal. The Commonwealth has wrongfully seized its equipment for years with no credible evidence that the games are illegal. Judges are now carefully looking at the evidence and ruling in our favor.

Mike Barley, Chief Public Affairs Officer for the company added, “Again, another Pennsylvania court has found that Pennsylvania Skill games, powered by Pace-O-Matic, are legal games of predominant skill. With the legality of our games upheld repeatedly, we are eager to work with the Legislature to pass legislation that will fairly regulate and tax the skill game industry. In fact, Pace-O-Matic stands out among our competitors as the active driving force seeking additional regulation and taxation.

Pennsylvania Skill games are manufactured in the commonwealth and 90% of the profit generated from them reportedly stays inside the state. Earlier reports claim to show that “real casino” businesses are not cannibalized by play on the devices as those seeking to spend a few dollars for entertainment with potential prizes on the games visit a neighborhood mom-and-pop grocer or other stores, another nearby small business, a favorite fraternal or social club, the local volunteer fire company or a veterans’ organization without the need to plan travel, overnight accommodations, or even to plan any form of major budget expenditures.

The Same or Similar Games have been Banned by Law in Kentucky Since March 2023

The games do not enjoy the same standing in Kentucky where they were recently codified into law as unregulated and illegal.

Pennsylvania casino and lottery revenues have continued to grow year in and year out as the skill games find their way into more and more locations giving at least anecdotal evidence to advocate’s claims that it is a totally different clientele than would be found looking for flashing lights, bells and whistles, and big jackpots.

Sen. Gene Yaw who serves as Vice Chair on the Judiciary Committee in Harrisburg has introduced legislation that would tax the machines and reportedly provide some $300m a year in revenue to the commonwealth while regulating the games as well.

As part of most press releases from the company, POM often mentions that it “employs a team of former state police officers to enforce all terms of contracts and codes of conduct. These contracted terms limit the number of machines, where they are placed in a location and have protections in place to prevent anyone underage from playing the devices.

Source:Judge rules that Pennsylvania Skill games are ‘devices of skill’, G3Newswire, June 7, 2023

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