From crooked referees and bloated stadium contracts to the theft of the old World Cup trophy, Brazilian football is no stranger to scandal.
The latest intrigue has a 21st century digital twist. More than a dozen players are suspected of taking bribes for deliberate acts, such as receiving yellow cards or giving away penalties, from a criminal gang that placed online bets on the incidents.
None of the websites on which the bets were placed have been accused of involvement. Prosecutors are treating them as victims since they paid for a scam. But the controversy has sparked a debate about the growing role of sports betting at a time of critical commercial development in the domestic game.
With acquisitions of teams by foreign capital and proposals to create a new league backed by big money, the manipulation of at least eight top competitions has even called into question the integrity of the sport.
“Whether it’s investors in clubs, leagues or media companies buying the broadcast rights, it’s bad for everyone,” said Eduardo Bandeira de Mello, a federal legislator and former president of Flamengo, a Rio de Janeiro side.
Sports betting has exploded in popularity since its legalization in 2018 in the football-mad South American country, with online international brands Bet365, Betano and Sportingbet among the hundreds aimed at gamblers.
Nineteen of the 20 top division clubs are sponsored by such sites. Consultancy H2 Gambling Capital forecasts R$83 billion ($17 billion) in betting by 2023, with R$5.82 billion in gross gaming revenue – expected to roughly double in the coming years.
Yet there is a lack of regulation. As a result, internet bookmakers operating from overseas jurisdictions are not subject to Brazilian rules or taxes. Andre Gelfi, president of the Brazilian Institute for Responsible Gambling and a local director of the Swedish group Betsson, believes this was the main cause of the fraud. “Without regulation, you can’t achieve international best practice,” he says. “The more formalized the market, the more effective the control of criminal activity.”
The new government in Brasília was already reworking rules that were drafted but not adopted by its predecessor, so the affair could give new impetus.
One concern, however, is that the political attention it has drawn could slow down the process. Government support in Congress is weak and some believe ministers will wait until the end of a parliamentary inquiry into the scandal. The ongoing uncertainty is negative for businesses and consumers who have little recourse to complaints in Brazil, said Neil Montgomery, a lawyer specializing in the area.
“It is very difficult for serious operators to make long-term plans because the final legal framework is not in place,” he adds.
Industry insiders don’t expect draconian regulatory action in response to the controversy. Businesses will need to apply for licenses or face advertising and payment processing restrictions.
“The mid-term concern for international operators is less match fixing, it is what will happen to the market once regulation is in place,” said Jon Moss of 34 Consulting and former head of international development at Bet365.
According to him, certain aspects of the proposed rules threaten to push consumers to unregulated portals. These include a 30 percent tax on winnings above R$2,112 and the fact that virtual blackjack, roulette and slot machines – a major source of income and popular with gamers – remain illegal when operated in Brazil and thus must be removed from legitimate sites . .
Even if sports betting isn’t overly tainted by the scam racket, lobbyists fear setbacks in a wider campaign to fully liberalize gambling and allow casinos in Brazil.
The Senate was expected to vote on a bill in the coming months to remove a blanket gambling ban from the 1940s. Yet the furore has sparked opposition from evangelical Christian politicians, who say it shows the dangers of addiction.
Operators say it is in their best interest to prevent fraud and have committed to take more action to detect and report suspicious activity, along with educating gamblers. Clubs and sports authorities are under pressure to do the same for athletes. With major changes coming in the business side of oh jogo bonito — the beautiful game — there’s a lot at stake.
“The implications will be extremely serious if we do not treat the matter with the seriousness it deserves. If it’s a weak reaction, it could cause a credibility crisis in football,” said Bandeira de Mello.
michael.pooler@ft.com
