South America has been a special part of my life for four decades. I have lived many years in Brasil and Peru. I am married to an incredible lady from Argentina. I want to share South America with you.
The elderly man in a brown cardigan sitting outside a bar in
São Paulo’s upmarket Jardins neighbourhood does not look much like a
mobster. However, he is in fact one of the many operators of Brazil’s Jogo do Bicho (Animal Game) — a gambling racket run by mafia bosses and corrupt public officials worth R$12bn ($3.7bn) a year.
“My
job is a bit like being a therapist,” he says, explaining how to play
the illegal lottery that started out as a raffle at a Rio de Janeiro zoo
in 1888. Clients often turn up to tell him their dreams, which he
interprets with the help of a specialised dictionary that also indicates
which of the lottery’s 25 animals they should pick.
You dreamt of
missing your flight? It means you have regrets and should bet on the
eagle. “Snakes are very common — they indicate betrayal,” he says.
The popularity of Jogo do Bicho — with Brazil’s
rich and poor, old and young — is proof, gaming experts say, of how
successful the country’s gambling industry could be if it only were
legal.
After a 70-year ban, Brazil’s government is finally
expected to legalise gambling as early as this year in an effort to
raise tax revenues to plug the country’s budget deficit, drawing huge interest from the world’s casino operators and betting groups.
“It would be one of the most significant events in gaming history if Brazil opens up to the gambling sector,” UK bookmaker William Hill said in a statement.
William Hill, rival Ladbrokes, the US casino group MGM Resorts International, and Sweden’s Betsson and NetEnt all say they are interested in expanding into Brazil once the sector is regulated.
“The Brazilian market has enormous potential with a population that has long enjoyed a love affair with football
which is Ladbrokes’ fastest growing product,” says the bookie, while
MGM highlights its interest in “large-scale integrated resorts”.
Luiz
Maia, a São Paulo-based lawyer who specialises in gaming, says
multinational clients are already discussing local partnerships and have
even signed provisional real estate contracts in preparation for the
legislation’s approval.
Based
on the calculation that gambling markets typically account for about 1
per cent of a country’s gross domestic product, Brazil’s market could be
worth R$55bn in total bets placed, according to Brazil’s Legal Gaming
Institute (IJL).
“Gambling has always been somewhat of a taboo
here, but in the rest of the world it is an entertainment industry,”
says Magno José Santos de Sousa, IJL’s president, adding that Brazil is
losing R$6bn a year in taxes in the R$20bn illegal gambling market.
Gambling
was outlawed in 1941 alongside vagrancy as part of Brazil’s Criminal
Contravention Act — rules brought in during Brazil’s industrialisation
period to increase productivity. In 1946 the then president Eurico Dutra
issued a decree to shut down all existing casinos — allegedly at the
behest of his piously Catholic wife. Only state lotteries, as well as
poker and betting on horse races, which are considered sufficiently
skill-based activities, remain legal.
In the 1990s bingo was
reintroduced under the “Pelé Law” to fund sports activities but became a
target for money launderers, leading the Supreme Court to outlaw it in
2007.
Both Brazil’s lower house and senate are discussing separate
legalisation bills, which include proposals to force foreign players to
take on local partners and restrictions on how many casinos one company
can own. Online betting may remain illegal for fear of fuelling
addiction.
After congress agrees on the legislation, it could get
the presidential sign-off this year but more likely early next, Mr Maia
says. However, Brazil’s president may try to speed up the process by
first creating a gambling regulatory agency as the government scrambles
to find ways to plug a budget deficit of more than 10 per cent of GDP.
Foreign
operators would be likely to dominate the casino industry, based in
tourist hotspots such as Rio, while sports betting will be hotly
contested with Brazilian companies, especially given possible interest
from local media groups, analysts say.
However, much will depend
on the government’s cut in taxes, which IJL says should be similar to
the world average of 30 per cent for physical operations and lower for
online groups.
Per Eriksson, chief executive of NetEnt, says: “A
good level [for online] would be between 15 and 20 per cent — we can’t
be there if we can’t earn any money”.
For the Jogo do Bicho
mafia bosses, though, even hefty taxes may come as a relief, says IJL’s
Mr Santos de Sousa, quoting a 2014 study by the institute that showed
one in nine clandestine operators favoured legalisation. “They have to
pay bribes to the police, to public officials — it’s such a long chain
of people that it’s actually cheaper to pay taxes.”
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