Talks in Brazil on Legalization of Gambling

Cash-strapped Brazilian government is in talks with lawmakers over the legalizing of gambling to increase their revenues while Congress is baulking at President Dilma Rousseff's efforts at overcome the budget deficit by raising other related taxes.

Pres. Rousseff's chief of staff, Aloizio Mercadante, has ran these idea with lawmakers recently after they had signalled to government that it will struggle to pass a controversial tax on financial transactions.

Brazil banned casinos during 1946 and they outlawed bingo halls during 2007 because concerns of facilitated money laundering, however they do allow federal lotteries and horse racing betting.

Proponents of gambling say that Brazil, who is facing their worst recession in 25 years, are no longer in a position to afford to forgo what could possibly be 23.5 billion Reais (Brazilian Real which is approximately $US5.9 billion), of annual gambling taxes — this is an amount that could probably have increased over the 2014 World Cup and also 2016 Olympic Games.

Mauricio Quintella, who is a leader of the center-right Party in lower house of Cngress, and also one of the lawmakers who is tasked with leading consultations on the idea of legalization of gambling, said that Brazilians who want to gamble go to places, such as, Paraguay, Las Vegas, Montevideo, Las Vegas, then they leave all the money spent there.

Mr. Quintella supports the legalization of gambling, however he says that the talks at this stage are preliminary.

To win over public opinion in a country where large numbers of people feel that casinos are synonymous with corruption could prove to be a challenge.

Many prior scandals have been linked to gambling, said an aide to the former President Luiz Inacio Lula da Silva, who was sentenced to 12 years imprisonment during 2012, because he asked for bribes from an illegal lottery operator during 2004.

Luiz Felipe Maia, a Sao Paulo-based lawyer said that talking about gaming and people immediately think of fraud, mafia, money laundering and addiction. Mr Maia is a specialist in gaming who believes that the Brazilian legal gambling market could very easily be worth about 70 billion Reais annually, and the government could take abut a third in taxes.

José Robalinho Cavalcanti, who is the president of the Brazil national prosecutors' association, says that the legalization of bingo halls would be "a very big step backward”, however he noted that the period when they were legal was marked by money laundering and smuggling.

He told he told the newspaper Correio Braziliense, that it remains to be seen if the government’s proposal of regulating bingos again would solve these problems but he expressed that he doubted it would.

Past errors

Mr. Maia said that the key for avoiding past errors and corruption was better regulation and should include a new Federal agency that will oversee the payouts to prevent gambling addictions.

He continued that Brazil could also incorporate new technology that will allow the casino operators to be able to closely track money.

Mr. Maia stated that Brazil was amongst a handful of countries situated outside the Middle East and Africa that has not implemented laws on regulation gambling.

Brazil has currently what is estimated as an 18 billion-reai illegal gambling market, this consists mostly of a numbers game which is known as the "game of animals" and there are many Brazilians who gamble online.

It is thought that illegal gambling currently surpasses the 14 billion-reai market, annually, for a legal lottery that is run by the Federal Bank, Caixa Economica Federal, and also betting on horse racing.

The regularization of gambling would not provide immediate relief to the government's stressed finances,

Mr. Maia said that any gambling proposal would be needed to be pass by Congress and that could probably take about a year to implement. After that auctions for awarding licenses for casino and bingo operations could then be held.

A few few proposals have been put forward to congressional committees but an aide to the Federal government has expressed concerns that there is not sufficient controls included.

Some of the international casino and game operators are very eager to see an opening of the Brazilian gaming market, whenever it might happen.

Mr Maia said that when the time comes for the Brazilian market to open there will be a line ready and waiting out the door, he did decline to name any of the companies that have contacted him regarding the Brazilian market.