Betting on influence: What can Mexico learn from Brazil’s boom?

There are many reasons why operators and industry members are currently so focused on Brazil (which we will refer to in the following lines). However, our main objective with this article is to outline the impact that having such high expectations on a particular market could have on different territories among the Latin American jurisdictions, specifically Mexico.

On a final note, please be advised that because we are solely licensed lawyers within the Mexican jurisdiction, we are writing this article as specialists with many years of experience in the gaming industry at a global level, and with the deepest respect for a country as important and full of good things – and amazing people – as Brazil.

Background of the gambling legal framework in Brazil

In the almost two decades we have been in our sector, we have witnessed firsthand how some industry observers think Brazil’s gambling legalisation process has not been the most stable or predictable. To corroborate this, it is worth briefly referencing some important precedents for this jurisdiction, which we will discuss briefly below. 

 At the beginning of the 20th century, gambling was largely unregulated, with casinos and betting houses operating openly and the Government taking opposite stands regarding gambling. However, in 1946, President Eurico Gaspar Dutra imposed a nationwide ban that forced the closure of all casinos and restricted other forms of gambling, pushing much of the activity underground or into illegal operations, as commonly happens whenever prohibition comes before regulation.

Regardless of the ban, illegal gambling persisted, mostly in the form of ‘jogo do bicho’ (animal lottery), an underground lottery game and other informal betting schemes. The Government attempted to manage certain forms of gambling through state-run lotteries, but comprehensive regulation remained absent for decades.

 Over the years, Brazil also developed a very peculiar segment: Gaming parlors known as ‘bingos’. Bingos grew exponentially, if not uncontrollably, and became an impressive business by the end of the 20th century in Brazil. It is estimated that bingos employed more than 300,000 people. However, it appears this activity was being carried out in an unclear way because, in 2004, then-President Luiz Inacio Lula da Silva (who now is holding office for the third time) ordered the closure of bingo halls nationwide, after corruption allegations concerning people very close to the Government at the time.

Although certain activities were allowed, such as the federal lottery and horseracing, the first major shift toward legalisation occurred with the passage of Law No. 13,756/2018, which authorised fixed-odds sports betting. This law marked a turning point by allowing both online and land-based sports betting under Government oversight. More recently, with Law No. 14,790/2023, Brazil implemented additional regulations, establishing a licensing regime and setting tax rates for operators and winnings.

Of course, the above summary is not exhaustive and perhaps we are missing some legal technical detail (as we said before, we are authorised to practice law in Mexico, not in Brazil), but using strict logic and common sense we can realise that after just a few years, it would be difficult to forecast – much less take for granted – whether the nascent Brazilian (legal) gaming industry will be sustainable in the long term.

Why is Brazil such a promising market?

Let us start with the obvious: Brazil is the largest country in Latin America. As of 1 July 2024, it held a population of 212,583,750, according to the Brazilian Institute of Geography and Statistics.

Moreover, as their history has shown with certain gambling activities, Brazilian people have revealed a natural enjoyment for many types of games and sports, particularly bingo and soccer.

This inborn love of the game translates into large engagement and high spending

As manifested in a piece published by the New York Times: “The Brazilian Government estimates that nearly a quarter of the population has started gambling online in the last five years. Currently, Brazilians spend about $3.5bn a month on online gambling and sports betting represents a huge segment in soccer-mad Brazil, according to figures from the country’s central bank.”

Influence on Mexico

In our opinion, it is crucial to understand that, even though we share a lot of characteristics, Latin America and the Caribbean is a region made up of more than 40 different countries and territories, with diverse origins, history and social, political and economic realities.

For instance, even though gambling in both Mexico and Brazil faced general prohibitions around the same time (1946-1947), since the past century to date, Mexico has maintained a very permissive gambling environment, with casinos, sports betting and online gambling already regulated under the Federal Law on Games and Drawings, as well as its Regulations enacted in 2004.

So, seeing things in perspective, two decades ago (coincidentally in the same year, 2004) gambling was being shut down in Brazil, while in Mexico the gaming industry was preparing to maximise its growth, which has remained fairly stable until today.

Nevertheless, we must recognise that, currently, the Mexican regulatory framework is far from ideal because it remains fragmented, short and outdated, leading to inconsistencies and enforcement challenges, while Brazil now seems to have made a 360-degree turn. Indeed, with its structured licensing model and tax regime, we hope this might inspire Mexican regulators to consider updates to our legal framework – particularly in connection with responsible gaming policies and illegal gambling enforcement.

The emergence of Brazil as a major regulated market should encourage greater cooperation among Latin American regulators and lawmakers with discussions aimed at harmonising gaming standards, promoting best practices and enhancing compliance measures across the region. Without question, the expectation around Brazil has drawn attention to the region and has brought the usual economic, political and social concerns on the table for further discussion, which is always a positive thing.

Conclusions

From our view, Brazil’s brand-new betting legalisation represents a turning point for the Latin American markets, as this country joins to the general tendency to uplift gambling prohibitions.

The shift from prohibition to regulation has unlocked significant economic benefits while presenting new challenges of all sorts

Brazil’s structured licensing model, robust compliance measures and taxation framework have provided a blueprint for other Latin American jurisdictions seeking to regulate and expand their gambling industries.

Mexico could benefit from adopting similar reforms to enhance responsible gaming policies and illegal gambling enforcement. As Brazil’s market matures, its influence on regional policies is expected to grow, positioning all Latin American countries as dynamic and competitive players in the global gambling industry.