Could gambling add some dynamism to the Brazilian economy?

Casinos were outlawed in 1946, but even then, they represented a considerable source of income for Brazil. Would bringing them back give Brazil a sense of progress?

Brazil is facing its most severe economic downturn since the great depression. Political corruption scandals deteriorated government trust, high level executives were removed from their offices, most notably former President Dilma Rousseff and low commodity prices keep commercial income at bay. Additionally, there is a severe fiscal deficit, social government programs from previous PT administrations have limited the contributor base and the country’s new leadership is struggling to find new sources of tax income.

Gambling then, comes up as a possibility, a sort of unexplored alternative to gather tax revenue. Before they were outlawed in 1946, casinos drew hordes of people to the tables and spiced up tourist spots such as Copacabana beach. Their continued existence signified a reliable taxable asset, and even if in the grand scheme of the Brazilian economy the income from gambling was relatively low, it was still a considerable contributor. One casino in particular, Copacabana Palace, brought in nearly $100 million each year.

The prohibition of gambling naturally moved the practice towards the Brazilian underworld and into criminality. Large cities in Brazil are known to have a widespread issue with illegal “bingo halls” and other types of gambling parlors, which have become a petri dish for subsequent illegal activity and violence.

There are enough incentives now to move towards a change in the legislation that regulates gambling, the Brazilian congress is already considering it. In fact, this April, passed legislation to begin a limited legalization of gambling activities. The bill known as PLS 186/2014 allowed for the construction of 35 casinos, with the condition that they offer other, non-gambling services, such as retail, restaurants or hotels, among other new permissions.

Further legislation on the matter will come as bill PL 442/1991, which if passed in the house and senate, would only need Michel Temer’s signature to become a reality.

Analysts expect Brazil’s first casino to open according to the current legislative parameters no sooner than 2019.

Alexandre Fonseca, a Brazilian gaming analyst currently advising members of congress on the matter told Americas Quarterly: “If you ask me what are the odds of Brazil becoming a global gaming destination within the next five to 10 years, I would say they are quite high”

Edgar Lenzi, president of gaming consultancy BetConsult echoed Fonseca’s thoughts and assured that “The demand for gambling in Brazil is huge”, which is unsurprising considering the thriving illegal gambling scene and the country’s commitment and passion for sport.

There are several foreseeable obstacles to sort before the country’s re integration with gambling can be considered a success, most notably, corruption. The big question being: ¿How can a government secure an increase in fiscal revenue when adequate fiscal collection cannot be guaranteed?

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