Brazil Government Seeks BRL3.6 Billion From Betting Companies Over Public Health Costs

Brazil’s Attorney General’s Office (AGU) has filed a lawsuit against 17 betting companies seeking billions of reais in compensation for the alleged impact of gambling on the country’s public healthcare system.

Filed in the Federal Court of Pernambuco, the action estimates that approximately BRL2.6 billion could be owed to Brazil’s Unified Health System (SUS), while the government is separately seeking at least BRL1 billion in collective moral damages.

The AGU argues that betting-related health problems have increased costs for the SUS and that the industry should contribute towards the resulting expenditure. The lawsuit was filed in Pernambuco because, according to the government, Brazil’s Northeast has the highest concentration of socioeconomically vulnerable people participating in high-risk gambling.

“The defendant companies privatise significant profits derived from the financial collection from millions of bettors, while transferring the budgetary cost resulting from collective illness to the SUS and to society as a whole,” the AGU said in the lawsuit.

AGU Targets 17 Betting Companies

The government argues that existing mandatory contributions from licensed betting operators are insufficient to meet the healthcare costs it attributes to gambling. Under the current revenue allocation structure cited in the proceedings, 0.12% of operators’ revenue is directed to the Ministry of Health.

The AGU has not requested a final fixed amount for reimbursement of SUS expenditure, instead asking for the figure to be calculated at a later stage. However, it estimates the potential cost at approximately BRL2.6 billion, covering the five years preceding the lawsuit and continuing for as long as any court-recognised damages persist.

A further claim of at least BRL1 billion relates to collective moral damages allegedly caused by betting activity. According to studies cited by the government, the 17 companies named in the proceedings account for approximately 80% of Brazil’s betting market.

Those companies include the operators behind some of the country’s largest brands, including Betano, bet365, Superbet, Sportingbet, Esportes da Sorte, Blaze, Betnacional, Estrelabet, 7K, Pixbet, Novibet, Betfair and KTO.

Other businesses named are OIG Gaming Brazil, BPX Bets Sports Group, H2 Licensed and SevenX Gaming, alongside their associated betting brands.

The claims remain allegations contained within the government’s lawsuit, with the amounts sought subject to the outcome of the proceedings.

Public Health Costs At Centre Of Case

The legal action centres on the AGU’s position that part of the financial burden associated with treating gambling-related harm should be borne by betting companies rather than solely by the public healthcare system.

The government is seeking reimbursement for services provided through the SUS, although the precise amount would need to be established during the legal process. Its BRL2.6 billion estimate is therefore not a confirmed liability for the companies involved.

The additional BRL1 billion claim for collective moral damages would also require the Federal Court to accept the government’s arguments and determine the extent of any liability.

Lawsuit Adds To Turbulent Period For Brazilian Betting

The action comes during a period of significant upheaval for Brazil’s regulated betting sector following President Luiz Inácio Lula da Silva’s decision to prohibit fixed-odds betting.

Licensed operators have been instructed to wind down their activities, with betting websites and applications due to become inaccessible from 6 October.

Industry organisations have challenged the decision, with the National Association of Games and Lotteries and the Brazilian Institute of Responsible Gaming seeking intervention from the Supreme Court.

The AGU lawsuit represents a separate legal development but adds further pressure on an industry already facing the prospect of its recently established regulated market being brought to an end.