Understanding Betting Markets
The markets, i.e. the jurisdictions of sports betting have 3 basic potential status: grey, black and white. Let’s understand the meaning of each expression
The expression implies that some kind of law regulates or forbids gambling activities. The laws could be exclusively about in-land betting or about on-line activities. Many countries, like Brazil, faced recent changes in the law because the previous gambling laws were older than the so called ‘commercial internet’, i.e. the internet for households simple didn’t exist when such laws were created.
Black markets are markets that forbid gambling completely, and it also describes the activities of operators that do not obey existing laws at a certain region. If there’s a monopoly, for example, owned by the state or not, and other companies take bets in that jurisdiction, they effectively operate in the black market.
If the government has issued 10 gaming licenses and a company that failed to obtain one decides to do business at that jurisdiction, that’s also illegal betting, i.e. black market.
A White market also implies the existence of laws. Companies that operate and obey the law of a jurisdiction operate in the so-called white market. A white market can exist in many ways, i.e. the number of legalised operators has nothing to do with the ‘colour’ of the market itself.
Grey markets would be anything that can’t exactly be described as white or black. The most common situations of grey markets would be
- Markets that aren’t regulated by law, which means gambling activities aren’t illegal or legal, there simply isn’t a law defining status of such business practices
- Cloudy legislation, like the old one in Brazil, i.e. in-land gaming was restricted to the CEF monopoly, but legislation ignored the existence of on-line gambling, which was ‘faced’ in practice, for many years, as ‘gaming abroad’ in the eyes of the local fiscal authorities. The legislation just didn’t predict the existence of the internet.
Grey markets are a fertile ground for speculation, i.e. some brands only operate at grey markets as they normally don’t require gaming licenses.
Legal firms thrive at grey markets until more clear legislation passes, and each different grey market has its’ own very complicated peculiarities.
The Grey Market of Brazil in 2020
One of the last acts of the former president Michel Temer was to sign new legislation about gambling. The Brazilian local law, however, dictates that such changes would only be effective when the process of regulation could be considered completed.
The regulation attempts haven’t seen the light of day yet, and several drafts have been redone since the law was signed. The most recent attempt was received in a very bad way by operators, which means this is a typical Brazilian situation: the full regulation can’t really be ‘predicted’ in terms of dates, and even very powerful and organized lobbying have failed to persuade the authorities to do something clear, fast and efficient.
In sum, Brazil remains a grey market for now, and it’s quite hard to know when this will change effectively. Experienced gaming professionals are sceptical about this process, as all individuals that felt optimistic about impeding changes over the years ended up frustrated by the Brazilian government.