FolhaMercado Newsletter: government announces bets – 10/02/2024 – Market

This is the edition of the FolhaMercado newsletter for this Wednesday (02). Do you want to receive it from Monday to Friday, 7am, in your email? Sign up below:

The moment of truth for betting

This Tuesday, October 1st, was a turning point for those who place bets online in Brazil.

↳ Only betting houses, better known as bets, that requested government approval in their regulatory program will continue to operate.

↳ There are 192 websites, released by the Ministry of Finance last night. See the list here.

Understand: The government has not yet given approval to these companies, but will allow them to operate while it evaluates final approval. Until then, it decided to block other websites that had not even signed up for the regularization program until mid-September.

Anyone not on the list will be gradually dropped from October 10th. According to Minister Fernando Haddad, it is difficult to carry out a complete scan in a short period of time.

Until then, however, betting functions must be suspended. The deadline is for Brazilian players to be able to withdraw money from bets that were left out of the list. See more here.

↳ The exception is betting houses that operate after concessions from states such as Rio de Janeiro. Understand.

“Clean.” This week alone, Minister Fernando Haddad’s expectation is that 500 websites will be suspended.

Two businesspeople from the sector told Sheetunder reservation, who expect the blocking of more than 2 thousand bets.

Attention: It is worth noting that the 192 bets that remain on the air may also be blocked in the coming weeks.

The new betting market, with several rules, will only come into effect on January 1st, but the denial or authorization from the Ministry of Finance may come earlier.

↳ Among the rules: have suitability certifications, financial transparency channels and tools that allow players to avoid addictive behavior. I talked about them in this edition of the newsletter.

↳ Taxes will also be paid to the Federal Revenue, which should generate up to R$12 billion per year, in addition to limitations on advertising and payment methods, such as restrictions on credit cards and the use of PIX.

Bets generate R$110 billion a year in Brazil, an amount that currently completely escapes taxation.

Almost back

OX (formerly Twitter) informed this Tuesday (1st) Minister Alexandre de Moraes, of the STF (Supreme Federal Court), that it will pay the fines totaling R$ 28.6 million.

The company’s retreat led the minister to release the bank accounts of satellite internet company Starlink, also owned by Elon Musk.

↳ The fine set for failing to comply with decisions to take down profiles is R$18.3 million.

↳ Another R$10 million is for the maneuver that made the social network work again in the country two weeks ago.

No access. The network remained blocked until late last night. Last Friday (27), Moraes decided to deny the official request for X’s release and made his return conditional on paying the fines.

Dropped the ball. After refusing to comply with court orders, Elon Musk gave in.

The lack of alternatives, pressure from investors and international criticism are seen as the reasons that made the company change its stance.

The social network made lawyer Rachel de Oliveira Villa Nova Conceição official as its representative in Brazil.

She had already held the position and will be responsible for suspending accounts, including that of a senator.

↳ In last week’s unblocking request, the company informed that Rachel de Oliveira will dispatch from an “office at a known address”, where she can receive subpoenas.

Money. Analysts estimate that the market value of X is currently 72% below the US$44 billion (R$246.9 billion) valued at sale in 2022.

At the end of 2023, a 50% drop in value had already been confirmed by Musk himself.

The absence in the Brazilian market, estimated at 20 million accounts, weighs against the platform’s financial objectives.

When buying the old Twitter, one of Musk’s promises was to make the network profitable, but the losses have been high for the billionaire.

↳ Of the US$44 billion paid by the network, US$13 billion (R$72.9 billion) was lent by banks.

↳ Musk revealed that annual interest payments total around US$1.5 billion (R$8.4 billion), according to the Wall Street Journal.

One step away from investment grade

Brazil is on the way to recovering the much talked about “investment grade”. This Tuesday (1st), the risk rating agency Moody’s improved the country’s rating in its ranking.

Now, we are just one level below the line that divides countries into more and less safe to invest in.

↳ The grade went up from ‘Ba2’ to ‘Ba1’. Investment grade starts at ‘Baa3’, the next step in the ranking.

↳ Brazil was already at this level, but lost its rating during the economic crisis of 2015 and 2016.

Understand: the rating agencies Moody’s, S&P and Fitch assess the risk of a country not meeting its debts.

The notes directly influence investor appetite, the interest of international businesspeople and the level of interest rates in the country. They also affect the appreciation of the exchange rate. See more here.

Optimistic. Moody’s ratings had been unchanged since 2016. The agency justified the improvement as a reflection of strong economic growth and a series of reforms that improve the country’s credit scenario.

Among the highlights are the independence of the Central Bank, tax reform and measures that improved the business environment, such as the digitalization of finance and labor reform.

Little help? Last week, President Lula and Minister Fernando Haddad met with representatives of the three agencies in the United States to present the scenario of Brazilian public accounts.

THE Sheet found that Lula’s intention was to strengthen Haddad with the unprecedented gesture of receiving risk agencies.

Behind-the-scenes information indicates that the President of the Republic expects the return of investment grade by 2026.

Yes, but… Shortly after the meeting, the Fitch agency released a note criticizing the uncertainty regarding Brazil’s public accounts, showing a divergent perception.

Despite the improvement, Moody’s stated that Brazilian debt is at a high level in relation to GDP and that the public budget needs more flexibility.

I commented on the rise in Brazilian public debt in the Monday edition of the newsletter.

In numbers

A weekly chart explains what is happening in the economy

Interest rates fall around the world, but Brazil, Russia and Japan are exceptions

Change in base rates since June, in basis points (hundredths of a percentage point)

The inflation that impacted the world post-pandemic has finally subsided, and the main central banks are now reducing interest rates.

The most important of them, the United States Federal Reserve (Fed), cut the country’s rates in September by 0.50 percentage points.

↳ This cut was the first movement since interest rates reached 5.5%, still in July 2023.

In the euro zone, the reduction was also 0.50 percentage points since June.

Some countries, however, are going against the trend.