Unlicensed gambling operators serving players in Brazil have received a notice to comply with regulatory requirements by the end of September or get kicked out of the market. The South American nation is doing this to ramp up its efforts of fostering safer gambling for its locals.
As the official launch date for regulated gambling draws close, the Brazilian government has set a deadline for all unlicensed gaming operators to apply for betting licenses. Beginning October 1, operators who would not have submitted applications for gaming licenses will be suspended, barring them from engaging players in the LatAm country.
The Secretariat of Prizes and Bets (SPA) will issue the licenses for qualified operators who apply by 11:59 pm on September 30. Initially, the Ministry of Finance, which runs SPA, had set a 90-day priority window ending September 16 for operators to send in applications. Operators who haven’t heeded the directive by the deadline will be allowed 10 more days so that players can withdraw their bankrolls before being shut down and canceling all user accounts.
All sites that will get the go-ahead to join the regulated gambling market must use the ‘bet.br’ domain extension. Companies willing to comply will be subject to Law No. 13,756/2018 and Law No. 14,790/2023, which outline rules on fraud, money laundering, and cyber security.
For a long time, the gambling landscape in Brazil has operated in limbo, majorly due to the government’s hesitation in regulating the market. With the current situation, it’s apparent that the government’s decision to crack the whip on the illegal gambling sector will significantly shrink unlawful betting operations, thereby protecting the socioeconomic framework in the country.
Any operator violating the mandatory license application requirements will face punitive consequences starting January 2025. These penalties include a 10-year ban on future license applications and a R$2bn (£269.8m/€320.3m/$354m) fine. According to Eduardo Carvalhaes and Karen Coutinho, partner and counsel from Brazilian law firm Lefosse, the move will root out non-compliant companies while protecting operators that have already shown a willingness to welcome a regulated market.
In Brazil, the gaming black market has often been deemed dangerous and a threat to economic development due to its perceived threat to public safety and ties with organized crime rings. Nonetheless, the industry was left to continue operating despite significant concerns. Thus, the current efforts to turn illicit gambling operations into legal ventures that will give back to the community have been lauded by many who have expressed hope that problem gambling can finally be tackled professionally.
These sentiments have been echoed by Finance Minister Fernando Haddad, who has dubbed problem gambling ‘a pandemic’ because of increasing reports on health issues brought about by the vice. Haddad said in part:
“This is related to a pandemic that has taken hold in the country, this issue of psychological addiction to gambling, and we need to start addressing it. We see an urgent need to bring order to this and to work with the Health Ministry because we’re receiving many reports of health problems related to it.”
Additionally, Minister Haddad told reporters that the just-completed regulatory framework has been drafted with families in mind. For example, the new regulations from the Brazilian government prohibit placing wagers with money obtained from loans or credit cards.
From statements issued by regulators, a recent scandal involving the arrest of Esportes da Sorte CEO Darwin Henrique da Silva Filho, his wife, and an influencer might have expedited the regulation process. This followed an arrest warrant issued for the company over allegations of money laundering and illegal gambling. Gabriel Oliveira, Esportes da Sorte’s legal director, has since defended the operator, claiming that Filho’s actions were independent of Esportes da Sorte’s.
SPA Secretary Regis Dudena also voiced his opinion on the rollout of the regulations, commending the regulator’s efforts to filter the betting landscape in time for the industry’s official inauguration. Regarding problem gambling and cases of fraud, Dudena said,
“Our goal is to protect the mental, financial, and physical health of bettors by preventing companies from using sports betting and online games as a tool for fraud and money laundering… Many police operations involving companies that operate in the betting market in a criminal manner have come to light. This was the way we found to not wait until January to start separating the wheat from the chaff.”
It should be noted that when the announcement was made for operators to register for licenses within a 90-day period, only a handful had submitted their applications even as the September 16 deadline approached. It was only after the finalization of the sanctions ordinance that gaming business holders applied for the licenses.
In fact, before July 31, 108 of the 113 that beat the deadline were yet to hand out their registrations. However, once it was clear that the government was set on implementing the ordinances, the pressure was on to get in line or be pushed out. Moreover, while the date has been extended, discussions are underway on the possibility of granting licenses to the operators who met the first deadline once the regulated industry debuts in 2025.
More operators are joining their peers after the government warned that it will act once time is up. Most recently, six applicants, namely, BRX Gaming, Amplexus Corporation, Nexus International, JBD Comunicação e Tecnologia, Boa Sorte Prêmios, and Wudy Pay Correspondente de Instituição Financeira, requested authorization to obtain licenses. Successful applicants must pay R$30 million ($5.4m /€4.9m) in registration fees.
Fixed-odds betting has been legal since 2018, but unlicensed operators have been operating in perpetual limbo with no specified rules because of the lack of a regulatory framework. The move is to finally set up a robust system that will guide the industry and guarantee order while ensuring that taxes and fees collected from gambling activities are channeled to worthwhile causes.
As the gaming industry continues to expand rapidly, the need for a structured legal framework for any jurisdiction looking to reap big from the massive gaming revenue is inevitable. The government’s decision to embrace a regulated market points to significant benefits for the country in the coming years.
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