By Leticia Navarro, journalist at G&M News.
Could you please analyze the Government’s recent ordinances that define rules for regulating the betting market in Brazil and what specific actions the Prizes and Betting Secretariat is taking in this regard?
Fixed-odds sports betting was legalized in Brazil in 2018. The law determined that there should be regulation within two years, extendable for another two, but the previous government did not regulate the sector, which resulted in a market that grew enormously during this period, without all the necessary rules. The process of effective regulation began in 2023, with the submission of a Provisional Measure and the processing of a bill in the National Congress, which ended up expanding legalization, including online gaming, with the approval of Law No. 14,790, from December 29th, 2023. In January of this year, the Secretariat of Prizes and Bets was created, which began operating in February and, since then, has published 11 ordinances, with several topics relevant to the control of the sector, as had been foreseen in the Regulatory Agenda released in April. The ordinances created rules on the conditions for obtaining authorization, for the use of payment methods, how systems operate, certification of systems and online games, in addition to addressing the rights and duties of betting companies and bettors, as well as responsible gaming policies to protect players and combat money laundering. The Law provided for a transition period, which should be longer than six months, for companies to adapt to the new rules, which was defined by regulation until December 31st, 2024, to allow time for the full regulation to be completed and for the current authorization process to be managed. The regulated market will then begin on January 1st, 2025. Currently, the Secretariat is evaluating 113 requests for authorization from 108 companies, and the responses will be given with the authorizations granted only to companies that comply with all the rules and, as of January 2025, only these will be authorized to provide the service nationwide.
Information says that the Ministry of Finance will monitor betting companies and may conduct on-site inspections. Is this correct? If this is true, what are the criteria for these inspections and their purpose?
On-site inspections are one of the possibilities created by the Secretariat of Prizes and Bets to carry out monitoring and inspection actions of companies. Since these will necessarily have to be operating on Brazilian soil, and complying with Brazilian laws, this will be done in Brazil. The purpose is to ensure compliance with the laws and ordinances that govern this activity. However, given the nature of the activity, the main means of monitoring and inspection will be digital, using technology.
The Ministry of Finance and the Central Bank are analyzing new strategies to make illegal betting companies unviable with the aim of identifying the financial flow of these bets to block bank transactions and prevent payment of bets. How would this identification and control system work?
The Secretariat has established several methods of action to combat illegal websites. These mechanisms include blocking websites on the Internet, prohibiting them from making any type of advertising, and controlling financial flows by payment institutions. For each of these actions, the Secretariat will work in collaboration with agencies and companies responsible for the respective sector. Among these, mainly from the point of view of financial flows, joint action with the Central Bank aims to create means of identifying unauthorized activities and, when this occurs, apply different methods of blocking payments.
Regarding the incidence of the Selective Tax on sports betting and online gaming, what is its importance and the destination of this collection?
The Selective Tax is constitutionally provided for services that may be harmful to health, designed both for the purpose of disincentive and compensation for social damages. The destination given to this collection, like all taxes, is the sole cash of the National Treasury.
The Ministry of Finance will establish how betting operators should collect amounts for social purposes. What guidelines will the Ministry establish on this issue?
The guidelines published by SPA on this subject are all detailed in Ordinance SPA/MF No. 1,212, dated July 31st, 2024. The idea is that the funds raised through gambling will help improve the development of sectors that are fundamental to the country, such as health, education, tourism and sports, among others.