Brazilian Judge Sides With BetNacional In Lawsuit Over Underage Betting

A recent legal decision in Brazil has significant implications for the country’s burgeoning gambling industry. A judge denied a request to suspend operations of BetNacional and its parent company, NSX, amid an ongoing $88.3 million lawsuit.

### Lawsuit Overview

The lawsuit was initiated by the Education and Citizenship of Afrodescendants and the Needy (Educafro) along with the Father Ezequiel Ramin Centre for the Defence of Human Rights. The plaintiffs allege that NSX, which operates the brands BetNacional, Mr Jack Bet, and Pagbet, has inadequately addressed concerns regarding underage gambling.

### Flutter’s Acquisition and Legal Outcome

In a notable development, Flutter Entertainment, the parent company of FanDuel, recently agreed to acquire a 56% stake in NSX for $356 million. The favorable ruling will undoubtedly alleviate concerns for Flutter as the courts have upheld NSX’s right to operate under Brazilian law.

### Judicial Reversal of Initial Injunction

Previously, the Public Prosecutor’s Office had issued an injunction to temporarily halt operations of the websites involved, pending evidence that measures to curb underage gambling were in place. However, the Court of Justice of the Federal District and Territories overturned that order, establishing that NSX held a valid license under Brazil’s newly enacted regulations. Since January 2023, Brazilian sports betting regulations require operators to be licensed by the Secretariat of Prizes and Bets (SPA).

BetNacional has secured its license and demonstrated compliance with these legislative requirements. The judge emphasized that the company has successfully implemented the necessary safeguards against underage gambling:

> “Considering the records proving that the defendant obtained authorization to operate for five years, it is concluded that the security measure required by the plaintiffs and mandated by the Ministry of Finance was appropriately enforced,” stated the ruling. Execution of these measures negated any grounds for the preliminary injunction.

### Implications for the Brazilian Gambling Landscape

Udo Seckelmann, Head of Gambling & Crypto at the legal firm Bichara e Motta Advogados, remarked on the ruling’s importance to the Brazilian gambling sector, noting:

> “This decision indicates that courts will likely support licensed operators who comply with regulations, particularly those safeguarding minors. It reinforces the judiciary’s commitment to evidence-based claims in allegations of non-compliance, promoting a balanced regulatory environment.”

The rise in strict market regulations has previously put pressure on crypto sportsbooks and offshore betting entities that thrived in an unregulated gray area.

### Integration with Flutter Brazil

The ruling serves as a crucial win for the newly established Flutter Brazil, which merges Betfair Brazil with BetNacional. João Studart, CEO of NSX Group, will head the new entity, recognizing this decision as a validation of NSX’s efforts in becoming a leading player in Brazil’s gaming landscape. Reflecting on this milestone, Studart proclaimed on LinkedIn:

> “Today marks a new chapter in our journey. This recognition stems from a path that began as a Brazilian startup and evolved into a leading figure in the betting and digital entertainment landscape, represented by brands like BetNacional.”

This pivotal moment underscores the ongoing evolution of Brazil’s gambling industry, which is increasingly aligning with global standards while prioritizing consumer protection and regulatory compliance. Stakeholders should closely monitor developments in both legal and operational realms to navigate the dynamic challenges and opportunities within this market.