Final Brazil ordinances published ahead of legal market launch

With less than five months remaining until the highly awaited launch of Brazil’s legal betting market, the Ministry of Finance’s Secretariat of Prizes and Bets (SPA) has officially delineated the final gambling regulations.

The comprehensive four-phase regulatory rollout initiated back in April is now complete, confirming that the launch of legal gambling in Brazil is scheduled for January 1, 2025.

Operators have begun submitting their applications for licenses, with a total of six requests recorded thus far, the latest being from NSX Group’s Betnacional on August 1. As the 90-day initial preference window approaches its close, operators filing applications by August 20 will receive prioritization from the SPA, ensuring processing ahead of the market launch.

The establishment of these comprehensive regulations is expected to accelerate the application process for many more operators.

Enhanced Clarity on Online Games

Normative Ordinance No 1,207 was published on July 31, formally approving online games in Brazil, including the notable Fortune Tiger game that had sparked debate.

Udo Seckelmann, head of Gambling & Crypto at Bichara e Motta Advogados, asserts that permitting games like Fortune Tiger is a strategic move to direct players toward licensed offerings. He states, “Excluding such games empowers the grey and black market, which the regulator aims to mitigate.”

Industry insights from Aposta Ganha’s CCO, Hugo Baungartner, predict that the online games ordinance will serve as a significant catalyst for increased applications. While Seckelmann estimates around 60 operators will ultimately apply, Baungartner anticipates the figure will be closer to 20-25.

Brazil Races to the Finish Line

Following Normative Ordinance 1,207, four additional regulations were announced to complete the rollout. This comprehensive framework includes guidelines for state contributions, gambling activity monitoring, responsible gambling practices, and sanctions against non-compliant operators.

The Brazilian Institute of Responsible Gaming (IBJR) commended the federal agencies for their dedication in establishing these vital regulations, expressing hope for responsible development in the sector.

Normative Ordinance No 1,225: Monitoring and Inspection

Normative Ordinance No 1,225 outlines inspection measures for individuals and legal entities with SPA authorization to operate fixed-odds betting. These measures must be evidence-based and aligned with identified risks.

The SPA is empowered to collaborate with other state bodies to ensure ongoing compliance and monitor gambling operations. Scheduled inspections, both remote and in-person, will last as long as necessary to clarify any situational factors.

Operators are mandated to provide requested information within ten days. Non-compliance could result in stringent punishments, including the obligation to inform the SPA and the public prosecutor’s office of any suspected irregularities.

Normative Ordinance No 1,212: State Allocations

The SPA also published Normative Ordinance No 1,212, detailing the processes for transferring gambling industry proceeds to the state. All transfers must be executed through a Federal Revenue Collection Document (DARF) to the National Treasury Single Account.

Operators will face civil, administrative, and criminal liabilities for improper processing, and unclaimed prizes will revert to the National Treasury. Records of these transactions must remain accessible to the SPA for a minimum of five years.

Key financial regulations include a 12% gross revenue tax on operators and a range of monthly inspection fees, alongside a 15% tax on player winnings exceeding BRL2,824.

Normative Ordinance No 1,231: Responsible Gambling

Normative Ordinance No 1,231 mandates operators to prioritize responsible gambling (RG) principles in their betting systems and marketing strategies to combat gambling addiction risks.

Operators must engage in public awareness campaigns, develop RG policies, provide tools for self-exclusion, and maintain communication with customers. Safeguards include barring underage individuals and persons who could influence sports outcomes.

Influencer Advertising Ban

In alignment with responsible marketing, all advertising must adhere to social responsibility standards and refrain from portraying betting as socially attractive. This includes a strict prohibition on influencer or celebrity endorsements that suggest gambling can lead to personal and financial success.

As legal experts Eduardo Carvalhaes and Karen Coutinho have explained, these advertising regulations are essential for clarifying permissible marketing strategies. Seckelmann echoes their sentiments, noting that these regulations significantly enhance protections for vulnerable players.

Normative Ordinance No 1,233: Sanctions

The final regulatory framework, Normative Ordinance No 1,233, establishes sanctions for operators violating regulations. The SPA retains the authority to revoke licenses in severe cases while issuing warnings for minor infractions.

Violations prompting potential sanctions include operating without a requisite license, non-compliance, and obstructing SPA inspections. Offenders must respond within 30 days upon notification of any administrative action.

Fines can range from 0.1% to 20% of revenues from the previous year, capping at BRL2 billion. Additional penalties may include suspension of operations for up to 180 days or a moratorium on acquiring new licenses for up to ten years.

While Seckelmann views the BRL2 billion cap as stringent, he believes it serves as a necessary deterrent, urging operators to exercise greater caution.

Can This Framework Establish a Thriving Gambling Market in Brazil?

With all ordinances published, the true impact of these regulatory measures will become evident upon market launch. However, industry stakeholders remain optimistic about the framework’s robustness.

Carvalhaes and Coutinho assert that these regulations reflect best practices globally and aim to create a secure environment for a rapidly growing market. They emphasize that effective oversight will be critical for compliance and trust in the industry.

Seckelmann highlights two key indicators for evaluating regulatory success: the channelization rate of players toward legal options and the effective enforcement actions taken against unauthorized operators targeting Brazilian citizens.