Brazil Enforces Key Authorization Deadline Amid Betting Regulatory Overhaul

Brazil's Ministry of Finance (MF) has implemented a significant deadline for betting companies operating within the nation. By October 1, 2024, all operators must request authorization from the Ministry’s Prizes and Betting Secretariat (SPA) to avoid suspension. This directive is part of an extensive regulatory endeavor set to precede the official inauguration of the fixed-odds lottery market on January 1, 2025.

Authorizations and Compliance

The new regulation, SPA-MF Ordinance No. 1,475/2024, published in the Official Gazette of the Union on September 17, 2024, stipulates that only operators who have applied for authorization by September 30, 2024, can continue functioning through December 2024. Starting from October 1, operators without authorization requests filed through the Ministry’s betting management system, SIGAP, will be deemed illegal and must cease operations until they secure necessary authorization.

Brazil is gearing up to unveil its regulated betting market on January 1, 2025, prompting a significant change in its gambling landscape. The Ministry of Finance aims to ensure that only compliant companies, adhering to Law No. 13,756/2018 and Law No. 14,790/2023, are operational within this structured framework.

During this phase, the Treasury Department will assess initial applications from betting companies to determine eligibility. Authorized companies will be required to pay a R$30 million grant by the end of 2024 to finalize their licensing. Non-compliance with these conditions might result in exclusion from the market’s official launch.

Efforts to Combat Illegal Betting Activities

Heightened scrutiny of the betting industry has driven this regulatory push. Regis Dudena, Secretary of Prizes and Bets, underscored the necessity of these steps in curbing illegal actions in the sector. “We will maintain the adaptation period until the end of December only for those who have already demonstrated that they want to act in accordance with the law, in accordance with Brazilian rules. 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,” Dudena noted.

The primary objective is to shield bettors from companies leveraging the betting sector for fraudulent purposes and money laundering. Dudena insisted that the transition period is not a pretext for breaching existing laws, such as the Money Laundering Law (Law No. 9,613/1998) and the Financial Crimes Law (Law No. 7,492/1986). The Ministry will consider these laws during the authorization evaluations.

All betting firms in Brazil must submit their authorization requests by 11:59 p.m. on September 30, 2024. They must disclose trademarks and website details during this transition. By January 2025, authorized operators must use Brazilian domain names ending in “.bet.br.” Strict protocols will be enforced for non-compliant companies post-deadline, requiring them to facilitate customer fund withdrawals by October 10, 2024, after which illegal operators will face disconnection with the collaboration of multiple authorities, including the Ministry of Justice and Public Security, the Central Bank of Brazil, and the National Telecommunications Agency.

Ongoing Monitoring and Enforcement

The SPA, alongside other government organizations, will monitor the market to enforce compliance with these new regulations. Companies operating without authorization past October 1, 2024, will incur severe penalties, including legal action.

Previous police operations have unearthed numerous instances of fraudulent activities among betting firms, including money laundering. Dudena emphasized the government’s resolve to promptly address these illegal operations before the regulated market commencement in January 2025. “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,” he remarked.

This robust regulatory framework underscores Brazil’s commitment to setting up a well-regulated betting industry, ensuring the safety of both operators and consumers. With the January 2025 launch approaching, compliance with the new rules is imperative for companies to remain active. The Ministry of Finance’s focus on consumer protection and legal adherence marks a transformative phase for Brazil’s betting sector, aiming to eliminate malpractices and encourage responsible gambling.

Source: ''A partir de outubro, Fazenda suspende funcionamento de empresas de apostas que ainda não solicitaram autorização'', Ministério da Fazenda. September 17, 2024.