New Horizons in iGaming: Unpacking Brazil's Latest Regulations

Brazil's Ministry of Finance, through its Prizes and Betting Secretariat, has recently introduced comprehensive guidelines that are set to reshape the landscape of online sports betting and gambling in the country.

The new framework prioritises consumer protection, information security, and the safeguarding of personal data. This article delves into these changes, offering insights into the impact and implications for stakeholders in the sector.

Consumer protection - Advertising Restrictions

The journey to re-defining advertising regulations has been marked by numerous challenges, and the framework remains a contentious topic in the country. Sports betting adverts in Brazil will be subject to compliance with the ministry of finance. The process of monitoring gambling advertisements will be confirmed and implemented during stage three, which will conclude at the end of June.

The regulations will prohibit illegal operators from publishing gambling advertisements. They also ban any operators from making unverified claims about the odds of winning. Additionally, advertisements must not depict betting as socially acceptable or suggest that gambling can resolve financial issues. 

​​In February, it was confirmed that a ban on celebrities appearing in sports betting ads was to be debated in Brazil’s senate. Further to this move, the use of celebrities or public figures to endorse gambling will be forbidden.

Stricter Financial Transactions and Crypto Asset Prohibition

A key aspect of the new regulations is the strict oversight of financial transactions. All financial transactions - deposits, withdrawals, and prize distributions, must be conducted through electronic transfers using only financial institutions authorised by the Central Bank of Brazil.

Furthermore, the use of virtual or crypto assets for betting has been expressly prohibited. This decision underscores a cautious approach towards the volatile nature of digital currencies. As a result, bettors are required to use conventional payment methods such as Instant Payment (PIX), Electronic Transfer (TED), debit or prepaid cards, and book transfers within the same financial institution.

No Bonuses Policy

In an effort to curb excessive gambling and maintain integrity within the betting ecosystem, the provision of bonuses for betting has been banned. This rule prevents operator agents from distributing any form of bonuses to bettors, whether for promotional, advertising, or propaganda purposes.

This measure aims to limit incentivized betting and ensure a more responsible gambling environment.

Enhanced Protection for Bettors' Funds

The new guidelines mandate that the financial accounts of betting operators must be kept separate from the funds of the bettors. This separation is critical in ensuring that bettors' money is not used as collateral or for settling the operator’s debts.

Additionally, bettors are entitled to a clear and transparent view of their financial standing through a virtual "graphical account," which tracks all transactions, including deposits, withdrawals, prizes, and bets.

Rapid Access to Funds and Financial Reserves

The new rules aim to enhance consumer protection by stipulating that bettors must be able to access their funds within 120 minutes of making a withdrawal request. Additionally, to safeguard against potential insolvency, betting operators are required to maintain a substantial financial reserve of R$ 5,000,000.00 in a Central Bank of Brazil.

This reserve must be completely segregated from the operator’s operational accounts.

Temporary Leniency for Payment Transactions

In a transitional provision, the SPA/MF Ordinance grants payment methods a six-month period following its publication during which they can conduct bet transactions freely, without facing restrictions or penalties. This temporary measure is likely designed to allow for a smoother transition and adaptation to the new regulatory framework.

Enhanced Technical and Security Requirements for Betting Operators

As part of the new regulatory framework, there are stringent technical and security requirements that must be adhered to by operators. All operators of fixed-odds betting lotteries are required to have their betting systems and data centres located within Brazil or in countries that have an International Legal Cooperation Agreement.

These data centres must possess ISO 27001 certification, confirming their compliance with high-security standards. Additionally, to strengthen their national identity, operators' websites and digital platforms should be registered under the "bet.br" domain.

Certification and Supervision of Betting Systems

Operators must ensure that their betting systems, including those used for sports betting and online gaming, are certified by entities recognised by the SPA/MF. These certifications must remain valid for the duration of the licence and require annual reassessment to ensure ongoing compliance.

Within 90 days of receiving operating authorisation, operators are also obliged to submit an evaluation report, verifying their adherence to the regulations.

Regarding oversight, operators are expected to provide SPA/MF inspectors with complete access to their betting systems whenever needed. Additionally, they should routinely share detailed information about bets, bettors, and their operational practices, ensuring transparency and accountability.

Physical and Virtual Betting Terminals

With certified systems, operators can offer sports betting through physical terminals and online gaming via virtual platforms. All betting activities, whether through physical terminals or online, must incorporate identification procedures and comply with SPA/MF’s payment and regulatory standards.

Online Games and Their Regulation

Operators are permitted to offer online games where winnings are determined by a multiplier of the bet value set at the time the bet is placed. The outcome of each bet must be based on a random event, generated either by a random number generator or defined by game-specific symbols, figures, or objects.

Sanctions for Non-compliance

As of May 2, 2024, the SPA/MF have the legal authority to impose certain sanctions on operators who do not adhere to the regulations.These sanctions can include warnings, hefty fines up to BR$ 2,000,000,000.00 (two billion Reals), revocation of authorisation, and a ban on acquiring new permits for up to 10 years. 

Additionally, non-compliant operators may be prohibited from participating in bids related to the concession of public services within the federal public administration for a minimum of five years and could face bans on serving in any directorial or administrative capacities in any betting-related organisation for up to 20 years.

What happens next?

The regulation will continue to be rolled out in stages, prioritised as follows:

• Stage one: rolled out by the end of April 2024 
• Stage two: by the end of May 2024
• Stage three: by the end of June 2024
• Stage four: by the end of July 2024

In April,  regulations were issued detailing the technical, payment, and security requirements that operators must adhere to, alongside guidelines for applying for licences to operate fixed-odds betting.

In the second stage, the SPA will publish its policies on anti-money laundering and anti-terrorist financing. It will also issue regulations that operators must follow to ensure bettors' rights. 

Stage three will introduce the technical and security requirements for online gaming. This stage will also establish procedures for monitoring gambling advertising.

In the final stage, procedures for allocating industry contributions to socially responsible causes will be outlined.

Conclusion

As anticipated, the Ordinance aligns with a multidisciplinary approach seen in earlier ordinances, emphasising consumer protection, information security, and personal data protection. 

Operators now face a significant challenge of navigating regulations that extend beyond the Betting Law (Law 14,790/2023) and SPA/MF ordinances, requiring adherence to consumer and data protection laws. 

By effectively navigating these guidelines, operators can comply with the stringent regulations set by Brazilian authorities and also seize market opportunities in this vibrant and dynamic region.