BRAZIL: THE REGULATION OF SPORTS BETTING IS CLOSER THAN EVER

On 02/05/2022, Games Magazine Brazil had access to the 3rd draft of the decree issued by the Ministry of Economy that will regulate fixed-odds sports betting in Brazil, as per article 29 of the Federal Law nr. 13.756/2018. If the draft is not amended, it is expected to be sanctioned by the president this month.

The main provisions of the draft are the following:

  • The Regulator: The Ministry of Economy will be responsible to authorize, regulate, supervise and monitor the exploitation of the fixed-odds sports betting in Brazil. However, the draft does not indicate which body within the Ministry of Economy will be assigned to carry out such duties. 
  • Licensing Model: Authorization. The main doubt of the past years was whether the regulatory decree would establish a concession or authorization model. By establishing an authorization model, the operators that submit the relevant documentation, comply with the requirements and pay the applicable fees shall obtain a license (without the need to go through a bidding process, as would be required if a concession model were imposed). 
  • No Limitation of Operators: there will be no limitation on the number of operators that will be permitted to offer fixed-odds sports betting in Brazil.
  • License Duration: 5 (five) years.
  • Licensing Fee: BRL 22.200.000,00 (twenty-two million two hundred thousand Brazilian Reais).
  • Legal Entity based in Brazil: Foreign companies shall establish a legal entity in Brazil to obtain a license. The betting operators must designate a legal representative, an accounting representative, an ombudsman and a person responsible for compliance established in the country.
  • Integrity Mechanisms: the operators shall adopt safety and integrity mechanisms, including the hiring of monitoring services to mitigate the risks of match-fixing and corruption.
  • Advertising: operators shall promote responsible gambling and their advertising shall be accompanied with a disclaimer regarding the harms of irresponsible gambling.
  • Prevention of Money Laundering and Financing of Terrorism: operators shall comply with the duties established in article 10 of the Federal Law nr. 9.613/1998.
  • Taxation: operators will be responsible to (i) pay the winnings to the bettors, (ii) pay the relevant contributions/taxes on their Gross Gaming Revenue (GGR) and (iii) pay income tax on winnings, as established in the Federal Law nr. 13.756/2018.
  • Regulatory Sandbox: perhaps the biggest novelty of the regulatory decree, which will be explained more thoroughly later by the Ministry of Economy when it launches the relevant program. In summary, the Ministry of Economy will have the power to create an experimental environment, in which it will set aside the rules applicable to operators that receive a temporary authorization to develop innovative business models and test experimental technologies in such environment under the limits to be established later on by the regulator.

Bichara e Motta Advogados’ team is closely monitoring the development of the regulatory process and providing legal assistance to those interested in the subject.