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First Ordinance for the Regulation of Fixed-Odds Betting is Published in Brazil

On 27 October 2023, Brazil’s Ministry of Finance (the “Regulator”) issued Normative Ordinance MF No. 1330/2023 (“the Ordinance”), outlining the foundational guidelines and norms for the operation of fixed-odds betting in Brazilian territory. The Ordinance in question specifically focuses on the rights and obligations of bettors, measures for preventing money laundering, adoption of responsible gambling, and manifestation of interest for fixed-odds betting operators (“operators”).

Firstly, the Ordinance instituted a principle-oriented framework for obtaining the necessary authorization by operators, characterized by legal qualification, tax and labor regularity, financial qualification, and technical qualification. As established in its article 5, item II, the Regulator will publish, in a subsequent act, a specific regulation detailing the requirements, conditions, and procedures for obtaining such authorization.

It is imperative to highlight that, to participate in the authorization process, foreign companies must initially establish a subsidiary in Brazil. After proving this establishment, they become eligible to participate in the aforementioned process. Moreover, interested companies, whether national or international, may express their interest within a period of up to 30 (thirty) days, counted from the date of publication of the Ordinance, to ensure priority in the analysis of authorization requests.

In this context, among the general requirements for the authorization of interested companies, are the proof of lawful origin of share capital; demonstration of the suitability of legal representatives, partners, ultimate beneficiaries and occupants of strategic positions in the company; providing a service of assistance to bettors, headquartered in Brazil; adoption of betting integrity mechanisms; integration with sports integrity monitoring organizations; and implementation of robust mechanisms to prevent illicit activities, especially in relation to money laundering and terrorism financing, with an obligation to report suspicious operations to the Financial Activities Control Council (COAF).

Furthermore, operators must comply with the applicable norms of the Consumer Protection Code and the General Law of Personal Data Protection, as well as respect the rights and obligations of bettors provided for in the Ordinance, guaranteeing a suitable, safe, and quality service, providing necessary information for the defense of their rights and interests, and allowing the use of the service with freedom of choice, according to current legal provisions.

Pursuant to Article 17 of the Ordinance, operators shall promote informative and preventive actions regarding pathological gambling, mandatory implementation of KYC methods, as well as harm reduction policies. They must also implement internal control systems on their platforms that allow the bettor to establish daily time or bet limits, maximum loss limits, pause periods, and self-exclusion.

Lastly, aligned with responsible gambling guidelines, marketing actions should promote social responsibility and combat illegal gambling. The Regulator also encourages self-regulation and the adoption of internationally recognized good practices. Nevertheless, due to the authorization process of fixed-odds betting activity conducted by some Brazilian states, operators authorized exclusively in this scope will be prohibited from carrying out advertising promotions in national sports competitions.

Our legal team at Bichara and Motta Advogados are attentively monitoring the regulation of the betting industry in Brazil, offering legal advice to multiple market participants.

Udo Seckelmann e Pedro Heitor