New Rules for Fixed-Odds Betting Authorization in Brazil
On Wednesday (22), the Ministry of Finance’s Prizes and Betting Secretariat published Ordinance SPA/MF No. 827 dated May 21, 2024, establishing rules for fixed-odds betting and conditions for commercial exploitation of fixed-odds lottery betting nationwide. Legal entities in Brazil since Law No. 14,790/2023 must comply with new provisions by December 31, 2024, or face penalties starting January 1, 2025. Only legal entities authorized by the Prizes and Betting Secretariat can operate fixed-odds lottery betting nationwide, adhering to Brazilian laws with headquarters and administration within the country. A national entity, subsidiary of a foreign firm, following Brazilian laws with management and headquarters in Brazil, may gain authorization if at least twenty percent of its capital is Brazilian-owned. Branches or subsidiaries of foreign firms abroad are ineligible. Authorization is limited to limited liability companies or corporations. New Ordinance Allows Legal Entities to Operate Up to Three Online Betting Brands for Five Years at R$30 Million The authorization, costing R$ 30 million, allows a legal entity to operate three commercial brands on electronic channels for five years. It’s personal, non-negotiable, and non-transferable. Entities may request authorization following established procedures anytime. SPA/MF may review authorization during mergers, splits, acquisitions, transformations, or changes in corporate control. Operators must submit documentation within thirty days of such changes to prove compliance. Operators can consult SPA/MF before corporate changes to avoid affecting authorization. SPA/MF will analyze such requests within 150 days, ensuring due process. Authorization applications must digitally include documents verifying legal, tax, and labor qualifications, integrity, economic-financial capability, and technical qualifications. Foreign documents must be translated into Portuguese by a sworn Brazilian translator. Legal qualification requires various documents. Economic-financial qualification involves data security, safe betting system operation, integrity, compliance, customer service, and Ministry of Finance communication. Responsible individuals must hold director-level positions. The requesting entity must register with the Commercial Registry under CNAE 9200-3/99, focusing on “Fixed Odds Betting Exploration.” Comprehensive Documentation and Integrity Proof Required for Regulatory Compliance The regulation mandates demonstrating integrity through various documents, declarations, and certificates. These include declaring the lawful origin of resources comprising the entity’s share capital, those of its controllers, ultimate beneficial owners, directors, and legal representatives, including foreign nationals. The entity must submit certificates from the Federal Police, state or Federal District Civil Police, and federal and state courts to prove the absence of convictions barring access to public office. Foreign nationals must provide equivalent documents from their countries of origin. The entity must maintain records proving the lawful origin of resources accessible to SAP/MF. Economic and financial qualification will be assessed through documents and certificates, including proof of a financial reserve of at least R$ 5 million, evidence of fully paid minimum share capital of R$ 30 million, proof of a minimum net worth of R$ 30 million, and a declaration of controllers’ economic and financial capacity (Annex X). Companies established less than a year ago must furnish an opening balance sheet, projected cash flow for the next two financial years, and a report detailing economic and financial assumptions, signed by the financial director or equivalent. Essential Integrity and Financial Requirements for Legal Entities in Betting Sector To operate more than three commercial brands, entities must make additional payments and follow procedures. Each extra authorization requires paying R$ 30 million, establishing a financial reserve of R$ 5 million, paying R$ 15 million in currency, and maintaining a net worth equal to the share capital. To demonstrate technical qualification, the entity must provide either a request protocol or a technical certificate of the betting system from a laboratory recognized by SPA/MF, confirming adherence to specified technical requirements. Comprehensive Compliance and Integrity Requirements for Betting Operators in Brazil The operator must declare (Annex IX) and implement policies, procedures, and internal controls to: prevent money laundering and terrorism financing; promote responsible gambling and prevent gambling disorders; adhere to a code of conduct and promote good practices in advertising and marketing; ensure bet integrity and prevent fraud; manage liquidity risk per SPA/MF payment regulations; maintain IT continuity as per SPA/MF betting system requirements; and establish suitable corporate governance. Additionally, the operator must detail the customer service structure in Brazil, offering support in Portuguese through free electronic and telephone channels, available 24/7 for handling complaints and inquiries. Proof of gaming, betting, or lottery experience is required from at least one member of the controlling group, including three years’ professional experience or current involvement in sector-related companies. Furthermore, evidence of compliance with administrative position requirements, registration on Consumidor.gov.br, affiliation with responsible advertising oversight organizations, and association with national and international bodies monitoring sports integrity to prevent match-fixing is mandatory. Detailed Licensing and Integrity Requirements for Fixed-Odds Betting Operators in Brazil The operator must provide a list of all licenses for the operation and commercialization of fixed-odds betting in other jurisdictions and states, including abroad, for the requesting legal entity or its controllers. This list should include the identification number, issuance date, validity period, and location. Administrators of the requesting legal entity must meet integrity requirements and have at least three years of professional experience in relevant areas or possess a higher education degree compatible with their position. During the evaluation of the authorization request, the Secretariat of Prizes and Betting of the Ministry of Finance may request additional documents or information through the Betting Management System (SIGAP). The requested documents or information must be provided within 15 days of the notification sent through SIGAP. Failure to provide the requested documents or information within the specified period, without justification, will result in the definitive filing of the authorization request. The following proofs may be submitted within 30 days of the notification: payment for the authorization fee, establishment of the financial reserve, full payment of the minimum share capital of R$ 30 million in local currency, a declaration of the lawful origin of the share capital resources, proof of a minimum net worth of R$ 30 million, a technical certificate for those who submitted the request protocol, and implementation of the bettor support system. How
