Brazil Operators Face Early Licensing Dilemma

October 30, 2023
Operators anticipating online betting and gaming licences in Brazil have been offered a fast-tracked application process if they agree to formally register their companies’ interest within the next 30 days.

Operators anticipating online betting and gaming licences in Brazil have been offered a fast-tracked application process if they agree to formally register their companies’ interest within the next 30 days.

A form to express interest in entering Brazil’s forthcoming regulated market was appended to a licensing ordinance that was published on Friday (October 27) by the Ministry of Finance, amid ongoing negotiations among lawmakers in Brasilia regarding the final scope of legislation to regulate sports betting and online casino games.

Prospective operators have been granted a window of 30 days, or until November 26, to submit notice of their interest in a licence.

A declaration of interest provides no guarantee of a successful licensing application, according to the finance ministry’s ordinance.

However, those companies that do step forward “will receive priority in the review of their requests for an authorisation for the commercial operation of fixed-odds betting, once the application period is opened”, states Article 29 of the ordinance.

Still, whether or not to register interest before the government at this stage in Brazil’s regulatory process is not necessarily a straightforward decision for operators.

For one thing, the final shape of Brazil’s legal regime remains uncertain, with a bill to authorise both sports betting and online casino approved by the lower house of Congress but still awaiting action in the Senate.

If a glut of operators do register their interest now, that could undercut industry lobbying arguments for the Senate to set a lower tax rate and upfront licensing fee compared with the bill as approved by the Chamber of Deputies in September.

Meanwhile, operators would also have to disclose sensitive information to the Ministry of Finance as part of the process, including the names of their legal representatives, corporate addresses and the licences they hold in other jurisdictions.

In the event that tax rates either stay the same or creep higher, online casino games are removed from the legislation, or other unfavourable policies are enacted and registered operators no longer wish to apply, then Brazilian officials could, in theory, have a stronger hand when it comes to pursuing enforcement actions against them.

Another complicating factor is a lack of certainty around a potential transition period that would enable current grey-market sites to move into the regulated market without having to switch off their Brazilian operations.

No such transition period was included in the bill as approved by the Chamber of Deputies.

However, past iterations of the legislation would have either granted a window of six months or otherwise delayed the effective date of new legal prohibitions on unlicensed gambling.

“Through this process operators will have to disclose their names, websites and other details to be granted priority in their future applications for a licence. Since there is no clarity regarding a transition period between when the licences become available and the deadline for unlicensed operators to leave the market, some feel uncomfortable sharing that kind of information with a regulator who may then be able to shut them down if there is no transition period in place after a law is passed,” said Luiz Felipe Maia, a Brazilian gambling law expert and founding partner of Maia Yoshiyasu Advogados in São Paulo.

“On the other hand, if there is a transition period and you do not submit interest and have priority, your licence may take longer to process and you may have to stop operating for a period of time,” Maia told Vixio GamblingCompliance.

In addition to seeking expressions of interest, Friday’s ordinance details various licensing criteria and other regulatory requirements that the finance ministry will look to apply once Brazil’s legislation is finally in place. 

Although those requirements would presumably have to be updated to reflect the statutory provisions of any final bill approved by Congress, among other things, licences could not be awarded to any companies that have had a licence revoked by any international jurisdiction within the past five years, nor to companies whose controlling shareholders include owners or directors of sports teams or professional athletes.

In another notable provision, the finance ministry ordinance also seeks to address the hot-button issue of state-level licensing by constraining the ability of state-licensed betting operators to advertise throughout Brazil.

Under the ordinance, betting operators without a federal licence acting under an authorisation from Rio de Janeiro, Paraná or the lottery authority of another Brazilian state would be forbidden from advertising alongside “national sporting competitions”.

In practice, that would appear to allow a state-licensed operator to advertise at or sponsor a state competition such as Rio’s Campeonato Carioca, but not games in the Brasilerão national football league. 

Friday’s ordinance was published as Brazil’s online betting legislation approaches a critical juncture.

Two separate Senate committees on sports and economic affairs are set to vote in the coming days on their own amended versions of bill PL 3626/2023

The full Senate faces a November 11 deadline to act on the bill, which would likely then have to return to the Chamber of Deputies for a final vote before it could be sent to the desk of President Lula de Silva to either sign into law, or veto in part or in full.


Our premium content is available to users of our services.

To view articles, please Log-in to your account, or sign up today for full access:

Opt in to hear about webinars, events, industry and product news

To find out more about Vixio, contact us today
No items found.