Brazil Publishes Licensing Ordinance For Online Gambling

May 22, 2024
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Brazil’s regulated online gambling market will formally open at the start of 2025, but international operators still face uncertainties about whether a local partner will be needed to qualify for a licence, according to an ordinance published on Wednesday by the Ministry of Finance’s new gambling regulator.
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Correction: A previous version of this article stated that licensed operators would not need to partner with a partially Brazilian-owned business. The article has been updated with further analysis and commentary that indicates this requirement is still unclear.

Brazil’s regulated online gambling market will formally open at the start of 2025, but international operators still face uncertainties about whether a local partner will be needed to qualify for a licence, according to an ordinance published on Wednesday (May 22) by the Ministry of Finance’s new gambling regulator.

Brazil has today formally kick-started its licensing process for sports betting and online gaming through the publication of Ordinance 827/2024 by the finance ministry’s Prizes and Betting Secretariat (SPA) in the federal government’s official journal.

The ordinance, which was initially expected in late April, specifies more detailed licensing requirements for operators that will have to pay R$30m for a five-year licence.

Contrary to previous reporting by Vixio GamblingCompliance, however, one of the most pivotal licensing questions does not appear to have been directly addressed.

Law 14.790, signed by President Luiz Inacio Lula da Silva in December, included a provision that requires all licence applicants to be at least 20 percent owned by “a Brazilian”. 

According to Article 4 of the new ordinance, international operators are eligible to apply for a licence provided that they do so via a “subsidiary of a foreign company, constituted under Brazilian law, with its headquarters and administration in the national territory”.

The Brazilian subsidiary must still have a Brazilian that owns at least 20 percent of the share capital; however, the wording of the ordinance does not make it immediately clear whether the requirement will be automatically met through establishing a Brazilian local company, or whether the subsidiary of an international operator would also need to have a Brazilian person as a local investment partner. 

The 20 percent shareholder requirement is a pivotal policy question as it will determine whether international operators will be able to apply on their own, or otherwise have to partner with a Brazilian investor or Brazilian company to qualify.

Industry observers had widely expected the question to be directly addressed as part of the licensing ordinance, or at least alongside it.

“They haven’t defined what a Brazilian shareholder means,” Luiz Felipe Maia, founding partner of Maia Yoshiyasu Advogados, told Vixio. “So there’s going to be some questions about that.”

Elsewhere, the ordinance establishes various licensing criteria and provides templates for the declarations that operators will have to submit to apply for a licence that will entitle holders to offer a combination of retail and online sports betting, as well as online gaming, via a maximum of three brands or skins. 

According to Article 23 of the ordinance, operators that submit an application within 90 days from today’s date will be guaranteed of receiving an answer on whether they have been approved within a period of 180 days, or by roughly late November, ahead of a formal start date of December 31, 2024.

The ordinance also formalises a transition period through to the end of this year for when new legal prohibitions on the offering or processing of payments for unlicensed online gambling will become effective. From January 1, 2025, unlicensed operators will be subject to prohibitions established by Law 14.790.

More to follow as this breaking story develops.

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