Brazilian States Joining Online Betting Licensing Game

November 13, 2023
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The state of Paraiba has followed Rio de Janeiro and Paraná in opening a local licensing system for online betting, as Brazilian states seek to fill a void left by delays in implementing a federal regulatory regime.
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The state of Paraiba has followed Rio de Janeiro and Paraná in opening a local licensing system for online betting, as Brazilian states seek to fill a void left by delays in implementing a federal regulatory regime.

A decree opening an authorisation process for fixed-odds betting operators was published in the state government of Paraiba’s official journal on Friday (November 10), as the jurisdiction of some 4m people in northeastern Brazil becomes the third state to move forward with a local licensing regime so far this year.

According to the decree, operators may submit applications between November 20 and December 10 for a five-year authorisation requiring an upfront fee of R$2m (approximately US$400,000) and payment of 5 percent of monthly gross revenues.

Mirroring pending federal legislation in Brazil, Paraiba operators would appear to be permitted to offer fixed-odds betting on sports events, as well as online casino games, plus games of skill. The decree also references the possibility of bets being offered through retail channels within the state.

The state lottery of Rio de Janeiro (Loterj) concluded an initial accreditation process for online betting operators in August. Last week, MarjoSports and ST Soft became the third and fourth operators to receive a Rio licence, joining local companies Rede Lotto and PixBet. 

The state lottery of Paraná (Lottopar) is similarly in the process of analysing the eight applications it received during a recent licensing process. Lottopar has already accredited a total of three companies, with lottery officials now working on the integration of those operators with the lottery’s system ahead of a launch.

Paraná officials are also attempting to eliminate competition from offshore operators available in the state, having published a statement last month saying that the state government was preparing to send legal notices to some 350 unlicensed sites.

“We cannot allow illegal [operators] to continue offering their betting services in a regulated environment that Paraná now has,” said the state’s lottery director, Daniel Romanowski. He added that legal notices were just “the first step among many other actions and partnerships to come to combat illegal gambling”.

The state-level licensing activity comes as the Federal Congress continues to deliberate over a national licensing regime to regulate retail sports betting and online gambling across the whole country. 

The Chamber of Deputies approved a bill in September to implement a national licensing regime for both online betting and casino games, with operators subject to a fee of up to R$30m, as well as an 18 percent headline betting tax rate.

A Brazil Federal Supreme Court ruling of 2020 confirmed that states and municipalities have equal regulatory authority as the national government over approved lottery games. Several other states, including populous Minas Gerais and São Paulo, have moved to launch online sports betting or other online lottery games via an exclusive state lottery operator. 

Brazilian experts speaking at this month’s SBC Summit Latinoamérica acknowledged that state-level operations were likely to be a significant feature of Brazil’s regulated market for sports betting and online gaming, with the prospect of national licensees facing meaningful competition from state-authorised operators able to secure a foothold in specific parts of the country. 

It is a situation that has not gone unnoticed among federal government officials.

A senior Ministry of Finance advisor recently indicated that the federal government is planning to bring a legal challenge to prevent Rio de Janeiro from allowing its licensees to accept bets from across Brazil via systems located in the state. Paraiba, unlike Rio, will require accredited operators to use geolocation technology to ensure all bets are placed from within the state's borders.

Separately, one provision within a preliminary licensing ordinance for fixed-odds betting released by the finance ministry on October 27 will prevent state-authorised operators from sponsoring national sporting competitions, meaning Rio, Paraná or Paraiba operators could market themselves alongside state football tournaments but not games in the Brasilerão national championship.

Paraiba’s decree was published on Friday at a time when federal legislation on fixed-odds betting is approaching a critical juncture in Brazil’s Senate.

The bill approved by the lower house of Congress in September was also advanced out of the Senate’s sports committee last week, albeit with significant amendments that would make the national market far less attractive. 

The sports committee’s report on the bill would limit licensees to sports betting and virtual sports games, while removing provisions for online casino. Senators also approved an amendment to ban all advertising via broadcast or social media between the hours of 6am and 11pm, as well as prohibiting any sponsorship of sports teams or athletes by betting companies. 

The federal bill, PL 3626/2023, still must be approved by another Senate committee on economic affairs and then by the full Senate, before being returned to the Chamber of Deputies for a final vote.

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