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Brazil received an unprecedented 113 applications for licences to operate sports betting and online gaming before an initial deadline of midnight on Tuesday (August 20), but at least some applicants are not expected to pay the hefty R$30m (US$5.5m) price tag when the time comes.
The number of applications is almost triple the 40 that officials had been expecting and of 113 submitted, 50 came on Tuesday itself.
Udo Seckelmann, a gaming law expert at the firm of Bichara e Motta, expressed surprise at the “high” number.
He had predicted that there would be around 60 applications, a number which he said was surprising to others who doubted it even a month ago when the number of submitted applications stood at only three.
“When I saw that 113 I was very surprised,” Secklemann told Vixio GamblingCompliance. “But as soon as the documentation is approved by the regulator, they’re going to give 30 days to pay the R$30m, so in that phase, maybe some of these operators will not pay.
“I think some operators bought time in order to search for an investor or somebody to buy their operation.”
Among the applicants for a federal licence are Brazilian entities associated with leading international operators such as Flutter, Entain, bet365, Betsson, Betway, LeoVegas/BetMGM and Betano, with other applicants representing a variety of established Brazil-facing brands that are currently operating under Curaçao licences.
The 50 companies that applied on Tuesday's deadline day included Brazil's national lottery operator Caixa Loterias, Skill on Net, Rivalo and Stake.
However, the backgrounds of many of the other locally headquartered companies that applied are less clear.
“I heard that some of them, they are not prepared to pay R$30m upfront right now, so that's why I say this … they’re searching for M&A or something faster,” said Seckelmann.
Seckelmann also pointed out that a licence application could be attractive for investors as it means companies can say they are no longer a part of the black market, but instead are transitioning to the regulatory regime.
“This is something that attracts investors, private equity funds, etc.,” he said.
Regis Dudena, the secretary of Brazil's newly established gambling regulator (SPA), said in a statement that he did not expect all applications to be granted licences either.
“Since the vast majority of applications were filed in the last few days, we still do not have an initial assessment regarding the completeness of the requirements, but it is expected that not all will comply with the requirements in full," Dudena said.
Whether the SPA will be able to manage the larger number of applications remains to be seen.
Rafael Marchetti Marcondes, legal director for the Brazilian association IBJR, said that the regulator may struggle a bit but predicted officials ultimately would be able to process all the applications within the timeline established by a May licensing ordinance.
He echoed the sentiment that applying for a federal licence may for some companies be a potential business strategy “to apply, obtain a licence and after that sell the company”.
Under Brazilian regulations, unlicensed operators are not allowed to operate or advertise their services as of January 1, 2025.
In the meantime, operators may continue to apply for a licence following the August 20 deadline. However, those later applications may not be processed until after January 1, whereas all those companies that applied in time are guaranteed a response by mid-November.
Additional reporting by James Kilsby.
