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Brazilian Ministry of Finance Sets Regulatory Agenda for Fixed-Odds Betting

Ordinance 561 underscores the Regulatory Policy’s overarching goals of pursuing regulatory efforts; sustainable investment will depend on regulations in the coming months

The Ministry of Finance enacted on April 10 Ordinance No. 561 (“Ordinance 561”) with dual scope: (a) creating an official Regulatory Policy to be pursued by the Secretariat of Prizes and Betting (“SPA”, acronym in Portuguese); and (b) setting a regulatory agenda for the coming months based on order of priority of topics including payment methods, betting systems, government authorization (grant) requirements, etc.

Ordinance 561 underscores the Regulatory Policy’s overarching goals of (i) pursuing priority regulatory efforts; (ii) ensuring legal certainty, predictability, and efficiency to fixed-odds betting regulations; and (iii) providing a stable, up-to-date, transparent, and attractive regulatory environment for sustainable investment.

Sustainable investment in the fixed-odds betting market will indeed depend on the robustness of SPA’s regulations to be enacted in the coming months. Another important signal that the Federal Government could give to convey security to investors would be ruling out the possibility of the SPA becoming subordinate to the Ministry of Sports instead of the Ministry of Finance, as rumored by the press.

SPA’s regulatory agenda was set up pursuant to a four-phase schedule, as follows:

1. Requirements for accreditation of certification entities fixed-odds betting systems utilized by sports betting operators, live gaming studios and online gamesOrdinance MF-SPA No. 300 of February 26, 2024
2. Payment Methods – Guidelines on payments transactions carried out by local operatorsPhase I – April 2024
3. Technical and Security Requirements Applicable to Betting SystemsPhase I – April 2024
4. Authorization – Requirements to be met by companies to be entitled to authorizations (grants) to operate at local level  

KLA input: SPA is expected to regulate in more detail legal requirement for the Brazilian partner to hold 20% of the share capital of the local entity and timeframe for complying with the requirements.  
Phase I – April 2024
5. Anti-money Laundering and Fraud Prevention – Policy, procedures, and controls aimed at preventing and combating money laundering, terrorism financing, proliferation of weapons of mass destruction, and other frauds related to the commercial exploitation of fixed-odds betting  

KLA Input: Market operators expect clarity on enforcement cooperation between SPA and finance sector oversight agencies e.g. COAF and Central Bank of Brazil (BACEN).  
Phase II – May 2024
6. Bettors’ Rights and Obligations – Set of rules to be observed by authorized operators for compliance with legal provisions and guarantee of bettors’ rights  Phase II – May 2024
7. Online Gaming – Technical and security requirements for online games  

KLA Input: Regulations are expected to provide clarity on the concept of online gaming so that operators have more clarity on activities that will be subject to related guidelines.  
Phase III – June 2024
8. Monitoring Guidelines – Rules and procedures for monitoring and oversight of the commercial exploitation of the fixed-odds betting lottery modality  
KLA Input: A key challenge for regulators is to set clear enforcement guidelines eliminating overlaps between multiple authorities with jurisdiction over betting operators such as Ministry of Finance (presumably by means of SPA), BACEN, Revenue’s Office (Receita Federal), among others.  
Phase III – June 2024
9. Enforcement (Penalties) – This piece of regulation will lay out procedures for issuance of administrative sanctions on fixed-odds betting operators  Phase III – June 2024
10. Responsible Gaming – Regulation of actions aimed at promoting responsible gambling, concerning the measures, guidelines, and practices to be adopted for the prevention of pathological gambling disorder in the context of fixed-odds betting, rules for monitoring and prevention of bettor indebtedness, and complementing the rules of responsible advertising  Phase IV – July 2024
11. Government Budget Allocations (Social Funds)  Phase IV – July 2024

The coming months will see an intense regulatory agenda. The government’s effort to enact robust regulations will be key to ensure operators’ reliance in a multibillion local market.

For more information, contact our team:

Roberto Lambauer

Melissa Kanô

Ana Carolina Cesar

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