The Prizes and Bets Secretariat of the Ministry of Finance published this Thursday (18) Ordinance MF-SPA/MF No. 615, which regulates Law 14,790/2023 by establishing general rules to be observed in payment transactions carried out by authorized agents to operate the fixed-quota lottery modality in the national territory.
Under the terms of the Law, fintechs that are positioned to manage financial transactions in this sector, and that are duly authorized to operate by the Central Bank of Brazil (“BCB”) as financial and payment institutions, can carry out payment processing operations only to sports betting companies that have authorization to operate fixed-quota bets provided for in the Law, as regulated by the Ordinance.
With the publication of the Ordinance, it comes into force the legal provision that classifies as an administrative infraction the dissemination of advertising or commercial advertising by fixed-quota betting lottery operators not authorized by the Ministry of Finance.
Subject to the authorization provided for in the Law and Ordinance, it is possible for a fintech to hire the services of a BaaS (Bank as a Service) to also carry out payment services for sports betting companies, as long as the latter are authorized to operate by the Ministry of Finance. As this business model involves the integration of the systems of fintechs that hire BaaS with various APIs, they become able to offer services with the same quality as financial institutions.
However, it is important to highlight that fintechs, including those that operate through BaaS, must structure their companies’ compliance policies and adapt their data protection and information security standards, as well as adopt solid anti-corruption and anti-money laundering policies.
In the service provision agreements to be signed between the betting operating agent and the fintechs, which will establish the parties’ obligations for the purposes of the Ordinance, the full alignment of the respective anti-corruption and anti-money laundering policies will be extremely important.
Electronic transfer
Bearing in mind these concerns, the contributions and withdrawals of financial resources by bettors, as well as the payment of prizes by operating agents, must be carried out exclusively by means of electronic transfer between a registered account of the bettor and the transactional account of the operating agent, both maintained in financial institutions and fintechs authorized by the BCB.
Therefore, institutions not authorized to operate by the BCB as intermediaries in payment transactions between the bettor and the betting operating agent, including through collection agents or payment managers, are prohibited from operating these services.
Furthermore, it is now prohibited for the operating agent to accept financial contributions through cash, payment slips, checks, virtual assets, or other types of cryptoassets, payments or transfers originating from an account that has not been previously registered by the bettor, payments or transfers from third parties, credit cards or any other postpaid payment instruments and any other electronic transfer alternative not provided for.
Regarding the protection of bettors, with respect to the actual receipt of the prize due to them, operating agents must implement policies for managing exposure to liquidity risks that establish a methodology for calculating exposure limits and that provide for processes to measure, monitor and mitigate exposure to liquidity risk over different time horizons, containing a contingency plan detailing additional sources of resources, responsibilities and procedures to face liquidity stress situations.
In this sense, the operating agent must establish a financial reserve, as a preventive measure in the event of insolvency or illiquidity, designed to guarantee the payment of prizes and other amounts owed to bettors, in the minimum value of five million reais. Such financial reserve must be held in custody in a financial institution authorized to operate by the BCB in the form of federal public bonds.
In its final provisions, the Ordinance emphasizes that operating agents must observe the tax rules applicable to the payment of prizes to bettors published by the Special Secretariat of the Brazilian Federal Revenue.
The prohibition on fintechs from operating in transactions to carry out fixed-quota bets with legal entities, which have not received authorization from the Ministry of Finance for their operation, comes into force after a period of six months, counting from the date of publication of specific regulation of the Prizes and Betting Secretariat of the Ministry of Finance that will establish the rules and conditions for obtaining the authorization dealt with in the Ordinance.
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