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Ministry of Finance Releases Rules for Fixed-Odds Betting in Brazil

Grant Payment of R$30 Million for a Five-Year License, Covering up to Three Brands

On May 21, the Secretariat of Prizes and Betting (SPA) of the Ministry of Finance published Ordinance SPA/MF nº 827/2024. The ordinance establishes rules for operating agents’ request for authorization for the commercial exploitation of fixed-odds betting within the national territory. The regulation was highly anticipated by the sector and is expected to cause intense activity in the coming months.

Companies operating in Brazil have until December 3 to adjust to the requirements set out in the ordinance. To warm up the market, the ordinance provides for a transitional rule according to which companies that apply for authorization within the first 90 days from ordinance’s publication will have their requests examined by the end of the year. Except in this case, the SPA’s timeframe for examining authorization requests is 180 days.

In line with the requirements of Law nº 14.790/2023, only legal entities with headquarters in Brazil will be authorized to operate fixed-odds betting. A subsidiary of a foreign company, established under Brazilian law, may be authorized if it has a Brazilian partner holding at least 20% of the share capital of the legal entity. The ordinance does not detail the requirement for participation by a Brazilian partner, which is considered sensitive by the sector. It is expected that the issue will be subject to regulation to be issued as soon as possible.

The ordinance provides for the payment of R$30 million for a five-year license, considering the limit of up to three brands to be exploited by the legal entity in electronic means.

Legal entities seeking authorization must prove compliance with legal, tax, and labor requirements, suitability, economic-financial qualification, and technical qualification.

With regard to legal qualification, the ordinance requires a registration form from financial institutions and payment institutions authorized to operate by the Central Bank of Brazil that will provide financial services to the operating agent. In addition, the legal entity must submit an identification form for the controllers, holders of qualified participation, administrators, and final beneficiaries.

Regarding the economic-financial qualification, the ordinance requires a minimum net worth of R$30 million and proof of full payment of the minimum share capital in the same amount, among other requirements.

With respect to technical qualification, the legal entity must submit a request protocol or technical certificate of the betting system, issued by a laboratory accredited by the SPA. In addition, there is a need to submit evidence of knowledge and experience in games, betting, or lotteries of at least one of the members of the legal entity’s control group.

Ordinance 827 is very welcome and is generating a great deal of repercussion in the market. In addition to the authorization requests that may be submitted within the 90-day window provided for in the regulation, it is expected that the SPA will demonstrate administrative capacity to deal with the requests and the various questions that will certainly be asked during the natural learning curve inherent to the subject, acting in line with the high level of expectation of the market and the government itself.

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