Online sports betting has been allowed in Brazil since 2018. However, still without consolidated regulation, more than 500 websites based abroad operate in the country. This makes room for financial crimes such as money laundering and private corruption.
This year, the match-fixing scandal in series A and B of the Brazilian Championship highlighted the weaknesses of the sector. The scheme consisted of enticing players to combine actions in matches, such as yellow cards and penalties. Fraudsters placed bets and received prizes in case of victory, but charged players if the result did not materialize.
The government has already come into play to cool things down, with PM 1,182, which regulates sports betting, establishing that only qualified companies will be able to offer bets related to official events.
Companies will be taxed at 18% on Gross Gaming Revenue (GGR) — the revenue earned from all games after winnings have been paid to players. In addition, bettors will have to pay Income Tax on profits that exceed the exemption range.
Just as important as these measures, however, is adopting GRC (corporate governance, risk management and compliance) mechanisms, such as survival and sustainability for the business model. GRC is essential for a serious company in the betting industry. The acronym refers to a set of practices and strategies that seek to ensure integrity, security and compliance in a given company.
Corporate governance (“G”) is essential for aligning the executive team with the Board of Directors' guidelines, ensuring responsibility in decision-making at all hierarchical levels and implementing appropriate tools for the business.
Risk management (“R”) identifies, deals with, anticipates and monitors situations that may harm corporate objectives.
Among them, the compliance risk (“C”) is very critical, as it deals with the prevention and correction of possible misconduct, which could bring legal liability and tarnish the company's reputation.
Improving risk and compliance management only adds value to a company's product, especially in sports, where the connection between club and fan is much more than mere commercial affinity. It is a relationship based on image, emotion and even social and historical values.
It is known that serious companies in the sports betting sector already have robust compliance departments to verify data from bettors and track the financial flow. Among the measures, we highlight the validation of CPFs, history of legal proceedings, linking the document to the bank account where the prize was received and monitoring the volume of bets with reports of suspicious activities.
However, the activity requires regulation that matches the potential of this financial movement. Brazil, world leader in the segment, has more than 3.2 billion accesses, and at least 25% of Brazilians have smartphones with bookmaker apps. That is why the GRC area is essential to implement adequate controls and promote the security and confidence necessary for the industry's success in the short, medium and long terms.
Luciana Silveira
Chief compliance officer at Neoway
