This represents a massive opportunity for international bookmakers, due to Brazil's vast size combined with enormous, untapped potential. With a population of over 200 million people and a tremendous love and enthusiasm for sports among its populace, Brazil represents a great opportunity for bookmakers. Sports betting is already highly popular in the country; despite the fact that bookmaking has been banned in Brazil since 1946, many Brazilians place bets with entities using international servers in a non-regulated “gray market”.
At the end of 2022, this gray market in Brazil was worth R$7 billion, up from R$2 billion in 2020. Furthermore, sports bettors in Brazil tend to be very engaged; one survey showed that at least 1 in 6 bettors in the country say that sports betting is their main source of income. And nearly 50 percent of Brazilians say they have bet on a sporting event in the past year.
However, any sports betting operator coming into the country must know the ins and outs of the gambling regulations in Brazil. To comply with the new regulations, sports betting operators will need to implement rigorous KYC and identity verification processes that can accurately and securely verify the identity of their customers. This is a complex process that requires the use of advanced technology and the expertise of highly skilled professionals. For example, there are more than 3,500 different identity documents used in the various regions of the country.
Fraud is also rampant in Brazil, which makes accurate identity verification that much more important. In the first quarter of 2023, nearly 2 percent of all digital transactions in the country were fraud attempts, according to Caf data. Its credit card fraud levels are also among the highest in the world, and it also ranks among the world's top producers of spam and phishing.
Smart operators that want to gain a competitive edge in this lucrative, largely untapped market should invest in initiatives that will help them meet these new regulations and gain an early advantage.
Here’s an overview of what sportsbooks looking to come into the Brazilian market need to know about the new regulations governing gambling in the country:
Identity Verification:
Sportsbetting operators will need to accurately identify all users as it pertains to Brazil’s specific regulations around identity management. This includes ensuring users are not on the country’s list of those prohibited from sports betting, which includes government workers involved with gambling regulation policy, those involved in professional sports, legal entities, employees of bookmakers and those under the age of 18.
Operators are also required to check every customer against the country’s CPF (“Cadastro de Pessoas Físicas”) database. The CPF is the Tax ID number given to all Brazilian citizens and foreign aliens who pay taxes. Doing so is vital to rooting out fraud and irregular activities; such as detecting if someone registers using the CPF of a deceased person.
Accurate, Fast Onboarding:
The new regulations will require operators to perform accurate and fast identity verification of all new users. This means operators coming to Brazil must be able to onboard new customers quickly and safely, while rooting out fraudsters and other bad actors.
However, doing this is not simply a matter of regulatory compliance; operators that enable seamless onboarding for legitimate customers and quick payouts will gain a significant competitive advantage and engender customer loyalty.
Tax and Location Requirements:
The new regulations are requiring sportsbooks doing business in the country to maintain some kind of physical presence in Brazil. Operators will also be subject to a 18% tax on gross gaming revenue, a percentage of which will be distributed to public health initiatives and anti-match-fixing initiatives.
Along those lines, operators will be required to fund and create public awareness efforts around gambling addiction and how to bet responsibly.
Stopping Fraud:
Of course, identifying and stopping fraudulent and potentially criminal activity will help operators avoid hefty fines and additional scrutiny from government regulators. But it is also vital for ensuring a safe gambling experience for good users.
Once any new industry arrives in a market, there will always be criminal elements not far behind. Once a wave of new, regulated sports betting entities go live, there will come with it a massive rise of fraudsters committing bonus abuse, targeting good users with account takeover attacks, laundering money and much more. International operators coming to Brazil must ensure they can protect their platforms from this fraud and ensure that they are keeping customer data safe and complying with all local consumer data privacy laws.
Caf: Your Local Partner in Brazil
As a Brazil-born and headquartered company, we know the ins and outs of local laws and regulations in the country. As the fastest-growing identity verification company in Brazil, Caf.io offers a range of features that make it an ideal solution for sports betting operators looking to comply with the new regulations in Brazil. These include:
Real-time verification: Caf can help your company to verify the identity of customers in real-time, allowing sports betting operators to quickly and securely onboard new customers and reduce fraud e.g. bonus abuse
Robust security: We implement advanced security measures to ensure that customer data is kept safe and secure.
Scalability: The Caf platform is able to scale to meet the needs of sports betting operators of all sizes, from small startups to large multinational corporations.
Compliance: Our solution is designed to comply with the latest regulatory requirements, including the new regulations around sports gambling introduced in Brazil.
Brazil-Native: Our company was started in Brazil and remains headquartered here, with offices in São Paulo, Rio De Janeiro, Venancio Aires and elsewhere in the country.
?Overall, the new regulations in Brazil are set to have a significant impact on global bookmakers. Operators will need to implement rigorous KYC and identity verification processes to comply with the new regulations, which can be a challenging and time-consuming process. Caf offers a solution that can help operators comply with the new regulations quickly and securely, ensuring that they can offer sports betting services to customers in Brazil and around the world.
Emma Lindley
Managing Director of Caf
