Authorisation to operate
Establishment and documentation: To offer betting services in Brazil, cross-border companies must become legal Brazilian entities with a Brazilian Federal Tax ID (CNPJ). Authorization from the Secretariat of Prizes and Bets (SPA) of the Ministry of Finance is mandatory. The process involves submitting key documents, including proof of registration, articles of incorporation, tax certificates, and financial stability evidence. Operators must also have a minimum net worth of BRL 30 million (US$ 5.3m), which can overlap with the required paid-up capital stock for operating up to three brands.
Technical and governance standards: Operators must meet strict technical and governance criteria, including adopting tamper-resistant IT systems that ensure continuous operation. Policies for preventing money laundering, responsible gambling, and match-fixing are also required. A crucial component is establishing a Brazil-based customer service infrastructure that operates 24/7, offering support in Portuguese via electronic and telephone channels.
Platform compliance and technical requirements
After securing authorisation, operators must ensure their platforms comply with the specific technical requirements set by Brazilian regulations. Key aspects include:
System integrity and security: Operators must synchronise clocks across all system components to maintain accurate time-stamping of transactions. Control programs should monitor the system’s operation while being resistant to tampering, allowing independent verification of their integrity. The platform must also include strong authentication mechanisms, such as multi-factor authentication, to verify user identities and prevent unauthorised access, with immediate responses to suspicious login attempts.
Betting account management: The process starts with account registration, where bettors provide personal information verified by the operator. The system must authenticate users before allowing them to place bets. Operators must capture detailed geolocation data during onboarding, including IP addresses, device IDs, and GPS coordinates, to ensure compliance with location-based regulations.
The platform must also facilitate account verification by cross-referencing the information provided by bettors during registration. This includes verifying the bettor’s identity, age, and location through various means. Operators may require additional documentation from bettors to complete the verification process. It is crucial to have age verification, ID checks, and facial recognition mechanisms in place before completing registration.
Geolocation and security: The geolocation data captured during onboarding plays a vital role in ensuring that user sessions are consistent with their location. Operators are required to update multi factor authentication credentials regularly, at least every seven days. For password updates, forgotten passwords, or suspicious login attempts, face-match verification is recommended. If fraud is detected, operators must request additional geolocation data, such as IP addresses or GPS coordinates, to verify the user’s location.
Transactions, betting, and account management
Operators must effectively manage three distinct types of accounts to comply with Brazilian regulations:
Transactional account: This account is used to receive deposits from bettors and pay out winnings. Operators are prohibited from using funds in the transactional account for any purpose other than paying out prizes. The system must ensure accurate processing of deposits, withdrawals, and bet placements. Bettors should be provided with records of all transactions, including the details of bets placed, such as event information, odds, and stake amounts.
Proprietary account: This account is used by the betting operator to manage operational expenses and liquidity. The funds in this account belong to the operator and can be freely used for their own purposes. Earnings from bets, after prizes have been paid out, are transferred from the transactional account to the proprietary account. Operators must maintain sufficient resources in this account to cover operational expenses and manage exposure limits effectively.
Reserve account: The reserve account serves as a safeguard to ensure the payment of prizes in the event of insolvency or liquidity issues. It requires a minimum balance of BRL 5 million, held in federal government bonds registered in the SELIC system. The reserve account must be maintained separately from the transactional and proprietary accounts, and its funds can only be used with prior authorization from the SPA, except for an annual withdrawal of real investment returns.
Cash in and bet placement: Bettors can fund their accounts using approved payment methods such as electronic bank transfers or PayBroker’s PIX. The system must ensure that deposits are accurately credited to the bettor’s account. Once the account is funded, bettors can place bets on various sporting events or casino games. The system must accurately record all bets placed and provide bettors with detailed records of each bet, including event details, odds, and stake amounts.
Withdrawals and account statements: Bettors can request withdrawals from their account balances at any time. The system must process these requests promptly and provide bettors with records of all withdrawal transactions. Operators must also provide detailed account statements that include all transactions, such as deposits, bets, wins, losses, and withdrawals. These statements must be accessible for a specified period and available for download or printing for record-keeping purposes.
Responsible gambling tools: Operators are required to implement responsible gambling tools that help bettors manage their betting activities. These tools may include deposit limits, loss limits, time limits, and self-exclusion options. Bettors must be able to easily access and manage these tools through their account settings. Additionally, operators must notify bettors of any suspicious activity or unauthorised access attempts on their accounts.
Cost-efficient transactions
To minimise costs associated with frequent bank transactions, operators are advised to maintain bettors’ prizes and balances within the platform’s wallet until the bettor decides to withdraw funds. This approach reduces the operational costs linked to transactional processes and provides bettors with more control over their withdrawals.
Conclusion
This comprehensive guide highlights the critical regulatory, technical, and operational requirements for betting operators looking to comply with Brazil’s iGaming regulations. By adhering to these standards, operators can ensure that their platforms are secure, efficient, and compliant with all necessary regulations. This will not only facilitate a smooth transition to the Brazilian market but also enhance the overall user experience, positioning operators for success in this rapidly evolving industry.
Source: GMB
