After a long six years since the betting market was legalized in Brazil, back during President Temer’s administration in 2018, the regulation of the sector is finally approaching. With exactly 50 days left until the start of the regulated industry on January 1, 2025, we are in the final stretch.
It’s no surprise how crucial regulation will be, creating a safer, more structured, and beneficial market for everyone, generating jobs and state revenue while implementing mechanisms to protect both bettors and companies.
It has always been clear that regulation was essential, given the vast industry that has operated without clear rules for too long. Now, however, with Law 14,790 and a series of ordinances issued by the Secretariat for Prizes and Betting of the Ministry of Finance, the scenario will change.
Among the various measures established - some already in force and others yet to be implemented - we are witnessing the creation of a system addressing critical aspects for the smooth operation of this enormous industry. This includes sector taxation, advertising regulations, support mechanisms, psychological assistance for bettors, institutionalized practices for responsible gambling, and many other considerations.
Betting companies must comply with strict regulations as outlined by the new Brazilian legislation. For instance, one of the main requirements is that betting platforms implement rigorous KYC (Know Your Customer) processes and transaction monitoring to prevent illicit activities such as money laundering.
These changes will lend greater credibility to the betting industry, and at Paag, we have closely followed this movement, preparing to ensure that betting companies comply with the new market demands starting in 2025.
In terms of fraud prevention, financial risk management, and regulatory compliance, we have developed Paag Shield to assist in these areas. Essentially, it is a product that provides real-time data on suspicious player activities or potential risks, offering a comprehensive risk score for each user.
Another significant point of focus is the requirement for bettors to create new accounts to access betting platforms. Each bettor will undergo identity verification, including facial recognition, when registering on any site.
This enhanced KYC process will require more stringent verification by betting companies, including facial and document validation, to ensure the player’s identity. To address this, we have developed Paag ID, which functions like a Google login, allowing bettors to register once and then access any platform using the system. This reduces KYC friction and operational costs, streamlining the entry process for players.
There are many new solutions available to help betting companies adapt swiftly. Some of these practices are already widely adopted, such as the ban on credit card payments for betting, which was already prohibited in our system and by major betting platforms in the country.
Other aspects, like the requirement for separate betting accounts, deserve more attention. Companies operating outside Brazil will enter the country and become Brazilian businesses, needing a financial structure to manage betting activities effectively and report operational information to the government.
To meet these requirements, companies must have three distinct accounts - reserve, transnational, and operational - that will be managed efficiently. This process, while straightforward, will require technological adaptations. That’s why we have developed technologies since the beginning of the year to automate fund transfers between these accounts as seamlessly as possible.
Over the next few weeks leading up to 2025, we will see the final adjustments to ensure the market operates optimally. At Paag, we eagerly anticipate this moment and remain committed to developing new solutions.
João Fraga
CEO of Paag, a techfin specializing in payment solutions for the betting sector
