Improving gambling regulations in Brazil is the mission of Legitimuz, which offers a robust identity and facial verification system to ensure security and compliance without compromising user experience. In this context, Legitimuz holds discussions with the Finance Ministry to assist the government, operators, and system providers with innovative solutions in the new environment of safe and regulated gambling.
In a Live on Instagram led by Kayky Janiszewski, CEO of the company, Manssur addressed the recent gambling regulations, highlighting the positive milestone of their presence at ICE London 2024 and the importance of the Brazilian market worldwide.
Kayky Janiszewski - What was the international market's reaction at ICE to the recent developments in Brazil?
José Francisco Manssur - The entire global market celebrated at ICE the fact that Brazil has now regulated its gambling. Brazil is very important in the global context of gambling due to the size of the country and its economic strength, and Brazil did not have regulation before. Brazilian companies that attended ICE over the past 10 years were always asked when regulation would be implemented, and this was the first time that we had something to show in terms of law and regulation. For me, it was especially gratifying. I spoke with the CEOs of the world's largest betting companies about how eager they were to enter Brazil, feeling more secure because the country now has a law to regulate gambling. This was the work that the Ministry of Finance did throughout the entire year of 2023. In a shorter timeframe than many expected, we now have gambling regulation, and ICE was a very special moment.
Initially, there is a lot of information about the regulation on the internet. I would very much like to hear from a person who has total credibility an overview of how the regulation will work. Does the government have any plans to issue the entire regulation with practical norms for you to maintain a license and not just to qualify to buy one?
Our regulation provides that online games are authorized in Brazil, and it also provides that fixed-odds betting is authorized in Brazil. What is fixed-odds betting? It is betting on the outcome of real sports events. That is... a football match, a basketball game, a volleyball game that is actually happening, a tennis match, a boxing or MMA fight, sports events. What is online gaming? Online gaming consists of other modalities where there are draws, such as a number draw on the internet.
But whether it's one case or the other, what our law allows is fixed-odds games, where the bettor, when he places a bet, knows how much he will win if his bet is successful. It is a game where the person bets knowing how much they will receive if their bet is successful. This is what is allowed in Brazil, and from there we have a series of rules about advertising.
Advertising has grown enormously. You can't watch a sports event today without having a lot of advertising from betting companies, and this advertising doesn't have to follow any rules. What we have included in the regulation and will delve into in the regulations is that advertising must promote responsible gambling. Advertising must ensure that it is not targeting children under 18. As I have been seeing since December, and I am happy to see, influencers, companies, artists... everyone who advertises betting companies must be concerned about conveying a message to children that betting is for people over 18, because that is what is in our law.
Our advertising cannot convey the idea to people that betting is a way to get rich because it is not true. Most people who bet thinking that this is a profession lose and run a great risk of becoming addicted to gambling. This cannot happen.
Now we have advertising rules, whether in the law or in the Conar annex, that must be followed. All of this came about because we created a law, we have to tackle money laundering. Security is required by law, facial verification, a series of proof of the bettor's identity, and then security systems are essential for us to have a healthy environment in this gambling market.
What is your view on how the illegal market, which is currently quite large and causes thousands to fall victim to scams, will be affected?
We will have requirements for those who want to be authorized in Brazil, such as payment of an authorization fee, which will be high: R$ 30 million. They will have to submit a series of documents, present us with this data in real time so that we can update this registry, etc. We will control the entire volume of bets to know if the company is paying taxes correctly and to prevent money laundering.
So we will create a series of obligations for those who register in Brazil. This means, in practice, that we will have very strict control over whoever wants to continue offering bets to Brazilians without being registered in Brazil. We will have three weapons that we will use to confront these companies that are not registered in Brazil:
1. Advertising: They will not be able to do any kind of advertising. We have had open discussions with TV channels, sports channels, and it is already very well mapped out by us, but we have been talking a lot with Meta, the owner of Instagram, and with the company that owns YouTube, Google, so that they always have an updated list of authorized companies so that they can prevent unauthorized companies from advertising.
2. Payment methods: These are the companies you use to make pix payments to place bets or use a debit card and receive the money you bet. These companies are all listed and are on a list from the Central Bank. If you are not authorized to operate in Brazil, these companies will not be authorized to make your payment or receive the money from your bet or pay your prize.
3. Real attempt to take down the illegal site: The site of a company that is not authorized in Brazil will not enter the cell phone located in Brazil, and I rely a lot on people who have knowledge of technology, who stand out with solutions so that we can improve this mechanism to really not give access to betting sites that are not authorized in Brazil. We must be able to prevent with technology that people access betting sites that are not authorized in Brazil. We are still looking for technological solutions, I think this is where we are most behind.
I would very much like to touch on the subject of match-fixing because this is taken very seriously outside the country...what is the government's view on this?
Match-fixing is very serious because it creates distrust among fans. We need to regain this credibility. With the system we are going to implement in the Finance Ministry, the ministry will be able to identify the bets.
You have companies from all over the world like Spotradar, like Genius, and many others that specialize in checking the standard behavior of athletes. They compile a catalog of behavior, and if the behavior in a match was different from what they usually do.
Today, in the illegal market, it often happens that some bettors place a bet, lose money, and then go to the central bank and request a pix refund claiming they were robbed, etc. How will this happen in the regulated market and what will be the requirements for you to request a pix payment refund?
We are sensitive to this concern of the operators. They will have the records of those who do this frequently, and we will work because we have to consider both situations. First, there is the person who is trying to defraud, asking for a refund after losing. And also, we cannot prohibit someone who is very close to winning without a reasonable reason because otherwise, they will go to consumer defense and end up filing a claim to get their money back.
What is important to say now is that we are not insensitive to this. We know, we know that this scam is happening. This doesn't just happen in gambling, it happens even in sports games. The team loses, the person requests the money back, saying that they did not receive the service.
We are going to create a mechanism to open an internal process to verify if this really happened because it can happen, or if this is actually an attempt to defraud. If it is an attempt to defraud, we may even have a register of bettors who do this, and they will end up having limitations with the operators to place new bets. And if necessary, the operator can contest this and defend themselves to keep the money that the person bet. I have received many many conversations about this, and we are concerned.
Is there a defined date because there are many operators, including many foreign ones, massive companies that want to make a strong entrance into Brazil?
We are working to open the window in March, meaning the person will submit their authorization request in March, and we will keep this possibility until June. In July, we will release the first list of authorized companies to operate in Brazil. Then we intend to reopen this window in October and close it in December. Authorization is a very serious matter. We want to do everything electronically on a website without creating a business counter because that is not the government's intention.
We want to do it electronically so that the person uploads the documents they will present, make the payment, and thus eliminate as much as possible anyone from the government deciding whether the person will enter or not. We don't want any of that in this gambling market. What we actually want is for this gambling market to be serious in Brazil, to be healthy, and for people to change this prejudice a little. Because I have seen that many of the operators I speak to, almost all are companies based outside Brazil, with compliance, with internal responsibility measures, etc. So we want these companies to enter Brazil knowing that Brazil is a serious market for this segment of gambling.
Basically, in the world of gambling, 99% of the operators are White Label. Will there be any regulations for betting site providers? What will be the consequence for them if they provide the system to a site that does not have a license?
Our first regulation deals with the certification of providers. We will have about four or five companies that already exist in the world that will request authorization to operate in Brazil. These companies will be responsible for overseeing the providers and also the platforms.
If the provider company is providing support or service to a company that is not authorized in Brazil, they will lose the possibility of working with authorized companies in the country. So we hope and believe that providers will not exchange the possibility of offering services to unauthorized companies and end up being out of the entire market.
Therefore, we will have companies that will be certified by the Ministry of Finance. First, for providers to comply with what is in the rules. And second, to prevent these provider companies from offering services to sports betting operators or online gaming that are not authorized to operate in Brazil
Source: GMB
