The exploration of gambling was expressly prohibited in Brazil from the promulgation of Decree-Law No. 3,688/1941 ("Penal Misdemeanors Law"). Since then, and until 2018, attempts to regulate gambling in Brazil were characterized by back-and-forth movements, reflecting changes in political and public opinion at the time. In general, the various legislative changes that emerged over the years did little or nothing to open the market to private gambling companies.
However, a large part of the Brazilian population already had access to online gambling operated by foreign companies. At the same time, the government's interest in taxing this billion-dollar market grew. The combination of these factors led to an increase in initiatives to regulate gambling, culminating in the issuance of Law No. 14,790/23.
This law began to authorize the operation of fixed-odds betting, provided that these bets relate to real sporting events or virtual events in online games. According to the new law, bets must be operated under a competitive regime, with prior licensing from the Ministry of Finance. Thus, betting companies must comply with certain integrity requirements.
For example, there are some restrictions, especially regarding marketing and the prohibition of betting with minors. After all, bets involving events with the participation of individuals under 18 years old remain prohibited.
Furthermore, companies wishing to operate in the Brazilian betting market must be formally established in Brazil.
The new law created compliance guidelines for the betting sector with conditions for licensing and operation in Brazil. It also began to require companies to implement policies and internal controls in four main areas, as detailed below.
Firstly, the law established rules for providing services to bettors, ensuring fair treatment and the application of rights provided for in the Consumer Defense Code.
Secondly, the law established rules for preventing money laundering (ML) and terrorist financing (TF) as one of the most important guidelines to be followed, since the gambling industry is known to be a high-risk sector.
Thirdly, considering the potential risks associated with sports betting, the law also included provisions for the prevention of gambling addiction and pathological disorders associated with these types of games (gambling addiction). As a result, the law provided for the concept of "responsible gambling" with the aim of protecting the most vulnerable groups.
Fourthly, betting integrity and the prevention of result manipulation are pillars of the Betting Law. The law requires the implementation of auditable systems that guarantee transparency and fairness in the game and that are subject to supervision by the Ministry of Finance to ensure that betting activities are conducted honestly and without fraud.
There are several other relevant aspects of the standard, such as data protection regulations, tax rules, rules for the onboarding of bettors, and additional regulations for financial institutions.
There are many challenges ahead, as the Betting Law still depends on regulation by the Ministry of Finance, which will establish detailed guidelines for various points.
However, the Federal Government has already created the Secretariat of Prizes and Betting, responsible for overseeing the application of the law, ensuring compliance, and promoting best practices in the industry. The creation of this Secretariat signals the government's commitment to enabling the operation of a regulated, transparent, and responsible environment for betting.
In summary, the Betting Law and the decree represent a comprehensive approach to the legalization and regulation of sports betting in Brazil. By addressing compliance, preventing gambling addiction, and ensuring the integrity of betting activities, the legislation sets a precedent for responsible gambling practices. The creation of the Secretariat of Prizes and Betting reinforces the importance of supervision and governance in promoting a safe and fair betting ecosystem.
Isadora Postal Telli
Lawyer at Souto Correa in the banking and fintechs area
Guilherme Aresi Madruga Souto Correa
Lawyer at Souto Correa in the business criminal law and compliance area
