With the recent approval of Law No. 14,790 of 2023, Brazil is on the verge of a revolution in the sports betting scene. It is estimated that this market moves around R$10 billion (US$1.75bn) annually in the country, which represents a vast revenue potential for the economy.
To date, there have been more than 100 expressions of interest from national and foreign operators interested in entering this market, which projects a maximum concession fee of R$30 million (US$5.25m) to the Union for the exploration of the activity.
Published in April, Normative Ordinance SPA/MF No. 615 establishes strict standards to ensure transparency, legality and integrity in the marketing of fixed-odds bets – by private economic agents throughout the national territory.
One of the main provisions of this ordinance refers to deposits and withdrawals, which must be made exclusively via electronic transfer (such as Pix, TED, debit or prepaid card), excluding the adoption of cash, bills, checks, crypto assets and credit cards.
With regard to withdrawals, they must be processed within 120 minutes after the request by the bettor, and the prizes must be paid within 120 minutes after the end of the event, providing a faster and more reliable experience for users.
With these requirements, the ordinance creates a regulated environment where fintechs can provide safe and fast solutions for payment processing, account management and financial risk mitigation, ensuring the integrity and reliability of the sports betting market in Brazil.
Another important point is the requirement that bettors' funds be kept in transactional accounts separate from the assets of the operator. In other words, players' funds must be kept separately from the assets of the betting company, preventing their use for purposes other than paying prizes or placing bets.
This ensures greater protection of funds in the event of financial problems faced by the operator, preventing players from being compromised by debts or other obligations of the company.
More recently, Normative Ordinance SPA/MF No. 827 was published as a supplement, detailing the transparency, legality and integrity requirements for private economic agents that commercially exploit fixed-odds betting. In this context, the main point is the need to prove legal capacity to obtain authorization, providing for the presentation of the articles of association, internal organization chart and organizational structure.
Legal security, in turn, also includes proof of a minimum financial reserve of R$5 million and a paid-in share capital of R$30 million (US$5.25m). Tax and labor regularity, suitability, and technical and economic-financial qualifications complete the criteria established for the authorization analysis.
The speed of this verification will be improved: for those who submit their requests within the first 90 days of publication, the approval of the authorizations will be published by December 31, 2024. This schedule provides predictability and security for interested parties, who will be penalized if they do not comply with the new rules by the end of 2024: as of January 1, 2025, any operation without the proper authorization will be subject to sanctions, reinforcing the government's seriousness in regulating and monitoring the sector. Success in the new environment, therefore, depends on the ability to adapt to the new responsibilities that arise.
The regulation also requires the presentation of a code of conduct and dissemination of good advertising and publicity practices during the technical qualification with the aim of ensuring the promotion of conscious consumption by the target audience, without compromising the financial health of bettors.
All of these implications, which are already quite significant for the sector, open doors to opportunities in the fintech ecosystem. With agility, adaptability and a focus on technology, fintechs will be able to act as operating agents and/or suppliers of a variety of services, from payment processing to risk management.
In short, the updates brought by Ordinances 615 and 827 are important steps towards the professionalization and legalization of the betting market in Brazil. The implementation of these measures will require a significant effort from companies in the sector, but, in return, it is a step forward in aligning Brazil with international best practices in gambling regulation.
As the country prepares for this new chapter, fintechs have the opportunity to play a crucial role in building an equitable, safe and beneficial ecosystem for all involved, contributing to the economic growth and sustainable development of this market.
Diego Perez
President of ABFintechs and co-founder of SMU Investimentos
