GMB - How has the recent anticipation of regulatory effects by the Brazilian government impacted your company's strategy in relation to the betting market in Brazil?
Fabio Kujawski - The recent anticipation of regulatory effects by the Brazilian government has had a significant impact on the betting market in Brazil. We were closely monitoring the process of regulating the fixed-odds betting modality, provided for in Law No. 14,790 of 2020 and in Ordinance SPA/MF No. 827 of 2021, which established a deadline of December 31, 2024 for operators interested in operating this activity in the country to comply.
However, Ordinance SPA/MF No. 1,475 of 2024, published on September 17, changed this scenario by determining that only companies that had already submitted the authorization requirement to the Ministry of Finance by the date of its publication could continue operating during the compliance period, and that the others should cease their activities by October 10, 2024, under penalty of blocking and deletion of their websites and applications.
Despite this unforeseen advance, one positive side of this ordinance was the fact that all companies that filed their applications by September 17 were considered compliant. In other words, the SPA must analyze the license requests from this entire group of companies (and no longer just those that completed the protocol by August 20) and grant the authorizations by December 31.
The ban on companies that have not yet applied for an operating license in Brazil came as a surprise to the industry. How is Mattos Filho dealing with this unexpected change and what measures are being taken to ensure compliance?
Lisa Worcman - Mattos Filho is a law firm that advises sports betting operators and other players in this industry. We have a specialized and experienced team in this area, which is aware of regulatory changes and the challenges they bring to our clients. In light of this unexpected change, we are dealing with this situation in an agile and proactive manner, seeking to guide and support our clients in making the best decisions to ensure compliance with the new rules.
We are analyzing the possibilities for adaptation on a case-by-case basis, according to the profile and situation of each client, and evaluating the best alternatives for each one. An important aspect of a healthy regulatory process is to avoid changing the rules of the game during the game. This prevents litigation and ends up bringing legal uncertainty to the sector.
What are the main challenges that a company faces due to the lack of a previously defined deadline – which has now been established – for requesting licenses? How does this affect planning for the start of regulated operations next year?
Fabio Kujawski - Companies that failed to meet the first deadline of August 20, for filing the license application, were in a situation of legal uncertainty. Ordinance 1,475 determined that operators who did not need to file the license application by the date of publication of the ordinance would be banned in Brazil on October 10.
At this point, it seems to me that the SPA could have given some additional time to import the burden of the ban from the country, especially since the original deadline for this ban was December 31. On that same day, the 17th, 4 companies managed to file the application, but others did not. This fact has greatly affected the continuity of these companies' business until the end of the year, and companies in this situation should evaluate the prospects for legal challenges to this early banning of the ban.
How do you defend the new licensing requirement influencing competitiveness and the entry of new companies into the Brazilian market? Is there an increased risk of consolidation among established operators?
Lisa Worcman - There is no limit to the number of licenses for companies interested in exploring fixed-odds betting. Therefore, the market remains open. On the other hand, if you have not submitted your authorization requests by September 17, you will have to wait for the authorizations to be postponed to start (or resume) your activities in the country. In any case, there has already been a growing increase in acquisition operations in the sector, and it is certainly difficult to obtain an incentive grant for these movements.
What impact could the regulatory anticipation measure have on the relationship between operators and regulatory authorities in Brazil? How could this affect transparency and trust in the licensing process?
Fabio Kujawski - Changes in the rules of the game during the game can lead to litigation, which is not ideal in a regulated sector that is just emerging. This can impact legal certainty and does not contribute to a healthy regulatory environment.
Has the change in regulation brought any uncertainty regarding future guidelines or additional regulations? How is your company preparing for possible new requirements or adjustments to the regulatory process?
Lisa Worcman - The change in regulation has brought any uncertainty regarding future guidelines or additional regulations, as it reveals an instability and unpredictability of the regulatory scenario, which may undergo new changes without prior notice or public consultation.
What is your company's perspective regarding adapting to the new regulatory deadlines and requirements? Are there specific strategies to minimize the impact of this transition and ensure a successful entry into the regulated market?
Fabio Kujawski - The Brazilian betting market is one of the largest and most promising markets in the world. We understand that regulating fixed-odds betting is an opportunity to develop a safe, competitive and responsible market that generates economic and social benefits for the country. As in all sectors of the economy, there are always ‘good players’ and ‘bad players’. The government should avoid penalizing ‘good players’ for individual acts of some ‘bad players’.
Source: Exclusive GMB
