Ministry of Finance new regulation on sports betting
It was published on Friday (27th) the Normative Ordinance No. 1,330/2023, issued by the Ministry of Finance (“Normative Ordinance”), which establishes general rules for the commercial exploitation of the fixed-odds betting lottery modality nationwide, the Brazilian sports betting. The Portuguese version of the Normative Ordinance can be accessed here.
The general conditions provided for in the Normative Ordinance will apply to all companies that commercially exploit the sports betting lottery modality nationwide, including those existing prior to the authorization specified in Federal Law No. 13,756/2018, with amendments introduced by Provisional Measure No. 1,182/2023. However, it is important to note that the Ministry of Finance will issue specific regulations detailing the requirements, conditions, and procedures for granting the authorization to operate sports betting. Therefore, authorizations to operate sports betting will only be granted after the publication of specific regulations outlining the requirements for granting them.
Please find below the main points of the Normative Ordinance:
- Prior statement of Interest. Legal entities interested in obtaining authorization for the commercial exploitation of sports betting in the national territory will be entitled to show their interest to the Ministry of Finance in advance, within 30 days of the publication of the rule, ending on November 26, 2023. The submission of this prior statement of interest does not constitute prior authorization for the exploitation of sports betting and does not bind the company, but companies that submit a prior statement of interest will ensure priority in the analysis of their applications for authorizations. In this regard, the interested companies must submit the prior statement, together with the following documents:
- Declaration and prior statement of interest form signed by the company’s legal representative.
- Articles of association, bylaws, or commitment to establish a Special Purpose Vehicle (SPV); and
- In the case of a foreign company, a commitment to establish a company in Brazil, written in Portuguese or accompanied by a sworn translation.
- Exploitation Regime. Sports betting will be exclusively operated in a competitive environment, without a limit on the number of licenses, and can be sold through any commercial distribution channels, both physical and virtual. National and foreign legal entities established within the national territory that meet all the legal requirements may request authorization for sports betting exploitation, if they prove compliance with the following requirements: (i) legal qualification; (ii) tax and labour regularity; (iii) economic and financial qualification; and (iv) technical qualification. In addition, foreign companies seeking authorization must establish a subsidiary in Brazil, according to current legislation. Authorization will be denied to certain companies with the impediments listed therein such as whose partners, directors and officers are related in any way to sports entities; whose partners, directors and officers are involved in certain crimes; and foreign companies that had their authorizations revoked or cancelled in other jurisdictions in the last five years.
- Prevention of Money Laundering and Other Offenses. In addition to legal compliance requirements, operators must demonstrate that they have effective internal policies to identify, assess, and control the risks of money laundering, terrorism financing, and proliferation of weapons of mass destruction. Interested parties must demonstrate that internal control mechanisms include customer identification criteria, monitoring procedures, risk analysis, and continuous training for employees and third parties, in compliance with applicable legislation. Also, the Normative Ordinance requires suspicious transactions to be reported to the Financial Activities Control Council (COAF).
- Rights and Obligations of the Bettor. The Normative Ordinance establishes as the rights of bettors: (i) to receive adequate, secure, and quality service; (ii) to receive information for the defence of their rights and interests; and (iii) to obtain and use the service freely, with the freedom of choice, subject to existing legal and regulatory provisions. It is the operator’s duty to provide clear information to bettors regarding bets on their website, such as how to place bets, the fixed amount of each bet, and how and where to receive the prize, allowing a clear and precise understanding of the betting platform and the criteria for winning bets. Additionally, for placing bets, the operator must obtain the bettor’s consent for the processing of personal data, in accordance with the terms and conditions specified in the Brazilian General Data Protection Law (Federal Law No. 13,709/2018), as well as acknowledgment of the prize award policies practiced by the operating company.
- Responsible Gambling. Operators must adopt measures, guidelines, and practices to prevent compulsive or pathological gambling disorders, prevent and not induce indebtedness, and protect vulnerable individuals, especially minors and the elderly. In this regard, Normative Ordinance establishes that only individuals over 18 years of age can purchase bets and receive prizes, and sets forth the operator’s obligation to control mechanisms, such as daily gaming time limits and self-exclusion. It is the operator’s obligation to ensure that these restrictions are clearly communicated in sales channels, messages, publications, and in advertising and marketing activities. Also, the Normative Ordinance prohibits the use of cash for placing bets.
Lefosse’s Public Law and Regulation Team closely monitors the changes that impact the Brazilian Sector. For further clarification on this matter, or others that may be of interest to you, contact our professionals.