On April 10th, 2024, the Brazilian Ministry of Finance published Ordinance no. 561/2024 (available here in Portuguese), establishing the Regulatory Policy of the Secretariat of Prizes and Betting ("SPB" – or "SPA," acronym in Portuguese) and the Regulatory Agenda for 2024.
The new ordinance aligns with the Ministry of Finance's efforts to regulate the "blurry lines" of Federal Law no. 14,790/2023, enacted by President Lula on December 30th, 2023. This law provided especially for the taxation, compliance, advertising, and inspection aspects that will be applicable to sports betting operators.
SPB proposes a four-phase schedule, following an order of priorities, and intends to fully implement it by the end of July 2024.
TozziniFreire's Gaming & E-sports team prepared the chart below with the agenda of the following Ordinances to be issued by SPB and a few comments on the key aspects of the long-awaited regulation:
Phase 1 - Until April 2024
Subject matter of the next ordinances
- Qualification of certification entities
- Provision - Requirements and procedures for recognizing the operational capacity of entities when certifying betting systems used by sports betting operators, live gaming studios and games.
- TozziniFreire comments - Ordinance no. 300/2024 – already published here.
- Payments methods
- Provision - General rules for payment transactions carried out by the companies authorized to operate sports betting in Brazil.
- TozziniFreire comments - The Ordinance may clarify the use of Bank as a Service (BaaS) and the intermediation of payment institutions (“IPs”) authorized by the Brazilian Central Bank (Bacen).
- Betting System
- Provision - Technical and security requirements for betting systems used by sports betting companies.
- TozziniFreire comments - The Ordinance may define the requirements that the systems must comply with, including obtaining the certification in compliance with the law.
- Authorization
- Provision - Rules, conditions, and procedure for sports betting operators to apply for authorization.
- TozziniFreire comments - In addition to the procedures for requesting, analyzing, and granting the authorization, the Ordinance may clarify open issues, such as the minimum holding of a Brazilian partner in the capital stock of the authorized company and the deadlines for interested parties to comply with the requirements for the issuance of the authorization. It is even possible that the Ministry of Finance should consider granting a temporary authorization, granting a period for all requirements to be complied with as a condition for permanent authorization.
Phase 2 - Until May 2024
Subject matter of the next ordinances
- Anti-money laundering and fraud prevention policies
- Provision - Policy, procedures, and controls aimed at preventing money laundering, terrorist financing, proliferation of weapons of mass destruction, and other frauds related to the commercial exploitation of sports betting.
- TozziniFreire comments - In addition to the provisions on the obligations, it is essential to define the form of interaction with the other monitoring bodies and entities – Bacen, Financial Activities Control Council (“COAF”), Brazilian Federal Revenue Office (“RFB”), etc.
- Rights and obligations
- Provision - Set of rules to be observed by authorized operators to comply with legal provisions and safeguard the rights of bettors.
- TozziniFreire comments - An essential aspect of this future Ordinance is the definition of the elements of mandatory internal policies provided in the norms. Besides, this Ordinance must define the prerogatives of sports betting operators to block accounts/users and other issues that could lead to conflict between regulation and consumer protection.
Phase 3 - Until June 2024
Subject matter of the next ordinances
- Online gaming
- Provision - Technical and security requirements for online gaming that may be made available to bettors by the authorized sports betting operators.
- TozziniFreire comments - Considering the recent inclusion of online games in authorized activities, their regulation is even more open than that of sports betting. It is essential that this Ordinance provide the details of online gaming and, besides that, give a solid legal definition, specifying what practices can or cannot be considered online gaming for the regulation to be enforced.
- Inspection
- Provision - Rules and procedures for monitoring and inspecting the commercial exploitation of sports betting.
- TozziniFreire comments - Setting limits to the Ministry of Finance's prerogatives and defining the operators' processes and obligations is essential to ensure an efficient inspection. It is also vital to establish how other bodies and entities of the Government can participate and collaborate on this.
- Penalties
- Provision - Procedure for enforcing administrative penalties against sports betting operators.
- TozziniFreire comments - Regulating the Federal Law of Administrative Procedure (Law no. 9,784/1999) for sports betting/online gaming is crucial. It is desirable to have proper rules adapted to the specificities of the operation and that ensure due process.
Phase 4 - Until July 2024
Subject matter of the next ordinances
- Guidelines for responsible gaming
- Provision - Regulation of actions to promote responsible gambling, regarding measures, guidelines, and practices to prevent pathological gambling disorder in the scope of fixed-odds betting, rules for monitoring and preventing players from falling into debt and additional rules concerning responsible advertising.
- TozziniFreire comments - Limiting operators' responsibilities—as a preventive approach—is essential to ensure legal security, preventing them from being forced to adopt measures outside their competence. Correctly delimiting the operators' obligations is relevant to avoid having them liable for acts that cannot be imputed to them.
- Social allocations
- Provision - Procedures to effectively allocate funds to legal recipients as provided for in paragraph 1-A of Section 30 of Federal Law No. 13,756/2018.
- TozziniFreire comments - It is essential to define the transfer procedures and to establish the obligations of operators and those in charge of the financial aspects of transfer operations.
