The history of gaming in Brazil has gone through various stages. From the total prohibition of gambling in the 1940s to the selective legalization of certain types of betting, such as poker, Brazil has experienced legislative swings. However, the debate on regulating online sports betting has been constant since 2018.
The sports betting market in Brazil has faced the challenge of reconciling the complexity of sociocultural factors with the market demand reality. Despite land-based casinos (and casinos on cruises) remaining prohibited, the federal government has opted to grant licenses to online casinos and sports betting platforms.
Who is affected
Fixed-odds betting operations are a form of gambling where individuals place bets on the outcomes of sport events or virtual online gaming events. Under Brazilian regulations, online games are defined as “electronic platforms that allow virtual betting on games with outcomes determined by the future results based on the random generation of numbers, symbols, figures, or objects specified in the game’s rules.” These online games fall within the scope of fixed-odds betting operations and are subject to specific regulations and oversight.
Similarly, the law addresses fantasy sports, which are described as virtual competitions based on the real-life performance of individuals. It’s important to note that engaging in fantasy sports activities may not require prior authorization, according to the law.
Current regulatory framework
In 2023, two significant milestones occurred in the regulation of online gaming in Brazil. In March, the Associação Brasileira de Defesa da Integridade do Esporte (ABRADIE) was formed, signaling a step forward towards safer and more transparent regulation of gambling in the country. In December, Law No. 14,790 was approved, primarily regulating fixed-odds betting. The new legislation introduces new payment rules designed to attempt to dismantle Brazil’s enormous illegal gambling market. Only operators authorized by the Central Bank will be able to offer payment services, and players will only be able to send money to a bank account based in Brazil. The new law was enacted for several important reasons:
- The growing surge of online gaming and other gambling activities in Brazil
- The loss of significant tax revenue from the Brazilian budget due to these activities
- The need to ensure security, as unregulated gaming and betting are more susceptible to fraud and money laundering
- The need to attract investments and major online gaming brands
Currently, despite regulations being fairly lax, the full legalization of gambling promises a range of benefits for Brazil. The National Gaming and Betting Secretariat (Secretaría de Apostas Esportivas) and the Brazil Ministry of Finance are responsible for overseeing fixed-odds betting operations and virtual online gaming events, and have been active in publishing regulatory guidelines and opening applications for operator licenses since late January. On July 15, 2024, the new regulations will come into effect. From generating tax revenue to creating new business opportunities, the future of the gaming industry in the country is as promising as it is uncertain.
The penalties for non-compliance with regulations in the gaming and betting sector include warnings, fines of up to BR$ 2,000,000,000.00, revocation of authorization, a prohibition on obtaining new ownership authorization for up to 10 years, exclusion from participating in public service concession or permission bidding for at least 5 years within the federal public administration, and disqualification from acting as a director or administrator in entities involved in any lottery modality for a maximum of 20 years. These stringent penalties serve as a deterrent and ensure adherence to regulatory standards within the industry.
Economic and social implications
Regulation of sports betting is expected to significantly contribute to tax revenue and generate employment opportunities in Brazil. However, the long-term success of the industry will depend on the effective implementation of regulations and maintaining a balance between economic interests and consumer protection.
The projected growth of online gaming underscores the importance of implementing robust regulations and establishing an effective licensing process. However, discussions on tax rates are still ongoing, and obtaining a gaming license is expected to be a significant investment for operators.
As Brazil moves towards increased regulation and legalization of gambling, the industry is gearing up for a period of transformation and growth. With a focus on public safety and preventing money laundering, the path towards a regulated and safe gaming market is already underway.
Integration strategies of digital identity in betting platforms
Player security and protection of personal information are key aspects of sports betting regulations in Brazil. Ensuring a safe and transparent gaming environment, as well as raising awareness about information security among players, is crucial.
Sector regulations and laws will require institutions to verify the identity of their customers. Implementing an effective identity verification process not only helps comply with KYC (Know Your Customer) and AML (Anti-Money Laundering) regulatory standards but also helps prevent legal sanctions, thus promoting responsible gaming and protecting players.
Facephi, a leading company in identity verification technologies, offers innovative solutions for the gaming industry, allowing for quick and secure verification of players’ identities:
- Facial recognition technology to identify bettors’ identities and the amount of taxes to be paid
- Verifies and validates the authenticity of identification by comparing it with sanctions lists and PEPs. To place bets, a bettor must be identified by their full name, date of birth, and identification documents.
- We conduct CPF checks via Brazil government data sources to verify and authenticate individuals’ identities.
• Providing a range of services to address various identity-related challenges in different industries. This includes age verification, password recovery, prevention of bonus abuse, detection and prevention of affiliate fraud, mitigation of account takeover risks, and identification of mule accounts. - The processing of personal data and sensitive personal data will follow the provisions of Law No. 13,709 of August 14, 2018 (General Data Protection Law – LGPD).
By implementing identity verification technologies like Facephi’s solutions, sector organizations and platforms protect themselves against identity fraud while ensuring their players enjoy a worry-free gaming experience, knowing that their personal information is protected and that they are participating in a secure and regulated environment.
The incorporation of identity verification technologies allows the sports betting market to comply with regulatory standards, promote responsible gaming, and provide players with the peace of mind of participating in a protected environment.
