The regulation was initiated by the federal government through a provisional measure in July and was discussed in the National Congress through a bill. This text complements two other pieces of legislation related to the same subject.
The Provisional Measure (PM), in effect since its publication, must be approved by the legislative branch by November 21. The Executive’s provisional measure led to a bill that has already been approved by the Chamber of Deputies and is currently under consideration by the Senators.
“It’s a significant number and a positive message that the betting industry needs to convey to society: with regulation, not only will taxes be collected, but there will also be job creation and income generation in the country,” explains Gomes, who is a partner at Ambiel Advogados.
Expert in gaming law, Fabiano Jantalia agrees with his colleague’s assessment and adds further requirements for serving bettors.
“The text stipulates that only operators who provide fixed-odds betting services and offer customer support in the Portuguese language through a toll-free channel, operating 24/7 to both address inquiries and resolve issues related to bets, can be authorized,” he stated.
Furthermore, betting establishments will need to register on the Consumidor.Gov platform, a public and free service provided by the Ministry of Justice and Public Security that enables direct communication between consumers and companies for alternative dispute resolution.
Public coffers
With the regulation of this topic, the federal government expects to collect up to R$ 15 billion (US$ 3.05bn) in taxes. This funding is crucial for meeting the fiscal targets planned by the economic team. According to Gomes, the ordinance, as well as the Provisional Measure (PM) and the Bill, is “excellent news.”
“It already clarifies a series of technical and, above all, legal criteria that must be adhered to by companies interested in operating in Brazil. Considering that a significant portion of the operators in this market consists of foreign companies, this will allow them to organize themselves in advance to meet bureaucratic requirements,” he evaluates.
For the expert, another positive aspect of the ordinance is the expression of interest: “It’s not binding, but it ensures that companies submitting the document by November 28 will have priority in the processing of license requests by the Ministry of Finance.”
“The measure is interesting because it will give the government a good idea of the actual interest in the market, and assuming there is a considerable number of interested parties, I believe this could serve as an additional incentive for the Chamber to quickly vote on any changes proposed by the Senate in the bill regarding the regulation of sports betting,” Gomes concludes.
International certification
Fabiano Jantalia, founding partner of Jantalia Advogados, adds that the platforms will have to comply with technical rules from the Ministry of Finance and will need to be certified by international laboratories.
Concerns about the reputation of operators are also emphasized in the ordinance. Foreign companies that have had their authorizations revoked or canceled by another jurisdiction in the last five years will not receive authorization from the federal government.
“These rules are important because they establish a kind of quality filter at the market’s entrance and are similar to a trend in the international market. In the European Union, for example, there is great concern about the cross-border activities of betting companies,” says Jantalia.
“Thus, there has been a strong movement of cooperation among regulators to prevent what is known as regulatory arbitrage, where an entity migrates from stricter countries to less strict ones. By taking this step, Brazil clearly signals that it does not want to be a marginal market but rather a globally respected one,” highlights the lawyer, who also mentions “market interest mapping.”
“Even so that the government can gauge the size of the structure that will be supervised, the number of agents, and who these agents will initially be. I think [the ordinance] is very interesting and allows the government to have a comprehensive view and better prepare for the opening market,” he adds.
Predictability
According to Jantalia, the ordinance provides more security for those involved by defining the guiding aspects of market opening. “And, most importantly, it already presents the general outlines of the solutions that the government intends to adopt for the main concerns of parliamentarians and society. This act is just the initial step in the regulation of betting, as the ordinance itself makes several references to specific acts that will be issued by the Ministry of Finance,” he says.
The federal government has chosen to regulate the sector in stages. “From a regulatory perspective, this is good because, while announcing the general conditions to the market, the Executive paves the way for the gradual development of a consistent and well-thought-out regulatory framework. I believe it was a good choice,” he praises.
Provisional measure, ordinance, and bill
Jantalia explains why there are currently three sets of regulations on this matter. According to the lawyer, the provisional measure from July was issued in conjunction with a political agreement made by the Ministry of Finance with the government’s base in the Chamber of Deputies to unfold the topic in two stages.
“However, during the Chamber’s deliberations, the parliamentarians decided to set aside the provisional measure and prioritize the bill. In this way, almost all the rules in the provisional measure were incorporated into the bill,” he highlights.
According to the expert, the bill establishes the breakdown of the subject into sublegal acts by the Ministry of Finance. Hence, the publication of the ordinance on October 27, the first of a dozen that are expected to be presented.
“Expect around eight to ten different ordinances because the Ministry of Finance has wisely, in my opinion, established a layered regulatory technique. So, instead of issuing a single ordinance that covers all the subjects, the ministry decided to address them separately—probably one ordinance on money laundering, one on responsible gaming, one on advertising,” explains Jantalia.
Source: R7
Translation source: GMB
