Betting becomes legal in Brazil, accepting only digital and real-time payments

Since December 2023, Brazil's betting industry has started operating in a complex regulatory environment, according to Project of Law 14.790.

The Ministry of Economy proposes to oversee all gambling activities. The main priorities of this Federal project for regulation are implementing governance frameworks to ensure fairness, security, and accountability, while also enacting anti-fraud regulations. Brazil is not only the largest, but the biggest non-regulated market in the World. This is about to change, and you can know more about the details envolved in this arrengement below.
First of all, the companies and operators who will be most affected by the new regiment are:

✅ Virtual betting operators; ✅ Physical betting operators; ✅ Real sports events betting operators; ✅ Sports-related virtual events operators.

Becoming Legal: how much will it cost?

Consumers will have 15% of the prize amount held, and Operators will have 12% of their stated revenue converted into taxes. Most of the revenue earned by the Brazilian government will be reinvested into sports (36%) and tourism (28%), followed by public safety (12$), social security and education (10% each). It's important to state that consumer taxes will incide only over 2.122 BRL cashouts. Overall, the government estimates to earn from 6 to 12 Billion BRL in taxes, every year.

The Brazilian Gaming License is estimated to be costing 30 million BRL (approximately USD 6 million) to operate within the country for 5 years. Bets can have up to 3 different brands operating under the same license.

If you wish to know further details on how to make your betting operation legal, contact our team.

All operators interested in coming or staying within Brazilian markets must become a part of Brazilian industry as well - companies cannot operate virtually using a Curaçao licensing like normally used to. Therefore, the Ministry of Finance has stated some rules for this new regulatory:

✅ Having at least 20% os the company registered in Brazil; ✅ One company team member must attend the Regulatory Group; ✅ Respect all the technical requirements according to Brazilian LGPD (Lei Geral de Proteção de Dados); ✅ Prevent Money laundering and anti-terrorism financing policies; ✅ Promote responsible gambling; ✅ Secure betting integrity; ✅ Connect to Payment Institutions authorized by the Central Bank; ✅ Monitoring of users' transactions.

When can this change be expected to happen?

The Deputy Secretary of Prizes and Bets of the Ministry of Finance (SPA-MF), Simone Vicentini, who signs the regulations, has established the Regulatory Agenda that are classified into phases, in order of priorities to be stated. The phases are set to be completed until December 31st, and they are:

I – Payment Methods, Betting Systems and Authorization; II – Money Laundering and other crimes and Rights and Obligations; III – Online Gaming, Inspection and Sanctioning Action; IV – To be discussed: Responsible Gaming and Social Destinations for Taxes.

How are Payments affected by the regulation?

In mid April 2024, the discussion has been finished over Payment Methods and Authorizations, as can be found here. Therefore, as soon as the Regulation begins, all betting merchants must be connected to a Payments Institution authorized by the Central Bank of Brazil, which will be regularly monitored by the Federal organs. Thankfully, companies wishing to operate within the law can count on Trio to be this partner.

According to the latest appendix to the law dedicated to Payments (linked above), casualties such as accepting cash with gambling purposes will be strictly forbidden. This may seem absurd in some countries, but it happens mainly to ensure AML policies, and it can only happen because of Pix's popularity. As you know, Pix is a payments system created by the Central Bank and available to all Brazilian citizens.

The Pix will play a major role in this change

Studies indicate that deposits made through Pix lead the sports betting segment and are expected to generate 62 billion BRL by the end of 2024.

The reason is simple: for betting companies, immediate receipt of the deposit made by the customer. For those who guess correctly, the bet prize will be added to your account in seconds. Collecting with the Pix makes everything possible:

✅ Agility in receiving the bet (top-up); ✅ Ease of sending the prize (cashout); ✅ Instant and rich transaction receipt; ✅ Availability 24/7, especially during weekend playoffs; ✅ Protection of sensitive customer data.

And the best part is: you can have it integrated to your system in one week.

Pix over Credit Cards and Crypto

According to the same resolution, all sorts of bets can only be placed via Pix, direct wire (TED), debit or prepaid cards. To match player and top-up deposit, the bettor will be needing an account registered on the platform of betting website. The rule determines that bettors can transfer resources to place bets just as long as it comes from their registered account within the betting website.

Financial contributions will not be accepted through cash, payment slips, crypto-assets or any other alternative form of deposit that may make it difficult to identify the origin of the funds. Credit cards or any other post-paid instruments will also not be accepted, as a prudential measure to discourage Brazilian families from getting into debt. Betting with cryptocurrencies will also be forbidden, since crypto market cannot be audited by government security.

So mainly, operators will depend on offering the fastest, safest Pix connection, or their own branded wallets, for client retention.

Essential add-ons to Payments

Some other compliance policies can and will be added to the process of creating a registered account and commanding pay-ins and payouts. In this KYC process, that can be expanded to the payment arrangement, details will matter. Some possibly illegal transactions can't possibly happen, therefore protecting both operators and customers should be the main priority of payment providers.Knowing this, will be crucial to be plugging add-ons to payments, such as Biometric or Facial recognition, blocklisting for Publicly Exposed Person, elders and people under 18 and sports team's board members, and proof of Liveness.

All of these features are offered as a single product by Trio. Know more.

Find out how Advanced Compliance added to the best real-time payments provider built for the gambling market can get you ahead of the game here.

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