15 de May de 2024


Last week, the betting market in Brazil received relevant news, a breakthrough in the regulatory scenario with the entry into force of a Provisional Measure[i] that outlined the possible end of the state monopoly related to the so-called fixed-odds betting or “bets”. As a result, this article seeks to clarify, under the existing regulatory, what has changed and what are the impacts on the national market.

Betting in Brazil: Law 13.756 of 2018 allowed betting in the country, but until today this law has not been regulated by Congress, which has generated a gray area about what is allowed and prohibited, as well as an avalanche of bettors and betting sites based outside Brazil, in jurisdictions where betting is allowed such as Malta, Gibraltar, Isle of Man and Curaçao.

Thus, the site that actually offers the betting service, whether sports, casinos or any other form of gambling, are hosted outside Brazil, where the Brazilian jurisdiction “does not reach” and caot prohibit the operation of such sites.

The question is: But how can the Brazilian bettor get credits to bet, by PIX, boleto[ii], debit/credit card, if the betting site is based offshore? This is where the figure of payment facilitators or intermediaries arises. These Bank as a Service (Baas) service providers allow, through an account management platform, customer registration, payments, among other services already constituted by these service providers, the Brazilian customer to access, via API, the payment system linked to one or more offshore betting sites.

In this sense, the platform of these intermediaries in Brazil will support payments via PIX, boleto, TED, QR Code and, also eFX services (international payment or transfer services, respecting the limit stipulated by BCB[iii]).

In relation to eFX services, transfers may occur between the customer’s own accounts in the country and abroad and to third parties, provided that they are intended for current expenses and qualify as unilateral transfers. Thus, in the example in which the funds received from bettors in Brazilian reais are converted into foreign currency, through the enabling of eFX services, such funds will be remitted to the betting site based abroad for which the facilitator provides services.

It is important to note that this eFX activity is not illegal in Brazil, as it has no link with the betting activity effectively, the service provided is only to consolidate values in Brazil and enable the legal remittance abroad (BCB Resolution No. 277).

As a rule, the simple consolidation of payments in Brazil and remittance abroad does not need any regulatory license, but in view of the regulatory gray zone, it is very important that those who provide eFX service (or have in their portfolio) validate their operation with some specialist to avoid further problems.

However, it is worth remembering that if these intermediaries perform activities such as prepaid account management, custody or other financial services for their Brazilian clients or even exceed the limit set by the BCB per transaction or aual volume, they will need to obtain a license from the Central Bank of Brazil to operate as a Payment Institution. Generally speaking, Payment Institutions aim to provide buying and selling services and the movement of funds, within the scope of a payment arrangement, but without the possibility of granting other services such as loans and financing to their clients.

In this context, Payment Institutions enable the client to make payments regardless of relationships with traditional banks or other financial institutions.

New Provisional Measure 1.182/2023: This new Provisional Measure (MP) No. 1.182/2023, published on July 27, 2023 is only a first step towards the regulation of betting in Brazil, which will be done mainly by the Ministry of Finance and must be previously submitted to the National Sports Council and approved by act of the Minister of State for Sports.

In addition, it was made clear that one of the main goals of the MP is to stablish that the revenue generated by the tax arising from betting should be destined and respect the social objectives of each beneficiary entity. The TCU[iv] will be responsible for overseeing such funds.

Article 29 of the MP excluded from the initially mentioned law the term “exclusive”, that is, now private companies can also explore the commercial activities of betting called “fixed-odds bets”.

It is also established that the Ministry of Finance will be responsible to grant the licenses for the interested betting companies and should detail and regulate the MP and betting activities, within 02 years, establishing, among other relevant facts, how the proceeding and which requirements will be enforced before those companies who wish to obtain betting licenses.

Also, the Ministry of Finance will regulate how the marketing, advertising and awareness actions of the bettor should take place and the National Council for Advertising Self-Regulation – CONAR may establish restrictions and additional guidelines to the Ministry’s regulation, and issue specific recommendations for communication, advertising and marketing actions of the fixed-odds bets.

The MP prohibits the advertisement of betting companies that do not have authorization to operate in the country, and internet service providers may be ordered to block foreign betting sites that do not have the licenses to operate in Brazil.

Also, the Central Bank of Brazil will regulate payment arrangements in order to prevent such players from acting as facilitators for betting in companies that do not hold the licenses that will be required by the Ministry of Finance. It has already been established in the MP that if the eFX service provider offers a transactional account, it must obtain authorization from the Central Bank.

The MP also created a series of administrative infractions, of the most varied species and natures, which include the application of up to 2 billion Brazilian reais fines, the suspension of the company’s activities, the cancellation of licenses, the prohibition of obtaining a new license or participating in government bids, etc.

The MP also indicated the prohibition of certain persons as bettors, such as, for example, owner of the operating agent, public agent that relates to the regulation of betting, minors under eighteen years of age, persons with access to computerized betting lottery systems, persons involved or who may influence the outcome of the object of the bet such as referees, coaches, athletes etc. and persons registered in national credit protection registers as debtors.

Taxes for Betting Companies: The Brazilian market fought for a 12% tax and speculated that a 16% tax would be established in the MP. However, the government imposed a 18% tax, that will be calculated based on the GGR (Gaming Gross Revenue), that is, based on the amount bet in any of the modalities, excluding the value of the prize paid to the wiing bettors.

Taxes for Bettors: The MP does not detail how the tax of the bettors will be, but the Ministry of Finance has already positioned itself in the sense that the simple bet will not be taxed, only the gain that exceeds the exemption range of R$ 2,112.00.

Whoever wins above this amount, in theory, will be taxed at 30% of the gains. There is also no detail about the possibility of using the accumulated loss in other bets to reduce the gain.

Conclusion: The changes brought by the MP regarding the authorization and operation of betting companies in Brazil are only a kick-off for the complete regulation of fixed odds betting in the national territory and have no definitive date to effectively enter into force.

In fact, it is not even known if it will actually enter into force, since, as it is a Provisional Measure, the National Congress has a period of 120 days to vote and convert, or not, the MP into a definitive and permanent Law. If this deadline passes without a vote or if the vote is unfavorable to the conversion into Law, the MP loses its legal effects completely.

Even so, considering that the MP will be converted into Law, it will still be up to the Ministry of Finance to regulate the topic dealt with in the MP, which may occur within 02 years from now. It is important to inform that this regulation will raise several extremely controversial matters such as taxation of all involved in betting market (bettor, betting site, intermediary etc.), prevention of results manipulation and undue interference, prevention of money laundering, encouragement of conscious betting etc.

Therefore, it is unquestionable that the preliminary entry into force of the MP is a relevant, but still incipient advance, considering the importance of the betting market in Brazil and the scope of the activity in several areas of the national economy.

Victor Solla Pereira Silva Jorge is a lawyer, founding partner of Jorge Advogados Associados, graduated from FAAP, lecturer, professor on MBA in company at FGV on banking security and anti-corruption, postgraduate in Compliance by FGV, postgraduate in Economic Criminal Law by FGV, specialist in Compliance by Legal Ethics Compliance.

[i] A Provisional Measure is a legal act in Brazil through which the President can enact laws without the previous approval by the National Congress. There are two requirements for a provisional measure to be used: urgency and relevance of the matter to be regulated.[ii] Boleto is a collection instrument widely used in Brazil. In practice, it works as a document in which an amount is charged to a person, who can be either natural or legal, and must be paid to the issuer by the stipulated due date.[iii] Brazilian Central Bank[iv] The TCU is the external control body of the federal government and assists the National Congress in its duty is to monitor the country’s budgetary and financial execution and contribute to the improvement of Public Administration for the benefit of society.