Find out more about the main innovations within the scope of public and regulatory law
On December 30, 2023, Law No. 14,790 was published to provide for fixed-odds sports betting (“sports betting”) in Brazil, and amend the current legislation on the matter.
Currently, Normative Ordinance No. 1,330/2023 provides for specific requirements from establishments that provide these services, but it will likely be updated by the Ministry of Finance given that it was published before Law No. 14,790.
As such, we have highlighted the main innovations of the new law within the scope of public and regulatory law:
Operating system and authorization procedure
Sports betting providers must operate in a competitive environment and obtain prior authorization from the Ministry of Finance, upon payment of a maximum grant at BRL 30 million, which authorizes the legal entity to use three trademarks for up to five years.
The authorization will be processed only by the Ministry of Finance, which will also establish conditions and deadlines of at least six months for legal entities that are already operating in sports betting to obtain authorization.
The new law does not provide for priority in the analysis of applications, however, we highlight that Normative Ordinance No. 1.330/2023 does provide for prioritizing authorization requests from companies that had previously expressed interest in operating sports betting in Brazil.
Minimum operation requirements
The main sports betting operation requirements are:
• Organized legal entity under Brazilian legislation, domiciled and managed in Brazil.
• Having a Brazilian partner that holds at least 20% of the legal entity’s capital.
• That controlling shareholders or partners cannot hold direct or indirect interest in:
o Football corporations (SAFs), professional sports organizations, or serve as manager of a Brazilian sports team; and
o Financial and payment institutions thar process fixed-odds betting.
• Implementing mandatory corporate policies to assist bettors, prevent violations, and encouraging responsibility and integrity in betting.
Further requirements will likely be established by the Ministry of Finance to provide for capital payment, previous experience, requirements regarding management positions in interested legal entities, among other topics.
Betting services and placing bets
Betting services can be provided online or in person, depending on the authorization issued by the Ministry of Finance. Regarding publicity and advertising, betting companies must not:
• Advertise a brand, symbol or denomination of legal entities or individuals (or the electronic/digital channels they use) that do not hold the authorization required by this law.
• Publicizing false information on winning odds or potential earnings for bettors.
• Advertise betting as socially appealing or include quotes from well-known people or celebrities which imply that betting contributes to personal or social success.
• Imply in any way that betting can replace employment, solve financial problems, earn additional income, or serve as a financial investment.
• Offend Brazilian cultural beliefs or traditions, particularly those that are opposed to betting.
• Advertise betting in schools and universities or to minors.
In addition, the company must implement security and integrity mechanisms to operate sports betting services to prevent results fraud and tampering.
Persons that cannot bet
Direct or indirect participation (including through intermediate parties) in betting is banned for:
• Children under 18 years old;
• Government agents that work directly with the regulation, control, and supervision of sports betting within the scope of the federal entity where they work;
• Persons diagnosed with ludomania (gambling addiction) – Requires medical report by a certified mental healthcare provider.
This ban extends to spouses, partners, and relatives (parents, grandparents, children, grandchildren, and siblings) in the following events:
• Owner, administrator, director, person with significant influence, manager, or employee of the betting operator;
• Person who has or might obtain access to the relevant computerized fixed-odds betting systems;
• Person who has or might have any influence on the actual result of a real sports-themed event that has been the subject of a fixed-odds betting event, including:
o Sports manager, coach, trainer, referee, referee assistant, or equivalent, sports entrepreneur, athletes/coaches’ agent or scout, or coach/member of a technical committee.
o Member of an administrative or supervisory body of an entity that manages a competition or sports event.
o Athletes participating in competitions organized by entities that are part of the National System of Sports and Leisure.
Penalties
Legal entities or individuals that violate the new law are subject to the following penalties:
• Warning;
• Fine:
o Legal entity: fine of 0.1% to 20% on proceeds after taxes, regarding the most recent fiscal year prior to the filing of a sanctioning proceeding. The fine must never be lower than the proceeds, if this amount can be defined, nor exceed BRL 2 billion per violation.
o Individuals or legal entities governed by public/private law and any de facto or de jurecorporations: fine ranging from BRL 50,000 to BRL 2 billion per violation.
• Partial or full suspension of operation for up to 180 days;
• Annulment of the authorization, termination of the concession or permit, cancellation of registration, revocation of accreditation or similar release from an obligation;
• Ban on obtaining new authorization, grant, permit, accreditation, registration, or waiver for up to ten years;
• Ban on certain activities or types of operation for up to ten years;
• Ban from bidding in public procurement proceedings with the federal government, directly or indirectly, for at least five years;
• Suspension from serving in a management, administrative or government position provided for in the articles of incorporation of a legal entity that provides any type of lottery, sweepstakes, betting or wagering services, for up to 20 years.
The Ministry of Finance is expected to provide for requirements and conditions to grant the authorization in a specific regulation, while additional requirements can be included in the future.
Demarest’s Public and Regulatory Law team is monitoring the updates of the sector and remains available to provide any further clarifications.
