SPA/MF publishes new regulations on fixed-odds betting operations in Brazil

From July 31 to August 01, 2024, the Secretariat of Prizes and Betting of the Ministry of Finance (“SPA/MF”) published five new ordinances regulating the fixed-odds betting sector in Brazil, which means all topics provided for in its Regulatory Agenda for 2024 have been regulated.

The list of key ordinances published is as follows:

Demarest’s multidisciplinary team has published client alerts on the ordinances published in early 2024.

Learn more about the five most recent ordinances.

1. Ordinance on online games and live game studios
2. Ordinance on the monitoring and supervision of the sector
3. Ordinance on the sanctioning regime
4. Ordinance on responsible gambling, communication, and marketing actions, as well as rights and duties of bettors and betting operators
5. Ordinance on social benefits

Ordinance on online games and live game studios

SPA/MF Ordinance No. 1,207, which establishes the technical requirements for online games and live game studios by betting operators of fixed-odds betting lotteries, enters into force from the date of its publication.

Certification of online games and live game studios

• In addition to complying with the technical and safety requirements established in SPA/MF Ordinance No. 722/2024, online game operators and live game studios must observe the technical requirements established in Ordinance No. 1,207/2024 and its annexes (Article 3).
• Online games must present, at the time of the bet, a multiplication factor for each unit of national currency placed that defines, in advance, the amount to be received by the bettor in the event of a win (Article 4).
  • Payment tables, which will cover all the bettor’s chances of winning, must be made available to the bettor before placing bets on the corresponding online game.
• Online games and live game studios must be certified by a certifying body whose operational capacity has been recognized by the SPA/MF (Article 5), and their operators must keep these certificates valid for the entire duration of the authorization granted by the SPA/MF for the operation of fixed-odds betting lotteries.
  • Certificates issued by the certifying entity for online games must be revalidated whenever critical components are included, changed, or deleted.
  • A valid online game certificate can be submitted, duly issued by certifying entities authorized by the SPA/MF, on behalf of the supplier or game developer with whom the betting operator has a service contract, in compliance with the provisions of Ordinance No. 1,207/2024.
    • If the betting operator uses a technological solution other than its own betting systems, it must have and submit a certificate of integration for all its platforms.
• Betting operators of live game studios must submit an evaluation report of the technical requirements within 90 days of the approval of their authorization to operate fixed-odds betting lotteries.
• Data, information, and documents relating to online games and live game studios must remain available to the SPA/MF for a minimum period of five years.

Technical requirements for online game certifications

• Ordinance No. 1,207/2024 replicates the definition of online games provided for in Law No. 14,790/2023, establishing that this is the “electronic channel that enables virtual betting on a game in which the outcome is determined by the result of a random future event, based on a random generator of numbers, symbols, figures or objects provided for in the rules system” (Article 2, II).
• Ordinance No. 1,207/2024 establishes the technical requirements regarding: (i) the interface of online games; (ii) online games sessions; (iii) advertising live online games; (iv) information and rules on games, including online games allowing for multiple bets, crash, cards, roulettes, sports or racing, drawing balls and numbers, and blackjack; (v) evaluation of the outcome of the game by means of a random number generator; (vi) game reliability; and (vii) payment percentages, probabilities and prizes.
  • The interface and instructions for using the bettor’s interaction device, the payment table information, and the rules of the games must be complete and unambiguous. They must not be misleading or unfair to the bettor.
  • Each game must, theoretically, have a minimum return to player (RTP) of 85% during its expected lifetime. Accrued, progressive, incremental, and incentive prizes must not be included in the payment percentage if they are external to the game, unless required for the operation.
  • As a rule, the probability of winning the highest prize announced, whenever based exclusively on randomness, must happen at least once in a hundred million play sessions unless the graphic art highlights otherwise.

Technical requirements for live game studio certifications

• For Ordinance No. 1,207/2024, a live game studio is the “physical environment that uses live video streaming technology to provide live online games to a remote gaming device integrated into the betting system allowing for bettors to take part in live games and interact with game assistants” (art. 2, III).
• Among other provisions, Ordinance No. 1,207/2024 establishes the following requirements: (i) security, supervision, and recording of live game studios; (ii) installation, operation, and use of gaming equipment; and (iii) the procedures for live online games.
  • Live game studios must have a pre-defined location and adequate physical security controls. Appropriate entry controls and security procedures must protect safe areas, consumables, and live online gaming equipment to ensure access to authorized members only.
  • The live online gaming provider must install, maintain, and operate a surveillance system capable of monitoring and recording clear and continuous views of all live games.
  • Live gaming procedures must at least allow for an adequate response to any security issue in live online gaming services as well as prevent tampering or interference with the operation of any live online game or gaming equipment.
  • Live online gaming equipment and procedures must be reviewed annually.

Limitations on betting offers involving online games

• Online betting cannot be provided in physical facilities through equipment or other means (Article 9).
• The following are not considered fixed-odds online games and, for this reason, cannot be provided on websites and betting applications authorized by the Ministry of Finance (Article 3, sole paragraph):
  • Skill-based games: “A game category in which the outcome is determined mainly or chiefly by mental or motor skills of participants, such as dexterity, skill, intelligence, training and mastery of knowledge, even if non-prevalent random events are involved” (Article 2, VIII);
  • Fantasy sport: the “electronic sport in which disputes occur within a virtual environment, based on the performance of real people, in which: a) virtual teams are formed by at least two real people, whose performance depends primarily on knowledge, statistical analysis, strategy, and skills of fantasy sports players; b) the rules are pre-established; c) the guaranteed value of the prize does not depend on the number of participants or the volume collected from the collection of the registration fees; d) the outcome does not arise from the result or isolated activity of a single person in a real competition”, as provided for in Law No 14,790/2023 (Article 2, VII);
  • Multi-bettor games: “Games in which the actions of the bettor or outcome obtained are influenced by the result or action of any other bettor” (Article 2, VI); and
  • Games between peer-to-peer bettors (P2P): “Games in which the betting operator does not engage in the game offer, providing the facilities for bettors and charging a commission fee on the winning bet or from bettors” (Article 2, IX).

Ordinance on the monitoring and supervision of the sector

SPA/MF Ordinance No. 1,225 – regulating the monitoring and inspection of operations involving fixed-odds betting lotteries and betting operators – enters into force on the date of its publication, however, they will only be applied as of January 01, 2025.

Here are the key highlights:

Monitoring

• The SPA/MF monitors and supervises fixed-odds betting operations across Brazil, which will be an ongoing and systematic activity.
• The SPA/MF can collaborate with other public bodies to ensure compliance with legal and regulatory standards.
• They also apply to individuals or legal entities not authorized by the SPA/MF to operate in the fixed-odds betting market.
• It will be separated into conduct, which will align with the rules regulating betting activities and operators, and prudential, which will evaluate the efficacy and effectiveness of betting operators in identifying, evaluating, and managing risks, thus ensuring timely intervention, as necessary.
• The SPA/MF can request documents during monitoring and supervision at any time, which must be officialized through a letter. The deadline to meet the request is up to ten days from receipt of the letter.
• The SPA/MF can access data and information, clarifications, technical, operational, economic-financial and accounting information, documents, certifications, certificates, and betting operator reports.

Supervision

• Supervision can be carried out in three ways:
  1. Scheduled: Planned by the SPA/MF, based on evidence and risk management.
  2. By a letter: Initiated by the SPA/MF or by formal communication to the public administration.
  3. By judicial determination: Whenever it is requested by a court.

• All supervisory actions must be recorded in the Electronic Information System (“SEI”), according to the applicable legal events.
• Supervision can last as necessary to clarify the facts, observing the provisions of Law No. 9,873 of November 23, 1999.
• Denying or hindering access to data and information systems, not displaying or not providing documents, papers, and bookkeeping records within the established deadlines and form will be considered a hindrance to supervision.

Inspection

• Inspection can be carried out remotely, with remote access to the systems and data of the operator (in addition to interviews, meetings, supervision, and other forms of remote contact, such as videoconferences), or in-person, with on-site examination of the resources used by the operator. It will focus on specific aspects of betting activities and operators, and it will be able to detect failures and ensure compliance with legal and regulatory standards.
• The operator’s partners are subject to remote inspection.
• Remote inspection must observe information security management practices, ensuring the continuity of services, availability, timeliness, consistency, integrity, confidentiality, and authenticity of the data. The operator must be informed about the procedure and the traceability of the information accessed.
• All inspection activities will be recorded in a form executed by the inspection team and the supervised party.

Supervisory reports

• At the end of each inspection, the SPA/MF will publish a report detailing the actions, circumstances verified, results obtained, analyses and proposed directions. The report can result in archiving, imposing preventive or corrective measures, or filing sanctioning administrative proceedings.

Coercive and precautionary measures

• Coercive and precautionary measures, such as temporary instrument deactivation, suspension of prize payments, and collection of tickets issued, can be applied cautiously.
• In cases of suspected manipulation of results, the SPA/MF can determine: The immediate suspension of bets and withholding of prize payments; suspension or prohibition of bets on specific events; and other restrictive measures to prevent or mitigate the consequences of practices that violate sport integrity.

Introduction of sanctioning administrative proceedings

• The Sub-secretariat must file a sanctioning administrative proceeding whenever it finds evidence of an administrative infringement.
• The process must:
  1. Be registered on SEI; and
  2. Observe the method established in a specific regulation.

Ordinance on the sanctioning regime

SPA/MF Ordinance No. 1,233, which regulates the sanctioning regime in the commercial operation of fixed-odds betting lotteries, enters into force on the date of its publication, but the regulations will only be effective as of January 01, 2025.

Here are the key highlights:

Administrative proceedings

• The sanctioning administrative proceeding will be carried out by the Subsecretariat of Monitoring and Supervision and, after analysis, forwarded to the Subsecretariat of Sanctioning Action to seek a decision.
• The defense must be submitted by the interested party or by a representative duly constituted within 30 days from notification.
• The administrative decision must determine the application of an administrative sanction or the filing of the proceeding.

Remedies

• Administrative remedies will not cease to be applied even if the offender corrects the error or claims to be unaware of the legal provisions. The current regulation will be applied from the day of the last infringement or the day on which the infringement ceased.
• Warnings will be applied based on a first offense, and if this does not result in a settlement, fines will be applied. One or more natural or legal persons can be held responsible for the same infringement, either separately or jointly.
• Precautionary measures can be applied before or during the administrative sanctioning proceeding, such as disabling equipment, suspending prize payments, and collecting tickets issued. Failure to comply with precautionary measures subjects the offender to the payment of a daily fine, which ranges from BRL 10,000.00 to BRL 200,000.00, depending on the severity of the conduct and the results from non-compliance.
• In cases of suspected match-fixing, the SPA/MF can suspend bets and withhold prize payments.
• Decisions that impose fines will be summoned for payment within 30 days and, if not settled, will be submitted to the Federal Government. Appeal proceedings do not prevent the enforcement of remedies with no suspensive effect.
• A repeated infringement occurs when the operator perpetrates two or more violations of the same kind under similar conditions of time, place, and execution, and they are considered to be a continuation of the first for applying the remedies. In this case, the remedy for only one infringement will apply – if they are identical – or else, the remedy for the most severe infringement perpetrated will apply, accrued by up to 50%.
• The deadline for compliance with the remedy will be counted from the date the decision takes effect and can be adjusted depending on the appeal status.
• The SPA/MF can sign terms of commitment with interested parties to cease harmful practices, correct errors and compensate damages, suspending or not filing administrative proceedings.

Ordinance on responsible gambling, communication, and marketing actions, as well as rights and duties of bettors and betting operators

SPA/MF Ordinance No. 1,231, which enters into force from the date of its publication, establishes the rules and guidelines for responsible gambling and for the actions involving communication, publicity, advertising, and marketing. It further regulates the rights and duties of bettors and betting operators to be observed in the commercial operation of fixed-odds betting lotteries.

Regulations and guidelines on responsible gambling

• For Ordinance No. 1,231/2024, responsible gambling is “the set of rules, practices and activities aimed, within the context of the fixed-odds betting lotteries, to guarantee: a) economic exploitation, promotion, healthy and socially responsible advertising of this betting category; and b) prevention and mitigation of individual or collective harm resulting from this activity” (Article 2, I).
  • Policies for preventing and mitigating individual or collective harm from such activity must address: (i) the negative consequences to bettors’ mental health due to dependence, compulsion, mania, or any disorder associated with gambling or betting; and (ii) violations of consumers’ rights, especially associated with financial problems, indebtedness, and over-indebtedness.

• For implementing responsible gambling, betting operators must: (i) act diligently in structuring their betting systems and all marketing actions; (ii) raise awareness of the risks of dependence, pathological gambling disorders, and the prohibition of gambling by children and adolescents; (iii) maintain systematic communication with registered bettors; and (iv) develop a responsible gambling policy to ensure that it reliably mirrors the actual functioning of their betting systems (Article 3).
  • The above-mentioned responsible gambling policy must at least provide for: (i) a communication policy with bettors on responsible gambling; and (ii) analytical tools as well as a data classification and analysis methodology to track and evaluate betting dependency risk profiles and other problems associated with game playing (Article 5).

• Among other obligations, betting system operators must: (i) inform the theoretical return to the players of each online game available in the betting system; and (ii) provide, in a clear and accessible manner, a specific “responsible gambling” section in the betting system (Article 4).
  • It is prohibited to use, in betting systems, devices that hinder bettors’ free and informed option through any of the mechanisms provided for in the corresponding regulation.
• In the case of the bettor’s self-exclusion, the betting operator can adopt a deadline of more than 24 hours, according to their responsible gambling policy, to accept the necessary first-time registration if the bettor attempts to re-include it.
• In order to contribute to the permanent regulatory improvement regarding responsible gambling, betting operators must: (i) assess the possibility of obtaining a responsible gambling certification issued by a body that provides a certification on this subject; and (ii) act cautiously and permanently to evaluate the impact of the mechanism on dependence, pathological gambling disorders and other problems associated with gambling (Article 7).

Communication, publicity, advertising, and marketing actions

• Ordinance No. 1,231/2024 provides for: (i) the guidelines and regulations on communication, publicity, advertising, and marketing actions; (ii) sponsorship; (iii) the opt-out procedure for advertising and irregular sponsorship; (iv) the ban on the offer of applications or advertisement of unauthorized operators; and (v) the advertising actions of affiliates to operators.
• The communication, publicity, advertising, and marketing actions of fixed-odds betting lotteries must be based on social responsibility and responsible gambling awareness, aiming at collective security and the fight against illegal betting (Article 10).
• Among other rules, communication, publicity, advertising, and marketing actions must:
  • refrain from displaying any advertising of unauthorized betting categories and comply with the regulations on responsible gambling (Article 11);
  • display an age restriction warning clause as well as the associated risks of dependence and pathological gambling disorders (Articles 13 and 14);
  • be able to be identified as such by the bettor (Article 15); and
  • submit the SPA/MF administrative order number authorizing the commercial operation of the fixed-odds betting lottery by the betting operator.
• Conversely, communication, publicity, advertising, and marketing actions cannot (Article 12), among other factors:
  • suggest easy gain or associate the idea of success or extraordinary skills with betting;
  • advertise bets as socially appealing or include quotes from well-known people or celebrities implying that gambling contributes to personal, social, or financial success.
  • be directed at children or adolescents or have these groups as the target audience; and
  • be served by individuals or legal entities operating fixed-odds betting without authorization issued by the SPA/MF (Article 16).
• The betting operator must integrate or be associated with a responsible advertising monitoring body (Article 16).
• When the betting operator is a sponsor, they must identify themselves as such in sponsored actions and refrain from:
  1. sponsoring children or adolescents;
  2. seeking to influence or encourage children or adolescents to bet;
  3. sponsoring events mainly directed to children or adolescents;
  4. sponsoring youth or children’s teams (Article 17); and
  5. including their logo in products and goods for sale to children under 18.

• • • For Ordinance No. 1,231/2024, a sponsorship is any “communication that occurs through the acquisition of the right to associate the sponsor’s brand or products and services with a third-party initiative project, through the execution of an onerous contract”.
• Only betting operators with the authorization granted by the SPA/MF can advertise their brands through publicity or sponsorship to the national sports team in events with national coverage (Article 18).
  • Betting operators with authorization granted by the States and the Federal District can advertise or sponsor the national sports team, provided such advertising or sponsorship is restricted to people physically located within their jurisdictions or those residing within their territorial boundaries.
• For actions in non-compliance with the provisions of Ordinance No. 1,231/2024, the SPA/MF will notify the operator and, if applicable, the provider of internet applications within the scope and limits of its service, clearly and specifically pointing out the infringing content for cancellation, removal, or unavailability.
• The electronic channels the operator uses to provide fixed-odds bets by virtual means must exclusively use the following domain registration “bet.br” (Article 20, § 1).
• Betting operators are jointly and severally responsible for all communication, publicity, advertising, and marketing actions by affiliates that form the betting operator’s actions (Articles 21 and 22).

Bettors’ rights and duties

• Among other rights, bettors can: (i) bet freely, without coercion, and safely and responsibly; (ii) express their will explicitly regarding the processing of personal data by the betting operator at the time of registration of their account; and (iii) withdraw their available financial balance held in the transactional account – duly registered in the graphic account –, without restrictions by betting operators.
• In addition to other duties, bettors must: (i) identify themselves before betting operators using reliable data; (ii) use their graphic account for the sole purpose of placing bets; (iii) inform betting operators if they are not eligible to place bets, in compliance with Article 26 of Law No. 14,790/2023; and (iv) not work as a betting intermediary – placing third-party bets as if they were their own (Articles 24 and 25).

Rights and duties of betting operators

• Among other rights, managers of betting operators can: (i) refuse, restrict or limit bets while seeking to ensure compliance with the current legal and regulatory provisions; (ii) change, at any time, fixed-odds betting attached to any sporting event or online game; and (iii) provide promotions, rewards, or loyalty programs to bettors (Articles 26, 27 and 42).
• In addition to other duties, betting operators must: (i) ensure bettors’ rights; (ii) provide bettors with secure means for placing, maintaining and checking bets as well as receiving prizes; (iii ) pay out any prizes due to bettors, without charging any withdrawal fees; (iv) join or become a member of a national or foreign body for monitoring sports integrity; (v) hold a database, which will gather all bettors’ records, in compliance with Law No. 13,709/ 2018 (General Law on Personal Data Protection); and (vi) develop and maintain the Terms and Conditions for using the website or application as well as the Privacy Policy (Articles 28, 29, 46 and 48).

Key regulations on personal data protection

• The registration of platform’s users or bettors must include the following information: (i) full name; (ii) nationality; (iii) Natural Persons Register (“CPF”) number; (iv) date of birth; (v) full address, which cannot be a mailbox; (vi) country of residence; (vii) telephone number; (viii) e-mail address; (ix) data from registered prepaid payment or deposit accounts; (x) IP address registered (at the time of registration); and (xi) a digitalized copy of a valid photo ID (Article 31). Bettors can only place fixed-odds bets once the registration process has been completed.
  • The CPF number cannot be changed after the bettor has subscribed, and transferring the registration to multiple bettors is forbidden.
  • The e-mail address and telephone number indicated must allow direct and effective contact between the betting operator and the bettor. They must also be verified by the betting operator and validated by the bettor.
  • Scanned copies of the following bettor identification documents will be accepted: (i) natural persons register; (ii) national identification card (“RG”) ; (iii) national driver’s license (“CNH”); or (iv) passport.
  • For bettors’ authentication, the following data must be registered: (i) face recognition, with a certificate of life; and (ii) alphanumeric password including special characters. Registration can be offered, subject to bettors’ consent: (i) other forms of biometrics, other than facial recognition; and (ii) token.
  • In order to verify the validity of bettors’ identity, confirmation is mandatory through the communication channels informed in the user’s registration, such as: (i) e-mail; (ii) short message service (SMS); or (iii) messaging applications.
• Betting operators must keep a database, which will gather all the bettors’ records. If information is changed in the bettor’s registration, the replaced information must be kept, including the IP address of each registration change (Article 32).
  • Betting operators’ procedures involving personal data must comply with the provisions of the General Law on Personal Data Protection.
• Every bettor can have a single registration associated with each betting operator’s trademark. Bettors’ data, upon their express consent, can be used by betting operators in all licensed trademarks for registration purposes, in compliance with the provisions of the General Law on Personal Data Protection regarding processing Personal Data (Article 33).
• Betting operators are prohibited from disclosing their other trademarks during bettors’ registration, as provided in the Consumer Protection Code.
• Betting operators will make individualized graphic accounts available in their betting systems for each of their authorized trademarks, enabling bettors to manage their operations and financial resources.
• Betting operators must require bettors to update or validate the registration data annually (Article 34).
  • If bettors do not update or validate their registrations when requested, betting operators must suspend their account use until the update or validation is carried out.
• Betting operators must have mechanisms to detect misuse of the account by third parties, including analyzing sudden changes in bettors’ behavior (Article 38).
• Betting operators must comply with the requests of competent public officials regarding access to registration data of bettors and other users of the betting system, in compliance with the legislation in force (Article 39).
• Betting operators must hold the data and information confidential to which they have access while operating in the fixed-odds betting market, in compliance with the corresponding legislation, as well as provide training to their employees regarding ensuring confidentiality (Article 40).
• Betting operators and their employees will respond jointly and severally in cases of violation of confidentiality, as provided for in the main section, in compliance with Article 42 of the General Law on Personal Data Protection, in relation to personal data (Article 40, § 2).

Ordinance on social benefits

SPA/MF Ordinance No. 1,212, of July 30, 2024, regulates the procedures for transferring revenues obtained from the operation of fixed-odds betting lotteries. According to this ordinance, transfers to the National Treasury’s single account must be made through the Document for the Collection of Federal Revenues (“DARF”). For this purpose, specific revenue codes are established: One for transfers intended for Social Security and the Ministry of Health, and another for other transfers. We await new ordinances in order to regulate the payment of remaining social benefits.

Betting operators are responsible for correctly completing the DARF. If transfers are not carried out in compliance with the ordinance, operators can be held liable in a civil, administrative, and criminal manner. Transfers must observe the general principles of public administration and will be monitored through monthly reports submitted to the SPA/MF. However, the form and content of these reports have yet to be regulated. In addition, betting operators must keep the supporting documentation of the transfers for five years.

The ordinance in question covers all fixed-odds betting categories, whether virtual or physical, relating to real sports-themed or virtual events of online games. The ordinance comes into force on the date of its publication and becomes effective from January 01, 2025.

Demarest’s multidisciplinary team remains available to provide any additional information and clarifications as may be necessary.