Brazil’s Betting Market Advances Despite Challenges

Brazil’s much-anticipated legal betting market has seen significant progress since the government opened its licensing window in May 2024. With a deadline set for 20 August 2024, operators were tasked with ensuring they met the requirements for a launch slated for January 2025. However, while some companies have received provisional licences, challenges, including delays in system certifications and lengthy approval processes, continue to cast a shadow over the sector. Despite these hurdles, the regulatory framework is a pivotal step in tackling the country’s gambling black market and creating a safer environment for bettors.

The Road to Regulation

The road to fully regulated sports betting in Brazil has been anything but smooth. The licensing process, which began in May, was complicated by several delays in the country’s legislative procedures. These delays sparked criticism from both local and international stakeholders, creating uncertainty in a market that had previously been dominated by unregulated and illegal operators.

On 20 August, the deadline for operators to submit their applications for licensing passed, and only those companies that met the criteria by that date were granted provisional licences. As of now, these provisional licences are valid for 30 days but can be extended for an additional 30 days if operators secure support from certifying entities. However, companies are grappling with delays in the certification of their betting systems, an issue that could further complicate their paths to full operational status.

As of now, only a handful of companies have received provisional licences, paying a substantial BRL30 million (£3.9 million) licence fee. The full list of these operators includes names like SPRBT Interactive Brasil, BetBoom, and KTO, among others. Notably, some big names, such as PixBet, BetMotion, and SportsBet.io, are absent from the list. The latter announced the closure of its Brazil operations earlier this week, raising questions about the stability of some businesses in the market.

One significant aspect of the licences granted is the flexibility for certain operators. A2FBR Ltda received two licences, allowing them to operate up to six betting brands in Brazil, with each licence capable of supporting up to three different “skins” or brand variations. This could create a more competitive environment, with operators having multiple offerings under one umbrella.

The government’s push for regulation has been met with cautious optimism, with SPA (Secretariat of Prizes and Bets) chief Regis Dudena pointing to the importance of the market now being under full control. “We will start 2025 with strict and clear rules, in addition to mechanisms to demand their compliance,” he said, indicating that operators will now be held accountable for their actions.

Regulatory measures, outlined in 2024’s Normative Ordinances, include requirements for operators to use “.br” domain suffixes to distinguish licensed websites from illegal ones. Other measures, such as facial recognition for bettor registration and restrictions on monetary transfers to Central Bank-authorized accounts, aim to provide additional protections for Brazilian bettors. Betting with credit cards or cryptocurrencies remains prohibited under the new regulations.

A 12% tax on gross gaming revenue (GGR) will be levied on operators, with an effective tax rate that could rise to 36% when factoring in other contributions. Moreover, players will be taxed 15% on winnings exceeding BRL2,824, further regulating the financial landscape of the sector.

One of the primary goals of the regulatory framework is to curb the influence of the black market, which has long been a concern in Brazil’s gambling sector. The ANJL (National Association of Games and Lotteries) has praised the government’s move, claiming that transparency and compliance with the new rules will gradually push illegal operators out of the market, offering more protection to consumers.

“The measure is essential for the continuity of the operation of dozens of serious bets,” the ANJL said, emphasizing that the government’s decision to grant provisional licences was both “sensible and fair.” These licences allow companies to continue operations while working through the certification process, preventing a shift back to the unregulated market.

For operators like KTO, receiving a full licence is a significant milestone. CEO Andreas Bardun expressed excitement at the company's ability to offer a legally compliant, trustworthy experience to Brazilian bettors. However, the journey is far from over for many other companies, who must navigate ongoing certification delays and adapt to new tax burdens while maintaining customer satisfaction.

International players, like Caesars Sportsbook, are also making their moves in the market. Big Brazil, Caesars’ local arm, has secured a provisional licence and is poised to leverage the brand’s global presence to attract bettors. CEO André Feldman reiterated the company’s commitment to providing a safe, regulated experience to customers.

We will start 2025 with strict and clear rules, in addition to mechanisms to demand their compliance, operators will be held accountable.

Conclusion

Brazil's journey toward a fully regulated sports betting market is in full swing, with the government’s new framework aiming to balance consumer protection, market integrity, and tax revenues. While the provisional licences granted so far mark a promising start, the challenges operators face in meeting all certification requirements cannot be overlooked. If these obstacles can be overcome, Brazil’s regulated betting market could become one of the largest in the world, offering significant opportunities for both local and international operators. However, only time will tell if the regulatory measures will be enough to drive illegal activity out of the market and provide bettors with the safe, transparent environment they seek.