“[ This is ] an absolute victory for the whole industry . It was something that we were fighting for over the last 15 years ”
“ It was only natural that igaming be reincluded into the bill , to the extent that most of the revenues for operators come from igaming rather than from fixed-odds sports betting ”
period will reflect the licensing framework that was provided back in October . More than 130 operators have submitted their expressions of interest , with early applicants promised priority in the queue once this process begins .
Along with that , we ’ ll also need to better clarify the conflicting timelines for enforcement to deter offshore operators . This will require Internet Service Providers ( ISPs ), advertisers , payments and technology providers to block unlicensed sites .
Regulation will also need locally approved payment options aimed at curbing offshore and crypto-based wagering . Only institutions authorised by the Brazilian Central Bank will be permitted to provide payment services – which again , requires clarity from the ministry of finance . It is also expected that customers will still be limited to transferring money from their betting account solely to a bank account located in Brazil .
PIX is by far the most popular medium used for payments . Dominating the market in Brazil , it represented 4.21 billion transactions in 2023 alone . The focus now will be adjusting this into a regulated framework , which again will match Montgomery ’ s prediction that we will be unlikely to see a regulated environment until the second half of 2024 .
LOCAL PARTNERS
The final key challenge , as highlighted by Montgomery , will be that of Article 7 , which will require all licensed operators to have a Brazilian national as a 20 % shareholder . Understandably , the ministry wants to see Brazil have skin in the game . The intention , as outlined by the ministry , is to ensure “ the participation of Brazilian investors in the composition of companies that may operate in the sector ”.
“[ This is ] an absolute victory for the whole industry . It was something that we were fighting for over the last 15 years ”
Hugo Baungartner , Aposta Ganha
“ It was only natural that igaming be reincluded into the bill , to the extent that most of the revenues for operators come from igaming rather than from fixed-odds sports betting ”
Neil Montgomery , Montgomery & Associados
However , the question of whether this is constitutionally possible , or indeed , is in line with various international investment treaties , remains to be seen . As Montgomery explains , a local presence on Brazilian soil will also open the door to plenty of litigation . Indeed , the presence of operators now on Brazilian home soil ( which is a first for local betting customers ), will certainly mean plenty of activity from a legal standpoint .
“ With the establishment ( finally ) of foreign operators in Brazil , there could also be an initial wave of litigation by disgruntled customers . They will now have a door to knock on in Brazil ; it was previously very difficult to sue them here . If all this does indeed happen , you will certainly see a larger Montgomery by the end of the first year !”
CONCLUDING THOUGHTS
The salient fact remains that Brazil has every potential to become one of the world ’ s biggest gambling markets and also that the industry ’ s biggest names are already circling as legal certainty approaches .
Several key policy questions will need to be answered by both the ministry of finance , as well as the expected litigation challenges that will be brought forward into court . The key now will be for the ministry to clarify these challenges and provide clarity as to how we move forward from here .
There ’ s still some way to go and , while there are battles to be fought , there ’ s also a huge opportunity , one that ’ s been a long time coming .
In the final words of Montgomery , “ as a Brazilian gaming lawyer for nearly two decades , this is the moment I have been waiting for all this time and was betting my chips on . I expect there to be an avalanche of foreign direct investment , and M & A and joint venture activity .”
ICE LONDON 2024 • ISSUE 135 • 79