Experts in the gambling industry at the SBC Summit Lisbon last week highlighted the importance of localisation and trust in establishing a successful Know Your Customer (KYC) process in Brazil. During a panel discussion, they addressed the challenges associated with stringent KYC regulations in the newly regulated online gambling market, where tough measures initially stunted growth for licensed operators. Hugo Baungartner, CBO of Esportes Gaming Brasil, Barbara Teles, compliance director at Stake, and Laura Beatriz de Souza Morganti, compliance counsel at Betboom, concurred that local KYC providers were the best fit for Brazilian gambling operators. This preference largely stems from a heightened sense of trust and understanding of local players.
Baungartner shared his observations, stating, "When we knew we had to do the process of KYC in Brazil, I saw a movement of international companies and local companies trying to provide the solution for the operators." He added that non-Brazilian tools were often complicated to implement, while his operation successfully utilizes a Brazilian third-party solution, emphasizing the need for trust in these partnerships.
Teles supported Baungartner's choice, arguing that KYC is a specialized area that should be managed by external experts. "We are in the entertainment industry. We are not a KYC supplier," she stated. She stressed that relying on third-party KYC suppliers is a more effective strategy than attempting to handle it internally, especially given that their experience in the regulated market is still emerging, having only begun nine months prior.
Morganti echoed this view, pointing out, "Our main service is the betting experience. We have to focus on that. Delegating the difficult and technical aspects seems to be a better solution."
Education has emerged as a vital element for the success of KYC processes among gambling operators. Many faced considerable customer confusion when regulations took effect. Before regulation, bettors submitted little information; however, since January 1, players must provide extensive personal details and facial recognition to create accounts. Baungartner noted, "That’s something we all went through between December and January. From the first of January, they need to complete everything before making the first deposit." He acknowledged the friction this caused in January, which resulted in a drop in traffic as operators communicated the requirement for 100% KYC completion.
Morganti added that the educational effort is mutual: "We are educating [players], but we are being educated too, especially on what is the hardest thing for the client to do. We also have to educate ourselves on making their lives easier."
Operators must also be proactive in preventing attempts from Brazilians to bypass KYC measures. Morganti emphasized, "Brazilians are very creative," and suggested that KYC providers should anticipate potential fraud risks, including verification of age and identity. Teles acknowledged the ongoing challenges that arise daily in Brazil, advocating for a collaborative approach to learning from international jurisdictions in KYC practices and the forthcoming self-exclusion initiative expected to launch by the end of 2025. Teles stated, "We have to be more creative. If we can share [data on] the self-excluded [players], we can put all of the athletes together that cannot bet. If we put [that information] in the same database, everybody will be safer."
