Regis Dudena, head of the Secretariat of Prizes and Bets (SPA), believes betting regulations will stifle the black market in Brazil as IP and Pix blocking will make the environment untenable.
Brazil began its new era of regulated betting on 1 January when the legal online market launched and the SPA is overseeing enforcement of the sector.
The black market remains a lingering concern in Brazil, though, particularly for licensed operators that have paid a hefty BRL30 million (£3.9 million/€4.7 million/$4.8 million) licence fee.
So far, the SPA has granted full licences to 14 companies, while 52 are awaiting final approvals.
Dudena remains confident the regulations laid out by the SPA in 2024 will be effective in blocking illegal sites by making the environment financially untenable for black market operators.
“The trend is that, over time, the economic incentives to operate illegally in the country will increasingly diminish,” Dudena told EXAME on 3 January. “When a bettor bets on an authorised bookmaker, he has much more guarantees that his rights will be preserved, that his mental and financial health will be protected and, most importantly, that he will receive the prize if he wins.
“With illegal companies, on the other hand, the bettor exposes his finances, his mental health and has no guarantee that he will receive the prize. So, what we believe is that, over time, operating illegally will become less and less viable, both due to the regulator’s actions and the market’s adjustments.”
Help needed from the financial industry
Brazil has already introduced a number of measures to restrict the black market.
For instance transactions made via Pix to unlicensed operators will be blocked. This is a popular local instant payment service operated by the Central Bank.
Additionally, the telecoms regulator (Anatel) has been blocking access to unlicensed sites identified by the SPA. Its current tally of blocked domains is over 5,200.
However, in November Anatel president Carlos Baigorri compared the agency’s efforts at blocking sites to “mopping up ice” as many sites quickly create mirror domains and circumnavigate the IP blocking measures. The body signed a cooperation agreement with the SPA to increase its powers in December.
In Dudena’s view, the IP blocking efforts will need to be “complemented” by assistance from the finance sector.
“I would like to be able to say that in two weeks we will not have any unauthorised websites operating, but we know that it will be a constant challenge,” Dudena explained. “New companies are likely to emerge and we will need to monitor and supervise them all the time. The Central Bank also needs to act in their area.”
Dudena: Complete ban on betting in Brazil wouldn’t work
Towards the end of 2024 concerns over the impact of betting on the social and financial health of Brazilians peaked and in October, Senator Sérgio Petecão proposed Bill 4,031/2024, which sought to prohibit online betting in Brazil. The bill is currently waiting for the appointment of a rapporteur.
Then, in November, the Supreme Federal Court held a two-day hearing to review a filing asking for betting laws No 14,790/2023 and 13,756/2018 to be deemed unconstitutional.
The legal market launched despite this mounting pressure and Dudena believes any such ban would only serve to push players towards back into black market.
“It is not the Secretariat’s role to say that the legislator cannot or should not address the issue,” Dudena continued. “What we can do as regulators is to study, monitor and, if necessary, technically point out what works and what does not.
“Regarding the total ban on betting, our reading is that an absolute ban would simply push demand to the illegal market. We have seen this happen in other places and we have a history of it not working.”
How will the SPA adapt in the legal betting market?
The discourse over betting’s impact in Brazil is unlikely to quieten down and the conclusion of the hearing into whether betting laws are unconstitutional is expected in H1 2025.
The SPA will monitor the first year of the legal market before deciding whether regulations need to be altered, with Dudena emphasising the importance of flexibility.
“I imagine that, after the first year, we will have enough data to assess the impact of the measures and, if necessary, promote changes,” Dudena declared. “We have always been clear that regulation is something that needs to be monitored. It is not something that is static, created once and cannot be changed.
“Regulation needs to be dynamic, following the market and responding to its needs in a technical and efficient manner. This will only be possible with patience and the use of concrete data to support any future decision,” he added.
Insufficient documentation a reason for unsuccessful licence requests
Only the 113 companies that applied for a legal betting licence by the initial 20 August deadline were guaranteed to have their requests processed by the legal market launch date.
The 52 companies that have received provisional authorisation within the first week of the launch must correct certain issues within their applications within 30 days before they receive the full licence.
Dudena revealed some applicants had failed to provide all the required documentation, saying: “Some of these companies were not approved because their authorisation requests were deficient.
“For example, of the 100 documents required, some presented only 20. When notified to complete the process, they did not provide the necessary documents, so the cases were archived.”
Additionally, the SPA turned down some requests due to concerns over suitability issues, made evident through collaboration with bodies such as the Federal Police and the Federal Revenue Service.
The SPA is taking a cautious approach to licensing. Dudena added: “If there are legitimate doubts, we prefer not to grant authorisation. We are not obliged to grant authorisation to anyone.”