"Brazilian political crisis can help speed up gaming regulation"

Witoldo Hendrich, owner-founder of Online IPS Brazil (International Processing Solutions), will be part of the panel "Online Gambling - migrating from a gray to regulated market" on June 27 at the Brasilian Gaming Congress 2017 in Sao Paulo. Before, he visited Games Magazine Brazil offices for an exclusive interview where he analyzed the future of online gaming in the country.

GMB - Explain a little about Online IPS. How did it come start and what are its differentials from other payment process companies?
Witroldo Hendrinch - I had the happiness of my professional career to meet two Americans, who are my partners and have an electronic payment processing company: credit card, bank transfer, direct transfer, etc. I already worked with a company consulting because I am a tax lawyer, I teach tax classes at PUC-RJ and other universities. When I had the opportunity to work as Online IPS, we began to provide a service from the initial legal advice until the last moment where the customer was effectively receiving money from the services that were provided, always in the online field. We were fortunate enough to be able to reconcile my two companies to provide the customer with a solution that is complete. We work in the adult market (relationship sites) and with the probable legalization of gaming in Brazil, we are focused on the market that will open in the future. One important thing about the payment processor is that the company is American, we have headquarters in Miami, we have a branch in Los Angeles, a branch located in Rio de Janeiro. We also are in Colombia, in Europe. So we can process our clients' transactions basically anywhere in the world in the most common possible currencies. This is our stand out from other service providers.

What is the main objective of the company when entering the future Brazilian gaming market?
Our goal, once regulated the activity in Brazil, is to be able to attend any game strand that is online. Everything that happens through the internet, we have the condition to meet. As soon as legislation moves in that direction.

With regard to online gambling, do you bet on some special strands? Like sports betting and fantasy games, fir example, that are gaining space in the country...
As soon as we have the legislation dealing with this, I think fantasy games and sports betting will take over the Brazilian market. And my opinion has the following reason: it is very common for Brazilians to travel abroad and play in a casino; We have already had bingo in Brazil, the Brazilian is accustomed to bingo; The legislation that comes around will release the locally popular " jogo do bicho”, the Brazilian is already used to it; We have lottery. What still has a repressed demand is precisely the fantasy games. We have the Cartola FC, but it is limited compared to other similar foreign websites, and sports betting. It is a repressed demand that we do not have the habit of using. People know gaming and they get to play in a casino, but sports betting does not have yet to work fully in Brazil.

And how is Online IPS following the process of legalizing gaming in Brazil? Do you think it walks at an acceptable speed?
I would say that it had been walking at a good pace, walking in a fast, adequate way, until we had this whole mess of impeccable, indescribable (still with President Dilma Rouseff) and it is natural that this should catch the attention of both the Federal government and from the congressmen that they direct their attention to other topics. After that time, under the Temer government, the legislative house has committed itself to at least voting, I would say, issues that are of major importance today, labor reform, social security, measures against corruption ... are issues that the country needs to approve, but at least vote and get rid of those topics that are very sensitive. After this step, it comes gaming. I would say that the first major theme that would be voted upon after these reforms would be gaming.

Do you believe that the current political crisis will change the course of the gaming regulatory process?
I have an interesting perspective on this. The national congress was committed to the federal government in approving the measures already mentioned; With the federal government on a tightrope, as it is now, I find it very unlikely that any deputy or senator wants to embrace some unsympathetic cause, such as labor reform without knowing whether the government will even continue in the coming weeks. This means that those issues which, although prioritized, are very unfriendly in the eyes of public opinion; It may be that they are dropped in the background, because no one wants to compromise, which opens space for secondary themes to be able to walk again. And gaming is one of them. It may be that this whole mess will push gaming back into the plenary vote, precisely because it took away from Congress the pressure to deal with those issues that are unsympathetic by nature.

Which of the two gaming regulation projects being discussed at the congress is most interesting for the online betting business? The one of the chamber or of the senate?
Both projects have many flaws. In the office we made a technical note showing what needs to be modified in each project, what worked and what went wrong somewhere in the world in this project that we have and I have taken this to deputies and senators in the last year. An example I can give is that there is an article in the Senate bill that says that two-fifths of the casinos installed in Brazil have to be in a northern and northeastern area with the goal of promoting tourism. Although the intention to develop a specific area is praiseworthy, the effect is this: if an international operator wants to make a casino in Sao Paulo and one in Rio de Janeiro, the regulator, that can be created, will say can not, because 100% of the casinos are out of that area and I can only have 60% of the casinos out of that area. It means that to have a casino somewhere in the country I have to have it first there. The bill in the House, it does not adequately address the issue of sports betting, leaves a gap. Nobody knows for sure who will be able to operate and if CAIXA is going to have a monopoly of the activity. So, we need to make it clearer so we can move forward. I'm in favor of having to change the projects, maybe merge the two of them and try a joint vote than to play the two projects ahead because both have flaws that can end with non-gaming in Brazil.

Would not the attempt to merge the two projects into one could cause a delay in the processing of the gaming law? Or may it be a way to speed up regulation?
The big problem of the two projects that are in process in separately in the Congress is that: beautiful son, everybody wants to be father! So everyone wants to be the father of this project, despite all the divergence of a part of society that considers that gaming can disaggregate the family, which are actually prejudices that we have because it lives in an environment where gambling is not regulated. Despite all this, I do not know if getting the two projects together would speed up or delay. It is more likely to delay. But I'd rather do a good thing in six or eight months than a wrong thing now, because fixing the hood is very difficult. If we have to wait six or eight months, that's fine, we've been without gaming for 70 years, it's not six months that they're going to kill anyone. Two things worry me about the delay: one is that every day a new site appears hosted somewhere with people playing, every day that passes more illegal bingos appear. The longer we wait, the more illegal things appear in that direction. So the rush I have to see the approved bill is that regulating people ceases this scenario of illegality. On the other hand, I have to reconcile my haste with the desire for something well done in Congress. The way it is today, it is not totally well done.

With a project well done, what effect do you expect that gaming will have in Brazil? Not only economically but also as a society
What I can say without fear of error is: thousands of jobs. This alone drives the economy as much or more than the tribute itself. The person who is unemployed and gets a job as a waiter at a bingo or post-doctoral engineer in the programming of an electronic gaming site, see that there is a whole spectrum of professionals to receive in the gaming industry. Every time a person who is out of the job market and reinserted through the gaming activitye, he consumes and the economy is moving, we make the wheel spin. The tax side, the financial gain, I think deep down it is less than the benefit that all these jobs can bring.

Source: GMB Exclusive
Author: Pedro Henrique Feitosa