Brazil opts for a model of unlimited licenses for the sports betting business

Lawyer Neil Montgomery, representative of Montgomery & Associados and specialist in Entertainment Law, held a meeting with members of SECAP (Secretary of Public Policy, Planning, Energy and Lottery) in Brasilia last Tuesday, May 28 where he gave his impressions to the regulator and received some confirmations from them on the draft of the decree that is being prepared. In dialogue with Games Magazine Brazil, Montgomery provided several details on the next regulation.

The draft of the decree would be ready in a maximum term of 120 days next to the call to a public consultation to know the opinion of the main sectors involved in the business. The former Finance Ministry (now annexed to Economy) had already resorted to the public hearing modality in September 2017, when it had to draw up the first LOTEX edicts. SECAP considers that this system is the most transparent and comprehensive so that no one is left without making contributions.

The draft of the presidential decree that will regulate sports betting would contain some key points such as:
 

• Authorization model for local and international sports betting companies
  The number of bookmakers that can work in the regulated Brazilian market will be unlimited. Companies that comply with the requirements of the presidential decree will receive permission through authorizations for a certain amount of time and there will be no concessions or bids, only licenses. This decision on an open business model for Brazil was the most anticipated by the international market that will receive the news in a positive way. The Government's objective is to achieve the highest possible tax collection and, for that, it was concluded that there is no point in limiting, much less monopolizing the market. With this decision, it is also sought to reduce the current illegality as much as possible.
   
• Tax incentives to attract companies
  It could be promoted the change of certain fiscal guidelines through the modification of laws in Congress to make the installation of companies in the country more flexible. This is not yet defined, and the regulator is working on this possibility. The opinion of foreign companies on the difficulties that Brazil has to settle in the country has been key, and they turn a supposedly attractive business into an almost unfeasible one.
   
• Betting sites servers could be located in Brazil and/or abroad
  This is a key and sensitive point related to the control over the information of the companies on the bets and the money route. It is defined that an operator may have servers abroad only if it can guarantee that its system gets audited immediately, in real time, by Coaf (Ministry of Finance Control of the Ministry of Economy). Otherwise, they must be in Brazil, always under Coaf's orbit.
  
  Coaf's mission is to produce financial intelligence and promote the protection of the economic sectors against money laundering and terrorist financing. The Coaf receives, examines and identifies suspicious occurrences of illicit activity and communicates to the competent authorities to institute procedures. In addition, it coordinates the exchange of information to enable quick and efficient actions in the fight against concealment of assets, rights and values. The Council applies administrative penalties in economic sectors for which there is no own regulatory or supervisory body.
   
• Currency to use in bets
  Although the first decision is that all bets are made in local currency (reais), SECAP analyzes to expand the spectrum of currencies and incorporate others, the most used in international markets. It is not defined yet.
   
• The regulator will require licensed companies to allocate a portion of their activities to land-based operations, in a bid to create Jobs for local citizens.
   
• The regulator will also announce whether Brazil will adopt, or not, a blacklist of operators quarantined form obtaining licenses at the opening market.
   

Since the activity was legalized in the country last December, SECAP (Secretary of Public Policy, Planning, Energy and Lottery) was very open to know how the most important markets work in the world, and generated meetings in Brasilia with specialists in various matters related to the business such as legal, operational, fiscal and control issues, together with technical visits to the most important fairs, events and congresses in the field.

In fact, the public hearing held on May 22 in Congress, carried out on the initiative of the Sports Commission and brought together more than 20 specialists from around the world, helped to add material and outline the most important points of the final draft. Although the members of SECAP could not be present in the meeting that day due to the LOTEX issue, the videos and the transcripts of what happened there arrived at the Secretariat. Although the draft of the sports betting decree is quite advanced, the current work can be relegated due to the priority that LOTEX has after the absence of interested on the last call of the Ministry of Economy.

Currently, SECAP is working very hard to know the opinion of international companies to adjust and to make more flexible the edicts that make the business more attractive. The idea is to solve LOTEX in 90 days and successfully complete this postponed tender that became a headache. Then, authorities would focus 100% again in the fixed odds betting market issue.

If everything go in the right direction, it is speculated that at the beginning of 2020 Brazil could already have a regulated and active sports betting market. The most optimistic slip that perhaps before Christmas there may already be developments in this regard.

Last month, in the framework of these meetings, SECAP held hearings to hear the opinion of specialists in the legal field such as Luiz Carlos Niyama and Luiz Eduardo de Odivellas Filho, from Odivellas Advogados, and Neil Montgomery, representative of Montgomery & Associados.
 

Source: Exclusive Games Magazine Brasil