With the creation of the Department of Prizes and Bets, the Ministry of Finance demonstrates the importance attributed to the topic of sports betting, a sector that has been experiencing exponential growth in recent years.
Especially with the recent approval of the regulation of this segment, whether by law or by ordinances, the matter of betting in the sports field becomes lawful and, therefore, assumes seriousness, control, and supervision, paving the way for economic development in the sector, increased state revenue, as well as the influx of foreign investments into the country. The Brazilian market is one of the most promising in the world in this field.
The specific body created, named the Department of Rewards and Wagers, is composed of three Subsecretariats: (i) Authorization; (ii) Monitoring and Enforcement; and (iii) Sanctioning Action.
As indicated by the organizational structure, the Executive will operate on these fronts separately, aiming to have end-to-end control of the involved actors, from their entry into the market through proper authorization, including monitoring the development of their economic activity, and finally, the enforcement and prosecution in cases of regulatory deviations.
The Authorization Subsecretariat's main function is to assess authorization requests from companies interested in operating in Brazil according to the new regulation. In addition to fixed odds or bets, the Subsecretariat will also be responsible for authorizing cases of free distribution of prizes, contests, and lotteries conducted by entities promoting horse racing.
It is worth noting that, up to this moment, the Ministry of Finance has received indications of interest from 134 companies. The Subsecretariat will evaluate the requirements outlined in the law for the company to operate authorized in Brazil, such as having headquarters in Brazil, prominently featuring bets in its corporate purpose, demonstrating the lawful origin of funds, and establishing governance at appropriate levels.
It will also regulate the procedures and deadlines for companies to request authorization, report on their activities, and improve their procedures and controls, in accordance with the law.
Therefore, the creation of this Subsecretariat is crucial, as the authorization for operation is, in our view, one of the main points of the new regulation.
Also, the Monitoring and Enforcement Subsecretariat has a broad role in monitoring market practices, regulating them, and overseeing companies, whether authorized by the Authorization Subsecretariat or not.
Its activities include developing specific actions on how commercial promotions and the exploitation of bets will be conducted. The Subsecretariat is also responsible for defining technical requirements on how systems should operate and providing betting monitoring systems, as stipulated by the new regulation.
It will also oversee, for example, how the rights of bettors and advertising in accordance with the law have been observed by companies. Finally, it plays the important role of initiating, conducting, and analyzing administrative sanctioning processes to investigate irregularities of companies. Additionally, at the end of these inspection procedures, the Subsecretariat is responsible for proposing to the Sanctioning Action Subsecretariat the imposition of sanctions or the dismissal of the process.
Finally, the Sanctioning Action Subsecretariat is responsible for processing and adjudicating the administrative sanctioning processes initiated to investigate irregularities of companies, and may or may not accept the recommendation made by the Monitoring and Enforcement Subsecretariat.
The Ministry of Finance, thus, replicates an interesting model already experienced in other entities, such as the Comptroller General of the Union, where the entity that initiates and conducts the process is not the same as the one that decides on it. After the judgment, there is the possibility of filing appeals regarding the sanctions imposed.
It is important to note that the sanctions for non-compliance with the regulation are those provided for in the law itself and will require a higher level of detail, such as fines of up to 20% of the revenue or up to 2 billion reais if it is not possible to determine the revenue.
Juliana Abrusio
Partner at Machado Meyer Advogados and Head of the Digital Law and Data Protection area
