SÁB 22 DE JUNIO DE 2024 - 23:48hs.
Fabio Kujawski / Isabela Fernandes Pereira (Mattos Filho)

The bureaucratic complexity of the granting process for operating fixed-odd bets

New ordinance includes the Ministry of Sports in the authorization process for companies in Brazil and further delays the granting process, which can take more than 200 days. In this analysis, Fabio Kujawski and Isabela Fernandes Pereira, partner and lawyer at Mattos Filho respectively, state that “bona fide operators cannot be harmed in their activities by manifestly impractical regulatory deadlines and long periods of analysis of the grant request.”

The Secretariat of Prizes and Betting (SPA) of the Ministry of Finance published Ordinance SPA/MF No. 827/2024 on May 21, 2024, to establish general rules for the authorization procedure for fixed-odds betting operations in Brazil. After years of waiting, this ordinance allows companies to start submitting their authorization requests.

The ordinance stipulates that the Secretary must review the documentation within 150 days from the submission of the authorization request. During this period, the Secretary may request clarifications, deny the request (in case of legal infeasibility), or authorize the payment of the concession fee (approval of the request).

Considering that the deadline for existing legal entities in Brazil to comply with the new rules is December 31, 2024, the 150-day period (which can be extended in case of requirements during the process) already proves to be extremely challenging.

As if the difficulties were not enough, on May 22, 2024, Interministerial Ordinance MF/MESP/AGU No. 28 was published, altering the original authorization procedure to also include the Ministry of Sport in the review of authorization requests, which was originally the exclusive responsibility of the Ministry of Finance.

According to the new ordinance, the Secretariat of Prizes and Betting may only grant authorization after the Ministry of Sport's consent, which must be given within 45 days following the initial review conducted by the Secretary.

If there is a disagreement between the reviews conducted by the Ministry of Finance and the Ministry of Sport, the Attorney General's Office (AGU) will be called upon to resolve the issue. The ordinance does not set a deadline for the institution’s response, which may further extend the process.

The inclusion of the Ministry of Sport in the process means that the government review period for authorization requests can reach an impressive 195 days, provided there are no delays or disagreements between the Ministry of Finance and the Ministry of Sport.

To try to address industry concerns, Ordinance SPA/MF No. 827 ensures the approval of authorizations by December 31 for legal entities that submit their requests within the first 90 days from the publication of the ordinance. However, meeting this deadline presents significant challenges considering the bureaucracy involved in establishing foreign-controlled companies and all other requirements that must be met when submitting the concession request.

Therefore, condemning companies that fail to submit their concession requests by August 20 to the risks of being considered illegal operators, and thus having their websites potentially blocked and being unable to advertise or process payments, is shown to be an absolutely disproportionate and consequently illegal measure, violating Article 3, XI, (e), of the Economic Freedom Law.

Curiously, the same body that now imposes an additional procedure not originally planned (approval by the Ministry of Sport and arbitration by the AGU), making the authorization process even more sluggish, is the same one that fails to comply with its own regulatory agenda, which scheduled the issuance of the authorization resolution for April. The sports betting sector has been waiting since 2018 for the regulation of its activity by the federal government, and it seems inconceivable that the deadlines granted are insufficient for companies to comply with all requirements and regularize their operations.

It is imperative to amend Article 24 of Ordinance SPA/MF No. 827 so that only companies that have not submitted their authorization requests by December 31, 2024, are considered irregular, not those that have not received their concessions by that date.

Good-faith operators should not be hindered in their activities by manifestly impracticable regulatory deadlines and long review periods by a plurality of independent government authorities.

Fabio Kujawski and Isabela Fernandes Pereira
Partner and lawyer at Mattos Filho, respectively