The ministry did not disclose the names of the entities targeted by the notifications. When contacted, ABFintech, which represents part of the sector’s institutions, stated that there is a market consensus that betting platforms should exclusively hire duly regulated financial or payment institutions.
The entity further stated that it was established that payment institutions—in this case, fintechs—committed to providing services only to authorized and regulated platforms, in accordance with the new regulatory framework.
Meanwhile, the Brazilian Federation of Banks (Febraban) issued a statement emphasizing its concern with the “social and economic aspects” of gambling, such as the risk of increased indebtedness.
In March of this year, the SPA (Secretariat of Prizes and Betting) published an ordinance requiring payment institutions to report any suspicious betting-related activity. If they identify evidence that a platform is operating in the country without authorization, they must notify the agency within 24 hours of becoming aware of the operation or identifying data indicating irregularity.
The report must detail the reasons for the suspicion and include specific information about the deposit or payment account linked to the alleged illegal operator, in addition to the company’s National Registry of Legal Entities (CNPJ), corporate name, the date the relationship began, and the associated Pix key, if available.
The ordinance also prohibits institutions from maintaining accounts for betting companies that are not authorized by the Ministry of Finance to operate in the country. Furthermore, depositing funds or paying out prizes into such accounts is forbidden.
Among fintechs operating in the sector, the rule has led to the mass disqualification of illegal betting platforms. At Pay4Fun, for example, which works with around 30 betting platforms, more than 600 sites were disconnected, according to the company’s CEO, Leonardo Baptista.
According to the executive, the company conducts a document review of the sites that request its services. As soon as a platform contacts the financial institution, it conducts a process known as KYM, which stands for “know your merchant.”
“With this process, we check with the SPA whether the company holds a license, and whether it is listed among the authorized companies to operate in the country,” he says.
The crackdown on illegal betting sites began on January 1 of this year, with the implementation of sector regulation. According to Fernando Vieira, president of the Brazilian Institute for Responsible Gaming (IBJR), the legal framework is positive and functions well, but the illegal market remains a challenge to overcome. The association works with regulated operators in the country to combat illegal activity in the sector and estimates that 75% of the Brazilian market is now regulated.
The institute estimates that around 50% of the betting market still operates illegally. In light of this, it points to the “choking of financial operations” as a way to tackle the problem.
“There is still a significant proliferation of illegal betting sites. So what is the mechanism we understand and have been working on to try to suffocate this illegal market? It’s through financial transactions, because every bet, to be completed, requires a financial transaction, a Pix,” explains Vieira.
To prevent the spread of irregular platforms, the IBJR sends biweekly reports with complaints to the Secretariat of Prizes and Betting. “The complaints are not only about illegal sites and operators, but also about the financial transactions behind those illegal bets,” he said.
The organization has already filed around 150 complaints with the SPA. With this information, the expectation is that the ministry will work together with the Central Bank (BC) to “strangle illegal operations.” Vieira believes that this will make the betting market more sustainable and that “consumers will be directed to the legal market, where Brazilian regulation provides many protection mechanisms.”
Between October 2024 and May of this year, the SPA ordered the blocking of around 13,000 illegal betting sites in Brazil, according to Valor reporting. Currently, the Ministry of Finance is reviewing 36 applications from companies seeking authorization to operate fixed-odds betting in the country.
So far, 71 definitive licenses have been granted to 69 companies. Each company may have up to three domains (betting sites) associated with its license. According to the SPA, two companies acquired two licenses each, paying R$60 million (US$10.6m) for the right to operate up to six commercial brands.
To obtain a definitive license, companies must pay an upfront fee of R$30 million (US$5.3m). With the companies already regularized through SPA’s administrative acts, the government has raised R$2.16 billion (US$381m) in licensing fees.
Source: Valor
