An ordinance was published in April with new rules, and more than 30 companies have already been notified by the Secretariat of Prizes and Betting (SPA) of the Ministry of Finance to explain their operations and present their defense. By law, financial institutions cannot move money for betting companies that do not have registration in the country.
Fines can reach up to R$ 2 billion (US$360m), but the government does not reveal the list of notified companies, arguing that investigations are still ongoing. However, Folha found that no major banks or financial institutions are involved.
Operations of illegal 'Bets' are concentrated in payment institutions (PIs) that currently do not require authorization from the Central Bank to operate, due to their small transaction volume.
A PI can provide payment methods, such as prepaid cards and money transfers, but is not authorized to lend money. They only need Central Bank approval after reaching a minimum transaction volume — currently R$ 500 million (US$90m), which will be reduced year by year until 2027.
These PIs, which do not require Central Bank authorization, have been used by 'Bets' based outside Brazil, such as in China and the tax haven of Curaçao in the Caribbean, to receive money from Brazilian bettors.
Federal government regulations determine that only financial institutions, such as banks, or payment institutions authorized by the Central Bank can hold accounts for betting companies. In these cases, they must verify whether the 'Bet' has authorization from public authorities to operate in Brazil.
The law allows only betting companies that have paid a R$ 30 million (US$5.5m) licensing fee to operate nationally, and requires compliance with a series of rules, such as ensuring only those over 18 years old can place bets.
However, some companies use illegal websites and advertising, as well as promises of bonuses for new players (which is prohibited in Brazil), to deceive bettors and receive money. Usually, it is impossible to withdraw funds after deposit.
According to a government source, the current strategy is to tighten the noose around payment institutions to prevent money from reaching illegal 'Bets'. The Executive believes it will be more efficient to pursue two dozen financial institutions than thousands of sites scattered on the internet.
Fighting the spread of platforms online is almost impossible, according to government officials, since these companies launch other sites as soon as one is taken down. So far, 13,100 have been blocked by Anatel (National Telecommunications Agency).
In addition to possible fines, the government also threatens to "flag" unauthorized PIs that work for illegal sites and to present this information when they apply for Central Bank approval.
The Executive believes financial institutions cannot claim lack of capability to identify whether an account is used by an illegal 'Bet'. According to authorities, sports betting has an easily detectable pattern of transaction values and times.
Leonardo Baptista, CEO of Pay4Fun, a payment company active in the betting sector, agrees: “Our market has very specific transaction behavior and it is indeed possible to detect it. There are an absurd number of transactions in a short period during specific events. An example is the Champions League final, which generates an enormous volume,” he says.
The sector estimates that 50% of operations carried out in Brazil occur in the illegal market and has sent information about companies operating irregularly to the Ministry of Finance for investigation, says Fernando Vieira, Executive President of IBJR (Brazilian Institute of Responsible Gaming).
Fraud even extends to the use by illegal sites of the CNPJ (tax ID) of companies duly authorized in Brazil and fake license numbers to deceive bettors. They also allegedly use payment institutions that do not require Central Bank approval to move money, according to complaints.
Stake, an international betting company with representation in Brazil, has sent official letters to the government denouncing the use of its name and data by at least three illegal sites and alerting about the PIs that perform banking operations for them: Nexus Tech Intermediações, Moeda Smart, and Moeda One. Folha tried to contact these three companies by email and phone but received no response.
Another payment institution denounced by industry entities to the government, according to Folha’s reports, is Voluti, a company from Pato Branco (PR) that acts as an intermediary for financial transactions for gaming and retail companies and, due to its volume of business, has not yet required Central Bank registration.
In a statement, the company denied “any improper association with illicit practices” and said that part of its services is linked to operations with municipal lotteries — whose authorization to exist is being challenged at the Supreme Federal Court (STF).
“The company only provides services to operators who have valid licenses issued by federal, state, or municipal authorities. There is no company in our client portfolio that operates without specific authorization for its activity,” Voluti said in a statement.
Source: Folha
