Brazil’s government has announced rules for sports betting agencies aimed at preventing money laundering, as the South American giant moves to further regulate the soaring iGaming sector, writes iGF Special Correspondent Jordi Bacardi.
The measure published by the Finance Ministry’s Secretaria de Prêmios a Apostas, the department that oversees betting, obliges betting agencies to watch out for suspicious activities that point to money laundering, like bulk betting on different results — and report them to Financial Activities Control Council (COAF), which is linked to Brazil’s Central Bank.
Failure to do so can incur hefty fines of up to 20 million reais (US$3.6 million) or lead to operating bans.
Betting agencies will have to get to know who their clients are and watch whether they are betting unusually large sums of money that are beyond their means.
They will also have to file a report annually to the ministry on their best practices in monitoring bets.
Lawyers representing betting companies said the measure is another step towards greater transparency and security in a sector that has mushroomed overnight into a mega-business since it was legalized last year.
“The idea is welcome, because it details obligations already created in the law enacted in 2023 on the subject, further closing the gap against money laundering in a relatively new sector with little supervision,” said Victor Ferreira Arichiello, a criminal and compliance lawyer at Pimentel & Fonti Advogados.
Fixed-odds sports bets were allowed in a law signed in December that set the rules for on-line betting agencies.
The biggest change is that they must be based in Brazil and be licensed to operate in the country.
Deadline
It is estimated that there are some 300 betting houses in Brazil, and most are registered in other countries such as the United Kingdom, Malta and Curaçao.
Licensing can be costly and rise to 30 million reais (US$5.5 million) in the case of larger agencies. The deadline is January 1 next year.
Regulation has included establishing taxes for the betting houses. Operators will have to pay 18 percent on their gross gaming revenue, which is the revenue obtained from all games after paying prizes to players and deducting income tax (IR) on the prize pool. Bettors will face a 30 percent tax on prizes of more than 2,112 reais (US$387).
Brazil’s government estimates it can get tax revenue from the betting sector of somewhere between 6 and 12 billion reais, around US$1-2 billion a year.
In a short space of time, sport betting agencies have become major sponsors of soccer clubs in a nation that is passionate about the game, with large audiences for games in stadiums, on television and over the Internet.
This has led to enormous advertising deals between the big soccer clubs and the betting companies.
Among the betting executives who praised the new regulations was Talita Lacerda, CEO of Bet7k, who said it helps consolidate legal businesses: “Regulation will be very good for the market. Everything will be correct,” she said on Instagram.
“This will separate the men from the boys.”
