Brazil iGaming 2022: A Future to Look Forward To?

Brazil has been a region of great interest to the iGaming community for a very long time. Recently, we have finally started to see some fundamental breakthroughs in this market, which could mean fantastic growth opportunities for new entrants.

We spoke with Dr. Ricardo Feijó, a lawyer specialising in Brazilian public law, who has been working with clients from the gaming industry since 2016. More recently, Ricardo co-founded the website Aposta Hub Brasil, which is dedicated to publishing useful information to Brazilian players. In this insightful Q&A, he outlines the most recent changes in the market and explains how this will affect potential opportunities for key stakeholders going forward.

What is the current state of online sports betting regulation in Brazil and how long until it’s fully regulated?

“Online sports betting became legal in Brazil in 2018 (Law nº 13.756), but it is still pending regulation by the federal government on how it will be licensed and explored. The deadline for the regulation expires on 12/12/2022.

“However, the federal government has said on numerous occasions that the regulation will be ready before the World Cup (November) and has shared an initial draft of the decree about sports betting. For these, the regulation is expected to be concluded by the end of the first semester of 2022.

“At the same time, sports betting is being developed by state lotteries since it is considered a kind of lottery in Brazil. Some states are authorising companies to operate sports betting, such as the states of Maranhao and São Paulo. The government has launched public bidding to authorise one operator to explore a state lottery, which includes sports betting in its territory, for example. However, the bidding is suspended, and it is most likely to be revised after federal regulation.

“The product compliance required from the operators also varies state to state. In most cases, it has been mandatory to obtain international certifications that assure the safety and quality of the products. The operators also need to have a compliance program, also certified, to guarantee that regulations are observed.”

Market research suggests there are already over 400 foreign operators accessing the Brazilian market, generating huge revenues. With this being the case, how many actual licenses do you expect to see awarded and how difficult will it be to obtain one?

“The current plan of the Brazilian government is to license as many operators as possible. To obtain a license, the operators will be required to prove they have the technical capacity and pay a considerable amount for the license, around US$5 million, for five years.

“The regulation draft that has been shared with the public does not mention how the operators will be able to prove their technical capacity. It is expected that further regulation will require the operators to prove they know how to operate sports betting by presenting proof of past experience. For example, they will have to prove they already have a licensed sports betting operation elsewhere.

“It will also be necessary to demonstrate that the company has the financial capacity to develop the activity in Brazil.

“Once again, the draft available does not give any details on how this will be evaluated. Therefore, I expect many licenses to be awarded in Brazil, but the process will be tricky and will demand attention from the operators.”

Many international game providers have already started to align with Brazilian entities to prepare for product launch. How can international companies ensure they are working with the right partners and ensure successful market entry?

“The only way to ensure that the international companies are working with the right partners is through due diligence performed by expert lawyers who are specialists in Brazilian gaming law.

“At the current moment, there is no company authorised in Brazil to explore sports betting because no license has been awarded by the federal government.

“For that, the only way international game providers can ensure they are working with the right partners to enter the Brazilian market is to assess the partner’s legal structure to verify if it is compatible with future regulations.

“Therefore, it is necessary to perform due diligence by expert lawyers.

“However, since regulation on sports betting has not yet been delivered, it is not possible to assure that the Brazilian partner will receive a license in Brazil. That can only be evaluated after the regulation process is over and the company has filed for a license for sports betting.”

The Brazilian market is very young and will need time to develop comprehensive consumer-based learnings. Do you think the issue of player protection has been sufficiently accounted for within the proposed regulatory framework or is there still room for improvement?

“The draft of the sports betting regulation that has been shared with the public shows that player protection is a main concern of the Brazilian regulator.

“Among other provisions, the draft establishes that the operators will be responsible for promoting responsible gaming and adopting measures to protect players. This includes restrictions on marketing campaigns and providing information about the game to the players. It will also be mandatory for the operators to have mechanisms to ensure the integrity of the game to protect players.

“Although the current framework does account for player protection, it is our opinion that there is still a lot of room for improvement. The main goal the reforms have is to bring the gaming sector into the light by transforming it into a legal activity. When the activity is no longer a crime and is regulated, it is possible to control and oversee the operators and address the gambling addiction problems. Moreover, legalised activities generate revenue that can be used in public health campaigns and in medical care.

“It is important to regulate the game at the same time that provisions are made to ensure responsible gaming.

“The current draft shows that the regulation is also concerned with that, but we need to see in reality that those rules will be complied with by the operators.”

Mexico is often seen as the benchmark for LatAm iGaming regulation. Ahead of the soon-to-be-published regulatory framework, do you think there’s anything Brazil can learn from Mexico, or any other LatAm jurisdictions, to help ensure the success of their market?

“For sure! There is a lot for Brazil to learn from Mexico and other LatAm jurisdictions. However, the regulators don’t seem to be focusing on other LatAm jurisdictions right now. They appear to be mining the regulations of USA states and European countries.

“There is also a new bill being discussed in our Congress that has already been approved in the House of Representatives and is going to be voted on in the Brazilian Senate that authorises online and land-based casinos. The general expectation is to have the law passed in the first quarter of 2023. After the law is passed, the federal government will begin the process of selecting the cities that will host a casino and the adjudication process. That will probably happen between 12 to 18-months after the law is passed. The same timeline is expected for online casinos.”

Editor’s Note:

From speaking with Dr. Ricardo it’s clear that after such a long wait the time for action has finally arrived. Around the world operators are forming partnerships and gearing up for the launch of the Brazilian market.

It’s exciting to see such progress in this soon-to-be flourishing key area of LatAm, which has the potential to be one of the biggest online sports betting markets in the world. The opportunities are endless and we’re looking forward to seeing how it will take shape in the very near future.