A Landmark Move for Brazil’s Gambling Industry

Brazil’s official launch of its regulated fixed-odds betting market on January 1, 2025, follows a long path of legal and regulatory evolution. The country took its first step toward legalization in 2018, with the National Congress approving online betting legislation. However, full implementation was delayed until late 2023, with the final framework emerging under the supervision of the Ministry of Finance and the Secretariat of Prizes and Bets (SPA).

The country has issued licenses to 66 operators, with 52 provisional licenses granted. This represents a substantial shift in Brazil’s approach to gambling, offering a regulated alternative to the previously thriving unregulated market.

Stringent Compliance Requirements for Operators

The regulatory framework introduced in Brazil is robust, with operators required to meet strict standards:

• Physical Presence: Operators must maintain physical offices within Brazil and use a specific “.bet.br” domain for their websites. This geographic mandate ensures the country’s control over operations.

• Payment Systems: To prevent money laundering and ensure transparency, only bank transfers and the national payment system Pix are allowed for transactions. The use of credit cards and cryptocurrencies is explicitly prohibited.

• Player Verification: To prevent underage gambling, operators must employ facial recognition technology and ensure that players register with their CPF (Cadastro de Pessoas Físicas, Brazil’s individual taxpayer registry). This verification process is a key component in maintaining the integrity of the market.

• Financial Oversight: Operators will be subject to rigorous financial monitoring, with strict anti-money laundering (AML) requirements. Transparency in governance will also be enforced to uphold operational integrity.

Provisional Licenses: A Transitional Phase

Operators granted provisional licenses are allowed to operate for a temporary period of 30 days while addressing any outstanding requirements. These requirements include certification of their betting systems and technical compliance. If necessary, this 30-day period can be extended by another 30 days.

This provisional licensing system gives operators a practical opportunity to transition into full compliance without losing the chance to operate. However, failure to meet requirements could result in suspension or permanent disqualification, reinforcing the high standards the government seeks to maintain.

Taxation and Economic Impact

The economic implications of the regulatory shift are notable:

• Concession Fee: Operators must pay a substantial R$30 million fee to secure a license. This revenue will contribute to the federal government’s coffers, generating over R$2 billion in total.

• Tax Rates: Operators are subject to a 12% gross gaming revenue (GGR) tax, which, when combined with other taxes, brings the effective tax rate up to approximately 36%. Players, too, will be taxed on their winnings, with a 15% tax rate on amounts exceeding BRL 2,824.

This taxation structure is designed to ensure that the government captures a significant share of the revenue generated by the sector, further enhancing Brazil’s economic position while fostering a well-regulated market.