The Brazilian government has established a December 2024 deadline for gaming operators to secure licenses or face penalties starting January 1, 2025. This requirement is detailed in Normative Ordinance 827, published on May 21, 2024, in the Official Diary of the Union.
Normative Ordinance 827 outlines the necessary steps for obtaining sports betting and gaming licenses in Brazil. It marks the beginning of an “adjustment period,” giving gaming operators active in Brazil until December 31, 2024, to comply with the new regulatory framework. Applications submitted within 90 days of the ordinance’s release will be prioritized for assessment.
Licensed operators will receive a five-year license upon payment of a BRL30 million fee (approximately £4.6 million/€5.4 million/$5.9 million) and will be authorized to offer gambling through three skins. Operators failing to secure a license in Brazil by the end of 2024 will face penalties starting January 1, 2025, according to Mattos Filho.
The ordinance is part of the Ministry of Finance’s efforts to finalize regulations through a four-stage process. While some sources suggest that licenses could be issued in the fourth quarter of 2024, with operations starting in January 2025, others believe this timeline may be overly ambitious and expect delays. The application guidelines were initially anticipated in April.
One lawyer described the timeline as “daunting,” but the Ministry of Finance believes it is achievable, bolstered by an increase in staff at the Secretariat of Prizes and Bets (SPA). “My expectation is to see a significant increase in the workforce at the authority in the upcoming weeks to meet the deadline,” the lawyer stated. “This happened before in other industries such as finance.”
Local Applicants Only
License applicants must be headquartered in Brazil. Foreign companies are eligible but must establish a local subsidiary with at least 20% Brazilian ownership. Experts are still debating how these requirements will be implemented, with some expressing disappointment at the lack of detailed guidance from the Ministry.
This local setup must be in place before applying for a license, as any mergers, splits, or changes in corporate control will trigger a review by the SPA. Similar to other countries’ regulations, companies must submit documentation proving their legal qualification to operate in Brazil, including identification and registration forms for controlling entities and a declaration of compliance with payment regulations certified by the Central Bank of Brazil.
Applicants must also provide a joint certificate from the Special Secretariat of Federal Revenue and the Attorney General’s Office of the National Treasury to prove they are registered to pay taxes in Brazil. All key personnel and financial beneficiaries must have clean criminal records with no history of bankruptcies, tax evasion, or embezzlement.
In addition to the BRL30 million license fee, applicants must demonstrate a financial reserve of at least BRL5 million. The Ministry requires a projected cash flow for the next two financial years, signed by a finance director or equivalent, to show the business’s expected growth in the market.
Licensed operators will be subject to a 12% gross revenue tax and a monthly inspection fee ranging from $10,000 to $390,000. Technical certification of operators’ betting systems is required, as outlined in Ordinance 722, issued earlier this month. This ordinance includes provisions for offshore data centers, ensuring the SPA has access to data. Data centers located in countries with legal cooperation agreements with Brazil on civil and criminal matters are acceptable.
However, the requirement for testing centers may cause a bottleneck in the regulatory process. Although Gaming Laboratories International (GLI) and similar organizations are certified for testing, the high volume of applicants could slow down the process. A call for expressions of interest in January saw 134 responses from local and international operators.
The Ministry of Finance’s four-step process, announced in April, includes the SPA releasing technical and security requirements by the end of June and setting out processes for monitoring industry advertising. Final rules on how industry contributions will be distributed to socially responsible causes will follow by the end of July, likely involving a central account from which funds will be distributed to various government agencies and charities.