Betting Market and the Creation of the Secretariat of Prizes and Bets by Decree 11.907/2024

On Wednesday, January 31, 2024, Decree No. 11.907/2024 was published in the Official Gazette, creating the Secretariat of Prizes and Bets (SPA) within the Ministry of Finance (MF).

The new secretariat, focused on regulating the fixed-odds betting (bets) and online gaming market, aims to modernize and improve the structure of the Ministry of Finance, in addition to:

– Comply with the legal attributions of the MF regarding lotteries and commercial promotions;

– Monitor and prevent money laundering;

– Monitor the market and establish responsible gaming policies;

– Supervise communication, advertising, and marketing activities.

Regarding its organization, the SPA will have three subsecretariats:

(i) Subsecretariat of Authorization:

– Responsible for analyzing requests for authorization for:

• Free distribution of prizes through drawing, gift voucher, contest, or similar operation;

• Early collection of popular savings [1];

• Exploration of fixed-odds bets and other lottery modalities;

• Sweepstakes [2] and horse racing lotteries.

(ii) Subsecretariat of Monitoring and Inspection:

– Responsible for supervising and developing inspection actions for the modalities authorized by the Subsecretariat of Authorization.

(iii) Subsecretariat of Enforcement Action:

– Responsible for judging Administrative Enforcement Proceedings in the first instance, observing legal limits and competences.

It is also noteworthy that the SPA will work together with the Ministry of Sport, which has attributions related to sports integrity, including:

– Monitoring the manipulation of results in sports events;

– Transfers to athletes, clubs, and sports administration entities.

The creation of the SPA is another step towards the regulation of the betting market in Brazil, covering virtual and physical bets, real sports events, and online games, which had its first and main advance in December 2023, after the enactment of Law No. 14,790/2023, which regulates fixed-odds betting (“bets market”). This Law established taxation criteria; defined rules for the commercial exploitation of bets; determined the distribution of the collected revenue; set penalties; imposed restrictions on advertising or commercial promotion by the fixed-odds betting operator agent; and established the competences of the MF in the regulation, authorization, monitoring, and inspection of the activity.

If you want to know more about the regulatory and legal developments related to the bets market in Brazil, do not hesitate to contact our partners felipe.monteiro@kasznarleonardos.com and fernanda.magalhaes@kasznarleonardos.com.

[1] Early collection of popular savings (CAPP) is a legal mechanism that allows companies to raise financial resources from the general public before offering a product or service. This collection is made through the promise of future delivery of the product or service, usually with some kind of advantage for the first investors.

[2] Sweepstakes are a type of contest where prizes are awarded to winners chosen at random. Unlike lotteries, where you typically have to pay to participate, sweepstakes are free to enter. You may have to complete simple tasks like filling out a form, providing your email address, or following a social media page, but you don’t have to pay anything to qualify for the prize.