New Rules and Conditions for Obtaining Authorization for the Commercial Exploration of Sports Betting

On May 22, 2024, the Secretariat of Prizes and Bets of the Ministry of Finance (SPA/MF) published Ordinance No. 827/2024, which regulates one of the most important changes brought by the new Betting Law (14.790/2023), which is the need to obtain prior authorization for the commercial exploitation of fixed odds lottery betting by private economic agents.

The Betting Law and the aforementioned Ordinance establish that the authorization for commercial exploitation (i) is valid for 5 years, upon payment of R$ 30,000,000.00 (appr. $ 6,000,000.00 USD), taking into account the limit of up to three trademarks to be exploited by the legal entity in its electronic channels per authorization act; (ii) is personal, non-negotiable and non-transferable; and (iii) may be requested at any time by interested legal entities, in compliance with the procedure established in this Ordinance.

In addition, Betting Operators must prove (i) legal qualification; (ii) fiscal and labor regularity; (iii) suitability; (iv) economic and financial qualification; and (v) technical qualification.

The regulations also bring a series of requirements with a step-by-step process for obtaining them. Among those, we highlight (i) the need to establish a company with its headquarters and administration in the national territory, (ii) the setting of a deadline for the regularizing betting operators.

In this sense, the Ordinance sets a deadline until the end of 2024 for obtaining authorization by companies that were operating in Brazil at the time of the publication of Law No. 14,790, of December 29, 2023. As of January 1, 2025, companies without SPA/MF authorization will be subject to the various penalties provided for in the Law, which may, in addition to warnings and sanctions, reach significant amounts of up to R$ 2 billion reais (approximately $400,000,000 USD).

In addition to the need for Betting Operators to adapt by January 2025, the Ministry informs that the deadline for the documentation analysis to obtain the grant is up to 180 days, but as a transitional rule, those companies that apply for authorization within the first 90 days from the date of publication of the regulation, i.e. by August 22, 2024, will receive an answer this year.

It is important to clarify that if the authorization request is rejected, it is possible to appeal administratively through an appeal addressed to the authority that issued the decision through the Betting Management System (SIGAP). Thus, the company has ten days from the notification of deferral referred to in Article 25 of the Ordinance, which is, from the sixth day of the date of sending the notification by the Ministry of Finance’s Prize and Betting Secretariat, or on the date of its consultation of the Betting Management System (SIGAP), if the consultation occurs before the 6th day, to file the appeal and prevent the authorization process from being archived.

If you want to learn more about the regulatory and legal developments regarding the betting market in Brazil, don’t hesitate to contact our legal partner felipe.monteiro@kasznarleonardos.com.