Brazilian Ministry of Finance issues new ordinances on fixed-odds betting

On July 31 and August 1, 2024, the Brazilian Ministry of Finance’s Secretariat of Prizes and Betting (SPA) published five separate ordinances with supplementary rules for fixed-odds betting operators. With the publication of these five ordinances, the regulatory agenda established in April 2024 has now been finalized.

Online games

Ordinance SPA/MF No. 1,207/2024 establishes technical requirements for fixed-odds betting operators in regard to online games and live gaming studios.

The games the ordinance regulates are those that allow for multiple bets, line games, crash games, card games, blackjack, roulette, sports or racing games, and ball and number draws.

Annex I of the ordinance contains general technical requirements and specific requirements that depend on the type of game. These include:

• Information that must be disclosed to the player before and during the game, especially to ensure transparency around the bets made, the chances of winning and game rules;
• Theoretically, each game must pay the player a minimum RTP of 85% during its expected useful life cycle;
• Incentive prizes, double-bet features and persistence games (i.e., games that allow financial resources to accumulate) are permitted, provided that specific requirements of the Annex are met to ensure reliability and transparency in relation to the player;
• Bets placed through the online gaming platform during live gaming events via attendants (such as croupiers) or certain gaming equipment (such as automated roulette) must be viewable to players in real-time via remote audio and video transmission. The platform must also have an interface that allows players to make decisions, among other requirements;
• Live gaming studios must have a designated location and adequate physical security controls. Secure areas, consumables and live online gaming equipment must be protected by entry controls and appropriate security procedures to ensure that only authorized members are allowed access.

Games of skill, fantasy sports, multi-player games and peer-to-peer games do not fall under the category of online gaming.

Responsible gaming, advertising and players’ rights and obligations

SPA/MF Ordinance No. 1,231/2024 establishes guidelines to ensure fixed-odds betting is run, promoted and advertised in a healthy and socially responsible way, preventing and mitigating individual or collective harm. In addition to establishing a responsible gaming policy, betting operators must (among other obligations):

• Promote awareness of the risks of gambling addiction, pathological gambling disorders and restrictions on gambling for minors;
• Allow the player to adopt a sensible betting limit (based on time elapsed, financial losses, total amounts deposited or number of bets), as well as request self-exclusion;
• Suspend players at high risk of addiction and pathological gambling disorders from using the betting system.

This ordinance also defines the rights of players, such as betting safely and responsibly, and operators’ obligations to ensure bettors are identified and protected.

Furthermore, rules regarding communication, advertising and marketing are provided for, including specific rules for sponsorship and the need to provide clear warnings about the risks associated with betting. The ordinance establishes that betting operators will be jointly liable for communication, advertising and marketing actions conducted by their affiliates.

Monitoring and inspection

Ordinance SPA/MF No. 1,225/2024 regulates how the activities of the fixed-odds lottery and betting operators are monitored and inspected.

The ordinance defines the activities of continuous monitoring and inspection – including remote and on-site inspections – to ensure compliance with laws and regulations, in addition to establishing preventive and precautionary measures to eliminate or reduce identified risks.

While exercising its supervisory powers, if the SPA’s Undersecretariat of Monitoring and Inspection identifies evidence of administrative infractions punishable under the applicable legislation, it must initiate an investigation (via administrative sanctioning proceedings) unless the parties sign a commitment agreement.

Sanctions

Ordinance SPA/MF No. 1,233/2024 regulates the sanctions framework for commercial fixed-odds betting. This ordinance outlines the relevant administrative procedures, including notifications, deadlines, defense and appeals.

The SPA’s Undersecretariat of Monitoring and Inspection will initiate, oversee and analyze the administrative sanctioning proceedings, which will then be sent on to the SPA’s Undersecretary of Sanctions to make a first-instance decision.

The applicable penalties include official warnings, fines, cancellation of authorization to operate, and bans on participating in public bids, among others. The ordinance establishes criteria for calculating sanctions, precautionary measures, recidivism, and the possibility of signing a commitment agreement.

The following considerations will be made when applying the penalties:

• The severity and duration of the infraction;
• Whether it was the offender’s first offense and whether they acted in good faith;
• The extent of harm caused or the risk of harm to the Brazilian economy, sport, consumers or third parties;
• The economic advantage gained by the offender;
• The offender’s economic capacity;
• The value of the transaction involved; and
• The existence of recidivism.

Distributing proceeds from collected taxes

SPA/MF Ordinance No. 1,112/2024 determines that transfers for tax payments made to the Brazilian Treasury’s Single Account (Conta Única) must be made with a Federal Revenue Collection Document (DARF). The ordinance establishes the applicable codes for each transfer. Betting operators are responsible for filling out the revenue codes correctly on the DARF.

The allocations contemplate proceeds resulting from all types of fixed-odds bets (virtual or real-world) linked to both real sports-themed events and virtual online gaming events.

In the case of expired prizes – in which the bettors lose their right to receive the prize or to request a refund – the prizemoney will be collected from the Brazilian Treasury’s Single Account, in accordance with the provisions of Law No. 14,790/2023 and via an act of the Brazilian Federal Revenue Service (RFB).

Betting operators must keep documentation of their transfers to the Treasury and legal beneficiaries and make it directly available to the SPA for up to five years. Operators are subject to civil, administrative and criminal liability if they fail to make these transfers.

For more information on this topic, please contact Mattos Filho’s Technology and Entertainment practice areas.