Speaking on a Latam-focused panel at iGaming NEXT Valletta 23 yesterday(21 June), Carvalhaes (which is the managing director of Brazilian online betting operator Vai De Bob) suggested that regulations recently proposed by the Brazilian government will serve to undermine the creation of a fair and sustainable market in the country.
Brazil’s latest regulatory proposal
In April, the government introduced a proposal for sports betting regulation which included a licensing fee of R$30m, a tax on GGR set at 16%, and a further tax on customers’ winnings set at 30%.
“For me as an operator, that’s completely unfair,” Carvalhaes said during today’s panel session.
“Nothing justifies a R$30m fee for sports betting only. If anyone feels positively about that as an operator, I really want to talk to them and find out their ROI plan, because it doesn’t make sense to me. How can you invest R$30m, unless you’re a multi-million, massive giant? For the small operators, what’s going to happen is they’re probably going to run a massive black market, just like happened in Mexico. You have the largest guys there running the show, and then you have a lot of guys just running under the radar. That’s probably what’s going to happen [in Brazil] because we’re talking R$30m, plus taxing the player 30% on winnings.”
Change is coming
While the proposals have been viewed unfavourably by many in the sector, they at least offer some level of certainty into the future of the market. Sports betting was legalised in Brazil in 2018, but the government is yet to introduce a nationwide licensing regime and regulatory framework for the sector.
Instead, at present some states have used their own interpretations of existing lottery regulations to begin issuing licences to betting operators.
The political split between state and federal lawmakers, alongside continuing political turmoil and a great deal of “going back and forth, back and forth” on betting regulation, have turned the situation around gambling into “a bit of a soap opera,” Carvalhaes added. That brings dangers for the betting sector, as Carvalhaes suggested, because “some states are regulating betting on the state level, but we don’t know if that’s going to stand up the moment that national regulation comes.”
For that reason, he added, “we need regulation on the national level for sports betting.”
What’s the alternative?
To bring about a strong betting sector nationally, Carvalhaes suggested the Brazilian government should aim to emulate its neighbours in Colombia, where well defined regulations have helped to develop a competitive and thriving online gambling sector since the market launched in 2017.
“For me as an operator, Colombia is the best example of what must be done in the other countries in Latin America. Firstly, you have your target audience – the population with a very high propensity to gamble. You also have more than 80% internet penetration in the country, and Colombia is a technology hub for Latin America”
“And then when it comes to the market, per se, we have regulation that’s clear. There’s no way you can get tangled up when it comes to regulation in Colombia, because it’s clear: you offer your product there, you pay 16% taxes to the government and to [local regulator] Coljuegos, and you can operate.
“Most of the operators that I know there are very happy with the results. As a regulated market, I think Colombia is the best example,” Carvalhaes concluded.
The development of a nationwide regulatory framework remains an ongoing discussion in Brazil. The latest predictions suggest regulations may be introduced by 2024.
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Although representatives of the restaurant located in Medellín confirmed that the betting house called 1win had canceled the event that same morning, Coljuegos' intervention was crucial to guarantee compliance with the law and prevent future attempts at illegal operations in the country.
The purpose of the event was to educate attendees about affiliate marketing strategies, traffic arbitrage and other forms of monetization in order to boost the participation of the betting public on the platform.
Bookmaker 1win is a gaming platform for bettors from the Russian Federation, Commonwealth of Independent States countries and near abroad countries.
However, Coljuegos has determined that the 1win brand does not have the required authorization to operate in Colombia, which makes any promotional activity in Colombian territory illegal. Furthermore, 1Win is not part of the web portals authorized to operate games of luck and chance over the Internet.
In this case, the entity highlighted that it will continue to work tirelessly to protect consumers and guarantee that all activities related to gambling are carried out in accordance with current regulations. It is worth remembering that, “To date, 15,120 blocking orders have been issued to unauthorized online gambling portals,” The national government will put the magnifying glass on health resources coming from taxes on games of luck and chance
The Secretariat of Prizes and Betting (SPA) - an entity of the Brazilian Ministry of Finance - recently issued Ordinance SPA/MF 722/2024, which details the technical and security requirements that sports betting and online gaming operators must meet. The technical requirements focus on the technological infrastructure of the betting systems. Specifically, all authorized operators must store the betting system and the corresponding data in data centers located in Brazil.
In exceptional circumstances, systems and data may be located outside Brazil, but must meet certain criteria. Operators must present to the SPA an explanation of why their systems are kept outside Brazil. The data center must also be ISO 27001 certified.
These conditions include that the countries have an International Legal Cooperation Agreement with Brazil in civil and criminal matters. Data owners abroad must authorize data transfers in advance. To facilitate effective supervision, operators must provide the SPA with data on bets, players, customer portfolios, legal destinations, and other operational information. This manual will soon be available on the website of the Secretariat, which may request additional information from the operator at any time.
On the other hand, operators must obtain certification of their platforms and systems from entities recognized by the Ministry of Finance. They must meet strict technology and security standards to protect consumers against potential fraud or unauthorized access.
Ordinance 722 SPA/MF 722 was published in an extra edition of the Official Gazette of the and can be consulted at the http://www.in.gov.br/web/dou/-/portaria-spa/mf-n-722-de-2-de-maio-de-2024-557715851
Senator Angelo Coronel, from the PSD party in Bahia, seems frustrated with the delays in implementing the law regulating sports betting in Brazil. He criticizes the Ministry of Finance for its sluggishness in collecting the grants for operating licenses, despite the estimated significant revenue of at least R$5 billion that could benefit the public coffers.
The senator views this potential revenue as a means to address other fiscal issues, such as compensating for payroll tax exemptions for certain sectors and small municipalities, which have faced legal challenges.
Caixa Econômica Board postpones decision on lottery transfer.
Although the law regulating the betting market was passed at the end of 2023, the appointment of the head of the Secretariat for Prizes and Betting, the Treasury body responsible for overseeing betting operators, only occurred recently. Senator Coronel expresses his frustration with this delay, emphasizing that Congress acted promptly in approving the legislation, but the government has been slow to implement it.
The taxation structure outlined in the law includes a 12% levy on bookmakers’ revenue and a 15% tax on punters’ winnings. These measures were part of Finance Minister Fernando Haddad’s plan to help achieve a zero fiscal deficit by 2024.
The Secretariat for Prizes and Betting is currently focused on drafting regulations governing the operation of the betting market in Brazil. Once these regulations are in place, interested legal entities will undergo evaluation, including criteria related to integrity and prevention of fraud. Over 130 companies have expressed interest in operating in the Brazilian market.
It’s highlighted that the law provides legal entities operating in Brazil with a minimum of six months to comply with the regulatory provisions once they are established. Senator Coronel hopes that the newly appointed Secretary for Prizes and Betting, Regis Dudena, will expedite the regulatory process.
The LifeMiles loyalty program and Codere launched a promotion aimed at the regulated market of Colombia and which has the legendary and much-loved former soccer player Carlos "El Pibe" Valderrama as the protagonist.
To participate, users must register their LifeMiles account number in the “Promotions” section of Codere, and then bet on any sport from COP 100,000 (USD25) with a minimum odds of 2.0. After that, they will begin to accumulate LifeMiles miles.
LifeMiles is a loyalty program, with more than 9 million members and hundreds of allied businesses (including Avianca, Bancolombia and many more) where members can earn and use their LifeMiles.
Can earn LifeMiles through our partner businesses: • On everything you buy, using an Avianca LifeMiles credit or debit card. • For air tickets, hotel stays, car rentals and other travel-related activities. And now to play in Codere.
The sale process of Enjoy is still in the early stages, but it already has several interested parties in its assets.
According to the Chilean press, Logrand Entertainment, the main target as a possible buyer in recent months, is interested in acquiring the operator's positions. However, the rooms in Viña del Mar, Coquimbo and Pucón would be left out of the equation.
According to Diario Financiero, the company considers the prices paid for these permits “stratospheric”, so it would be more profitable to pay the guaranteed notes. In this way, other operators such as Dreams and Marina del Sol would have the opportunity to invest there.
On the other hand, Enjoy's perhaps most relevant asset, the Punta del Este casino, is the one that generates the greatest interest in international companies. There would already be advanced negotiations with five potential buyers, despite certain negative projections in this regard.
The imminent regulation of gambling in Brazil, which could include physical casinos, would be detrimental to the Uruguayan operation, whose main clients come from that country.
However, the Plaza Esteña is relevant beyond its games room, as it is a central destination for tourism in the region. In this way, it is very likely that it will remain one of the most important assets of the Chilean company.
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