In Brazil’s business environment, the term often used to describe the country’s unique policies or regulations is derived from a fruit tree believed to grow exclusively in Brazil. This fruit’s name symbolizes the complexities that make navigating Brazil’s regulatory landscape particularly challenging for foreign entities.
The last year has underscored the appropriateness of this term for Brazil’s upcoming regulated online gambling market, scheduled to officially commence on January 1, 2025. The anticipation around Brazil’s market is understandable. According to Vixio’s projections, the first year could see gross revenues from online sports betting and casinos exceeding $2.9 billion, positioning Brazil among the world’s top 10 regulated markets.
These revenues are anticipated to grow to $6.3 billion by 2028, potentially making Brazil the second-largest market globally, assuming no changes in New York’s igaming legalization status. However, the smooth introduction of online gambling in Brazil is uncertain due to numerous policy risks and unique compliance challenges that industry stakeholders will need to navigate in the upcoming months.
**Regulatory Reset Risks**
In many regulated markets globally, there have been trends of initial liberalization followed by stricter regulations concerning advertising, responsible gambling, and increased taxes as a response to public and media concerns. In Brazil, however, the likelihood of a legislative pushback and regulatory overhaul has already quickened throughout 2024, even before the official market launch.
Amid an ongoing transition phase, some Brazilian policymakers have raised concerns, influenced by recent influential reports from Brazil’s Central Bank and other financial entities, highlighting the purportedly high expenditure by Brazilians on unregulated platforms. In September, Brazil’s new betting regulator, SPA, unexpectedly revised the transition terms, effectively banning operators who had not applied for a license.
President Lula subsequently engaged various ministries to assess the robustness of regulations drafted between April and August but not effective until January 2025. He pledged to ban online betting should the regulatory framework prove deficient. Regulations around bonuses and payments have also evolved, with other government and judicial entities asserting their influence over specific areas.
Brazil’s Senate, more hesitant than its counterpart in Congress in 2023 regarding fully opening the gambling market, has revisited online betting. In November, senators formed a parliamentary investigation commission to scrutinize the online gambling industry, with public hearings slated before and after the market’s launch.
The Senate commission is expected to report after 130 days, possibly recommending new measures related to advertising, responsible gambling, and the use of AI by betting platforms. Concurrently, a separate Senate investigation into match-fixing in Brazilian football is evaluating betting type restrictions, while broader tax reform discussions could lead to additional levies on fixed-odds betting.
**Potential Court Challenges**
Beyond legislative scrutiny, attention also focuses on Brazil’s courts, notably the Federal Supreme Court (STF), where three significant legal challenges against the new licensing regime are pending. These challenges, initiated by a retail association, a political party, and Brazil’s Attorney General’s office, claim the online betting law contravenes constitutional rights related to public health, economic stability, and competition.
Industry proponents avoided an immediate halt to the implementation of the licensing system when the presiding justice refused to suspend the law. However, new restrictions to prevent gambling with welfare funds were mandated, and the pending challenges will be resolved in 2025.
Moreover, other crucial legal matters are before the STF, including a dispute involving Rio de Janeiro’s state lottery, which is being challenged for allowing bets from players outside its jurisdiction. Should Rio’s lottery prevail, it might offer an alternate market entry for operators nationwide via a state license with lower costs and potentially relaxed standards.
**Navigating Compliance Complexities**
As Brazil’s market gears up to go live, companies must prepare for these external risks. They also face inherent compliance hurdles within the regulatory framework that includes distinct rules on facial recognition, payouts, and paytable displays.
By January 1, eligible operators will have invested significantly in compliance and reporting requirements and paid an upfront licensing fee of BR$30 million (over US$5 million) before spending on marketing and customer acquisition. Compliance will be crucial, particularly regarding enforcement against unlicensed operators.
The SPA and telecom regulator Anatel have already tested web-blocking, blacklisting over 5,000 sites since October. However, as Anatel’s president noted, effectively blocking offshore gambling sites is challenging, with many suggesting the most effective measure would be to disconnect unregulated operators from the Pix instant-payments system managed by Brazil’s Central Bank.
Given these uncertainties, Brazil’s gambling market remains in focus for the industry through 2025. As the adage goes, doing business in Brazil requires expertise and resilience, given its distinctive and captivating challenges. For a comprehensive overview, Vixio provides the “Brazil: Online Gambling Playbook 2025,” which details the current landscape of online gambling and sports betting regulations in Brazil, available [here](https://bit.ly/4g6Mi9w).