igaming regulations in Brazil: Uplatform’s insights on the Latin giant

Uplatform explores the transformative impact of new regulations and opportunities for operators in the Brazilian industry.

Opinion.- Imagine a colossal market awakening from its slumber, ready to transform the landscape of an entire igaming industry. Brazil, the Latin giant, is making waves in the global igaming arena, presenting a treasure trove of opportunities for operators and igaming businesses.

According to Statista, the igaming market in Brazil is set to reach a remarkable €1.80bn in revenue this year, with a user penetration rate of 0.9 per cent. The future looks even brighter, with an annual growth rate (CAGR 2024-2028) projected at 16.63 per cent, potentially swelling the market volume to an impressive €3.33bn by 2028.

This positive outlook did not arise from nowhere. The year 2023 marked a turning point with the adoption of Federal Law No. 14.790, which legalised gambling, including betting and online casinos, throughout the country. Previously, licences for these activities were issued only at the state level—think Rio de Janeiro, Paraíba, and Paraná.

This new law breaks down those barriers, paving the way for a unified, nationwide igaming framework. Join Uplatform in discovering the Latin giant awakening from its slumber, poised to revolutionise the entire igaming industry.

A new dawn for betting and fantasy sports

Under this groundbreaking law, fixed-odds betting is now legalised, providing a structured and transparent framework for betting activities. This includes fantasy sports, where competitions take place in virtual environments based on real-life performances. However, the regulation of Esports remains unclear, leaving many questions unanswered.

One key issue is the list of approved sports and sports organizations by the Ministry of Sports that can be included in bets on real sporting events (Interministerial Ordinance No. 28/2024). This list has yet to be compiled or officially published.

Additionally, there is still no regulation on the use of images, names, and other intellectual property of Brazilian athletes and sports organizations for the law. The anticipation around these developments adds a layer of excitement and urgency for operators looking to enter this vibrant market.

Navigating the new regulatory landscape

The newly established Secretariat for Prizes and Betting (SPA) within the Ministry of Finance will play a crucial role in ensuring the integrity of sports events subject to betting. The Ministry of Sports will collaborate to safeguard “within their powers, the integrity of the unpredictability of events and sports outcomes that are subject to fixed-odds betting.” There’s even talk of forthcoming legislation prohibiting bets on negative outcomes, such as yellow or red cards, to maintain the unpredictability of sports.

However, live casino games are not clearly defined under the law as they do not fit into the existing definition. Nonetheless, it is anticipated that the Ministry of Finance, which oversees this legislation, will soon clarify the status of these games and establish specific requirements for live gaming studios, which are widely favoured among the public.

Blocking unlicensed websites and bonus prohibitions

To protect the market’s integrity, Internet service providers (ISPs) are mandated to block access to illegal sites and unlicensed betting apps upon notification by the Ministry of Finance. Online games (“jogo online”) are defined as: “An electronic means allowing digital betting in a game, where the result is determined by a future random event through a random generator of numbers, symbols, figures, or objects, as outlined by regulatory acts” (Article 2(VIII) of Law No. 14.790). Currently, there are no restrictions on the types of online casino games allowed. 

When it comes to apps facilitating unlicensed gambling, the ministry must specify the illicit content provided by third parties; otherwise, any removal request will be invalid. Currently, a list of unauthorized websites to be blocked has not yet been compiled. For operators venturing into a new market, effective advertising is crucial to attract new players and offering bonuses is key to retaining them. While advertising isn’t outright banned, the law prohibits giving advances, bonuses, or any form of prior advantage for placing bets. Industry experts speculate this applies mainly to welcome bonuses, with retention bonuses for established players likely to remain unaffected.

The taxation and technical terrain

Operators must navigate a complex taxation landscape, with an effective tax rate of 23-26 per cent on gross gaming revenue (GGR). This includes a 12 per cent tax on GGR, additional federal social security taxes (PIS/COFINS) of 9.25 per cent, and local services taxes ranging from 2-5 per cent. Also, foreign operators are required to have a substantial presence in Brazil, including headquarters and at least 20 per cent ownership by a Brazilian citizen.

On the technical front, operators are required to use certified software, with RNGs subjected to rigorous statistical tests. While specific return-to-player percentages (RTP %) are yet to be detailed, compliance with technical standards will be essential for obtaining and maintaining a federal license.

Federal vs. state licensing and the federal licence acquisition process

The shift from state to federal licensing marks a significant transformation. Before the new law’s enactment in December 2023, online activities were licensed at the state level. The new law now prohibits individuals holding a state license from applying for a federal one.

This change is in response to a September 2020 ruling by the Federal Supreme Court, which stated that states and municipalities have equal rights with the federal government to conduct or regulate lottery games, including fixed-odds betting, within their jurisdictions.

Law 14.790 clarifies states’ powers regarding online gambling, requiring them to apply rules to operators that align with federal legislation. State licences significantly need to catch up to federal permits, mainly due to the prohibition on obtaining multiple licenses in different states of Brazil and the restriction that advertising must be limited to players physically located within that jurisdiction.

However, licences granted under the state-level licensing framework initiated before July 24, 2023, will remain valid according to their current terms. This transition from state to federal oversight marks a pivotal shift in the regulatory landscape of online gambling in the country.

The SPA is the primary body for issuing licenses. Applications submitted within the first 90 days from the publication of Ordinance No. 827/2024 will receive responses by the end of 2024. Starting January 2025, unlicensed operators will face penalties, making it crucial for businesses to act swiftly and secure their position in this burgeoning market.

Embracing Brazil’s igaming reform: A catalyst for growth

Brazil’s regulatory overhaul heralds a transformative era for the Latin American igaming landscape. As the largest economy in the region, Brazil’s move is expected to catalyze similar reforms across neighbouring countries, fostering a cohesive and expansive igaming market in Latin America. This synchronization promises to spur excellence, cross-border partnerships, and robust economic growth, turning the region into a bustling hub for the global iGaming industry.

For operators and igaming businesses, this is a clarion call. The time to tap into Brazil’s burgeoning market is now. With comprehensive solutions tailored to navigate the complex regulatory environment, Uplatform stands ready to assist businesses in leveraging this monumental opportunity.

Uplatform’s comprehensive platform encompasses three key units: Usports, a sportsbook offering traditional sports and Esports; Ucasino, an online casino games portfolio tailored to specific requirements for optimal operation success; and Utools and payment, a suite of technical solutions essential for managing, marketing, and nurturing business growth.

With a wealth of practical expertise and thorough data analysis, Uplatform has developed an impactful solution designed specifically for the LatAm market. By building customised betting software, Uplatform can assist operators in establishing, helping them tap into the region’s growing igaming market.

The awakening of the Latin giant is more than just a market expansion; it’s a revolution poised to redefine the global igaming arena. Seize the moment and be part of this groundbreaking transformation.