Normative Ordinance 827 was published in Brazil’s Official Diary of the Union on Tuesday (21 May), clarifying the authorisation requirements for gambling companies to gain licences in Brazil.
Those who achieve authorisation will be granted a licence lasting five years, once the fee of BRL30m (£4.6m/€5.4m/$5.9m) is paid. Up to three online commercial brands will be allowed.
Companies active in Brazil when Bill 14,790/2023 was published will have until 31 December 2024 to be authorised. From 1 January 2025, companies who are active without authorisation will be subject to penalties.
Authorisation requirements in Brazil
Those wishing to be licensed in Brazil are mandated to have their headquarters and administration in Brazilian territory. Subsidiaries of foreign companies must have a Brazilian holding at least 20% of their share capital. Those companies with headquarters abroad will not be eligible for authorisation to operate.
Only limited liability and joint-stock companies will be considered for licences. Companies must also have a “very personal, non-negotiable and non-transferrable character”.
Authorisation can be reviewed whenever companies undergo a merger, split, incorporation, transformation or the transfer or modification of direct or indirect corporate control. When requested, companies must submit documentation displaying compliance to the Secretariat of Prizes and Bets (SPA) of the ministry of finance within 30 days.
Intended corporate changes must be discussed with the SPA to ensure they won’t affect compliance. The SPA will have up to 150 days to analyse situations that may impact authorisation from when documentation is sent.
Criteria for obtaining authorisation
Authorisation applications in Brazil must contain documentation assuring legal qualification, tax and labour regularity, suitability, economic-financial qualification and technical qualification.
Documents originally created in a foreign language must undergo translation into Portuguese by a Brazilian-sworn public operator.
Legal qualification will entail companies presenting documents such as identification and registration forms for controllers and holders of qualified holdings. Declaration of compliance with rules on payments will be required, as well as certification from the Central Bank of Brazil.
Tax and labour regularity will be proven with a joint certificate on federal taxes from the Special Secretariat of Federal Revenue and the Attorney General’s Office of the National Treasury.
Suitability, meanwhile, will be displayed with documents such as a Federal Police certificate of a negative criminal record for controllers and holders of qualified participation and final beneficiaries.
Among the convictions that will discount authorisation include bankruptcy, tax evasion and embezzlement.
Additionally, legal entities will have to provide evidence of a financial reserve of at least BRL5m. A proof of payment of minimum share capital valued at BRL30m will also be required. Additionally, net worth of at least BRL30m must also be proven.
Companies formed less than a year ago will be required to submit an opening balance sheet, projected cash flow over their next two financial years and a report signed by a financial director or equivalent role outlining their economic-financial hypothesis.
Technical certificates of betting systems must also be provided. Normative Ordinance No 722 previously outlined the technical requirements of such systems. These included the need to gain certification of platforms and systems from entities recognised by the ministry of finance.
Customer support systems based in Brazil
Companies will be required to describe their customer service systems to achieve authorisation in Brazil. These systems must be based in the country with a Portuguese service through a free electronic and telephone channel. They must be available 24 hours a day, seven days a week, to deal with complaints and other problems.
At least one of the members of the control group must have evidence of experience in gaming, with said persons having at least three years of experience.
In the case of entities, they must hold or have already held a qualified shareholding in legal entities whose corporate purpose is gambling.
Brazil in process of rolling out regulation
Brazil’s long road to a regulated betting market really kicked into gear in late 2023.
On 21 December, Brazil’s chamber of deputies voted to approve legislation to regulate sports betting. Additionally, igaming was included in the bill having been previously removed by the senate.
Later that month, president Luiz Inacio Lula da Silva ratified a new regulatory framework for sports betting and igaming. Lula signed the bill into law on 30 December.
In April, it was announced Brazil’s betting regulation would be fully announced by the end of July 2024. The implementation of that regulation is currently being rolled out in four stages.
Among the regulations already announced prior to the authorisation requirements was the ban on credit card and cryptocurrency payments in Brazil, revealed in Normative Ordinance No 615.
Normative Ordinance No 2,191, meanwhile, confirmed there would be a 15% tax on player winnings if they exceed BRL2,824.
Regulations still to be announced include procedures on advertising, as well as how industry contributions will be allocated to socially responsible causes.
Original article: https://igamingbusiness.com/legal-compliance/licensing/active-brazil-operators-authorisation/
