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Addressing a critical area of regulatory uncertainty, Brazil’s betting authority has published technical standards for online gaming that encompass a full range of popular casino games.
Ordinance SPA/MF no. 1.207 was published on Wednesday (July 31) by the newly formed betting secretariat (SPA) within Brazil’s Ministry of Finance, meeting a commitment by the regulator’s chief official to answer a pivotal question for prospective operators in the Brazilian market before the end of the month.
Enacted in December, Law 14.790 authorises licensed operators to offer fixed-odds betting on sports, as well as so-called “virtual online gaming events”, but the scope of the forthcoming regime had been unclear as officials expressed initial doubts that certain games popular in Brazil’s current grey market would meet that law’s definition of a fixed-odds bet.
At least some operators have even been holding off applying for a Brazilian licence ahead of an initial deadline in August, unsure that they would be able to justify paying a stiff upfront fee of R$30m (US$5.3m) and making other commitments in the event of material restrictions on permissible casino games in the regulated market.
Subject to various conditions, Ordinance 1.207 specifically permits online slots (“line games”), roulette, blackjack and card games, plus crash games, virtual sports and live casino content.
“This act was eagerly awaited by the market, as the definition of online games in Law No. 14.790/2023 and SPA/MF Ordinance no. 827/2024 [which established the licensing process] did not provide operators with clear guidance as to which games were actually permitted and regulated in Brazil,” said Fernanda Meirelles, a partner with FAS Advogados law firm in São Paulo.
“With the publication of the new ordinance, there is now no doubt that it is possible to offer fixed-odds betting on real sporting events and on well-known games of chance that rely essentially on luck to achieve their expected results.”
Fabio Ferreira Kujawski of Mattos Filho law firm echoed that the ordinance addresses the “significant level of debate and ambiguity surrounding the types of games that could be lawfully conducted in Brazil”.
The regulations not only encompass a wide range of game types but also establish explicit technical requirements for each of them, Kujawski told Vixio GamblingCompliance.
“This level of specificity is poised to garner the interest of gaming operators who have previously expressed interest in the Brazilian market but were hesitant due to the previously vague definitions,” he said.
Particularly significant is the fact that the ordinance allows for popular games such as Fortune Tiger whose legality has been subject to scrutiny by the Brazilian media, said Rafael Marchetti Marcondes, legal director for Brazilian betting industry association IBJR and chief legal officer for fantasy-sports operator Rei do Pitaco, one of five companies that have so far applied for a federal licence in Brazil.
“This measure, in addition to providing security to bettors, prevents the growth of the parallel market, strengthening the Brazilian licence,” Marchetti told Vixio.
Technical Requirements
Although permissive in general, Ordinance 1.207 does impose specific restrictions to ensure that online casino games can meet the statutory requirement to involve a fixed-odds bet per Brazilian law.
For example, the return-to-player (RTP) percentage for every game must be clearly visible to the player and each individual game must fully display a paytable with every possible winning combination at the start of a game session and on-demand. Games also may not offer mystery prizes, although progressive jackpots and bonus features are permitted subject to specific requirements.
The status of crash games had been one central area of concern for the industry, as Aviator and other similar games have exploded in popularity in Brazil and are thought to account for a very significant slice of the offshore market in the country.
Wednesday’s ordinance includes a specific article that addresses “colisão” or crash games, which will be permitted so long as their outcomes are random and each game provides clear rules and other information to the player before and during the game cycle.
For live casino games, the ordinance does not appear to require that studios have to be in Brazil or any other specific location, but live casino operations must meet specified security requirements and be certified against them within 90 days of licensing and then on an annual basis.
Casino games in general will all have to be certified specifically for the Brazilian market by an independent testing lab approved by the SPA. However, game certifications can be submitted in the name of a contracted game provider and will not have to be unique to each operator.
Games will also have to be recertified whenever a change is made to the game’s “critical components” that could affect the rights of the player, revenue generation, regulators’ access to information, or result in non-compliance of Brazilian regulations.
In a brief statement announcing the ordinance, the SPA said its technical requirements for online gaming “seek to protect bettors through rules that guarantee honesty and transparency in games”.
The agency added that the ordinance was “based on international guidelines related to operational safety and reliability, as used in the main markets for these games”.
Further Regulations To Follow
Also on Wednesday, a separate ordinance was published mapping out how licensed operators should apportion revenue to designated tax beneficiaries once Brazil’s regulated market officially launches from January 1, 2025.
The ordinance on tax allocations was not as keenly anticipated as that addressing casino games. Still, Marchetti of IBJR said the ordinance surprised the industry by not including all the necessary codes for the payment of taxes and it will need to be supplemented by further rules so that operators can fully comply with tax requirements once the regulation goes live.
The rules for casino games and tax allocations are the sixth and seventh of a total of 11 regulatory ordinances that were all scheduled to be released by the SPA before the end of July.
The four outstanding ordinances could be published as soon as today (August 1) and are set to establish additional rules on responsible gaming, bettors' rights, enforcement procedures, and inspection and monitoring processes for betting platforms.
