Claudio Akio Namikata Jr, head of product at PayBrokers, examines the essential regulatory requirements for betting operators wishing to establish and operate in Brazil's regulated iGaming market. With the growing demand from the company's clients, this overview highlights critical points from a service and compliance perspective.
Authorization to operate
Establishment and documentation: To offer betting services in Brazil, foreign companies must become Brazilian legal entities with a National Registry of Legal Entities (CNPJ). Authorization from the Secretariat of Prizes and Bets (SPA) of the Ministry of Finance is mandatory. The process involves submitting key documents, including proof of registration, social contract, tax certificates, and proof of financial stability. Operators must also have a minimum net worth of R$ 30 million, which may coincide with the fully integrated capital required to operate up to three brands.
Technical and governance standards: Operators must meet strict governance and technical criteria, including the adoption of tamper-resistant IT systems that ensure continuous operation. Policies for the prevention of money laundering, responsible betting, and manipulation of results are also necessary. A crucial component is establishing a customer service infrastructure based in Brazil, operating 24/7, offering support in Portuguese through electronic and telephone channels.
Platform compliance and technical requirements
After obtaining authorization, operators must ensure that their platforms comply with the specific technical requirements set by Brazilian regulations. Key aspects include:
System integrity and security: Operators must synchronize the clocks of all system components to maintain accurate transaction timestamps. Control programs must monitor the system's operation while resisting tampering, allowing independent verification of its integrity. The platform must also include strong authentication mechanisms, such as multifactor authentication, to verify user identities and prevent unauthorized access, with immediate responses to suspicious login attempts.
Account management for betting: The process begins with account registration, where bettors provide personal information verified by the operator. The system must authenticate users before allowing them to place bets. During the registration process, operators must capture detailed geolocation data, including IP addresses, device IDs, and GPS coordinates, to ensure compliance with location-based regulations.
The platform must also facilitate account verification through cross-checking the information provided by bettors during registration. This includes verifying the identity, age, and location of the bettor by various means. Operators may request additional documentation from bettors to complete the verification process. It is crucial to have age verification mechanisms, identity checks, and facial recognition before completing registration.
Geolocation and security: The geolocation data captured during registration plays a vital role in ensuring that user sessions are consistent with their location. Operators are required to update multifactor authentication credentials regularly, at least every seven days. For password updates, forgotten passwords, or suspicious login attempts, facial recognition verification is recommended. If fraud is detected, operators must request additional geolocation data, such as IP addresses or GPS coordinates, to verify the user's location.
Transactions, betting, and account management
Operators must manage three distinct types of accounts to comply with Brazilian regulations:
Transactional account: This account is used to receive deposits from bettors and pay out winnings. Operators are prohibited from using the funds in the transactional account for any purpose other than paying out prizes. The system must ensure accurate processing of deposits, withdrawals, and placement of bets. Bettors must have access to records of all transactions, including details of the bets placed, such as information about the event, odds, and amounts wagered.
Proprietary account: This account is used by the betting operator to manage operational expenses and liquidity. The funds in this account belong to the operator and can be used freely for their own purposes. Winnings from bets, after paying out prizes, are transferred from the transactional account to the proprietary account. Operators must maintain sufficient resources in this account to cover operational expenses and manage exposure limits effectively.
Reserve account: The reserve account serves as a safeguard to ensure the payment of prizes in case of insolvency or liquidity issues. It requires a minimum balance of R$ 5 million, held in federal government bonds registered in the SELIC system. The reserve account must be kept separate from the transactional and proprietary accounts, and its funds can only be used with prior authorization from the SPA, except for an annual withdrawal of actual investment earnings.
Deposit and placement of bets: Bettors can fund their accounts using approved payment methods, such as electronic bank transfers or PayBrokers' PIX. The system must ensure that deposits are accurately credited to the bettor's account. Once the account is funded, bettors can place bets on various sports events or casino games. The system must accurately record all bets placed and provide bettors with detailed records of each bet, including details of the event, odds, and amounts wagered.
Withdrawals and account statements: Bettors can request withdrawals from their balances at any time. The system must process these requests promptly and provide bettors with records of all withdrawal transactions. Operators must also provide detailed account statements that include all transactions, such as deposits, bets, wins, losses, and withdrawals. These statements must be accessible for a specific period and available for download or print for record-keeping purposes.
Responsible gaming tools: Operators are required to implement responsible gaming tools that help bettors manage their betting activities. These tools may include deposit limits, loss limits, time limits, and self-exclusion options. Bettors should be able to easily access and manage these tools through their account settings. Additionally, operators must notify bettors of any suspicious activity or unauthorized access attempts to their accounts.
Cost-effective transactions
To minimize the costs associated with frequent banking transactions, it is recommended that operators keep prizes and bettors' balances within the platform's wallet until the bettor decides to withdraw the funds. This approach reduces operational costs linked to transactional processes and gives bettors more control over their withdrawals.
Conclusion
This comprehensive guide highlights the key regulatory, technical, and operational requirements for betting operators seeking to comply with igaming regulations in Brazil. By adhering to these standards, operators can ensure that their platforms are secure, efficient, and compliant with all necessary regulations. This not only facilitates a smooth transition to the Brazilian market but also enhances the user experience, positioning operators for success in this rapidly evolving sector.
Source: GMB
