The Ministry of Finance establishes minimum requirements to grant authorizations for sports betting operations and will prioritize companies that express interest

On October 27, 2023, the Ministry of Finance published Normative Ordinance No. 1,330, which:

• establishes the general conditions for commercial operations of the lottery category of fixed-quota betting (“sports betting”) within Brazil, as provided for in Law No. 13,756, dated December 12, 2018, with the changes introduced by Provisional Measure No. 1,182/2023; and
• regulates the general rules on the rights and obligations of bettors, the prevention of money laundering and other crimes, responsible gambling, and prior expression of interest.

The key highlights of the new ordinance, within the scope of Public and Regulatory Law, are described as follows:

Requirements and conditions for obtaining the authorization grant

• Although the ordinance emphasizes that the Ministry of Finance must publish the requirements and conditions for granting authorizations according to future specific regulations, the new regulation already establishes 13 minimum requirements, which are:

• 1. Have the operation of fixed-quota betting as its main business purpose.
  2. Prove its proper incorporation under the Brazilian laws, with headquarters and administration in Brazil.
  3. Prove the lawful origin of the funds that form the share capital.
  4. Prove the good standing of legally responsible parties, partners, final beneficiaries, and those occupying strategic positions in the company.
  5. Have a sports betting platform that meets the technical and operational requirements defined in specific regulations, if it is certified by a laboratory whose competence is duly recognized by the Ministry of Finance.
  6. Operate under a corporate governance structure consistent with the complexity, specificity, and risks posed by such business category.
  7. Provide bettors with a Portuguese-speaking support service, based in Brazil, accessible by electronic and telephone channels, free of charge, available 24 hours a day, 7 days a week, and able to respond to complaints, queries, and other problems related to bets.
  8. Register on the digital platform “Consumidor.gov.br”.
  9. Adopt integrity mechanisms in the placing of fixed-quota bets, according to specific regulations.
  10. Integrate domestic or foreign sports integrity monitoring bodies.
  11. Implement policies to prevent match-fixing, money laundering, terrorist financing, and the proliferation of weapons of mass destruction, in accordance with specific regulations.
  12. Appoint a person responsible for the following areas, provided that the accumulation of duties is prohibited:
      • Accounting
      • Data security
      • Ombudsman
      • Operational security of the betting system
      • Integrity and compliance
  13. Comply with other requirements and conditions established by law and specific regulations.

Who is not eligible to obtain authorization?

• Authorization will not be granted to:

• 1. Individuals
  2. Legal entities that do not meet the requirements established in the ordinance and specific regulations issued by the competent technical area of the Ministry of Finance.
  3. Legal entities whose partners or controlling shareholders – individuals or members of a control agreement –, directors and other members who make up their corporate structure hold participation, directly or indirectly, in a football corporation or in a professional sports organization.
  4. Legal entities whose partners or controlling shareholders – individuals or members of a control agreement –, directors, and other members who make up their corporate structure act as professional athletes, members of a technical committee, referees, or managers of Brazilian sports teams.
  5. Legal entities, including the partners or controlling shareholders, directors, and other members who make up their corporate structure, whose right to bid and contract with public authorities is suspended, or who have been declared ineligible by the government, within the federal and state levels, or by the federal and municipal districts, while the conditions for punishment remain in force, or until eligibility is reinstated.
  6. Foreign companies whose authorizations have been withdrawn or revoked in other jurisdictions in the last five years.
  7. Legal entities whose partners or controlling shareholders, directors, and other members who make up their technical or corporate structure – are spouses, partners, or relatives in a direct and collateral line, by lineage or kinship, up to the third degree – of public servants or service providers who are employed by the Ministry of Finance in the area that is responsible for granting the authorizations addressed by the new ordinance.
  8. Legal entities whose partners or controlling shareholders, directors, and other members who make up their corporate structure have convictions and are barred for crimes provided for in the ordinance.

(IMPORTANT) Prior expression of interest¹:

• Legal entities interested in authorization grants for commercial operation of sports betting within Brazil can submit a prior expression of interest to the Ministry of Finance by November 26, 2023 (Sunday).
• Prior expressions of interest must be forwarded to the Ministry of Finance’s General Coordination of Lotteries, via the email address cogel@fazenda.gov.br, including all the documents the Ordinance. requires.

1. 1. It is important to emphasize that foreign companies must submit a commitment agreement on the constitution of a company in Brazil, in addition to the powers of attorney of those who will sign the declaration of expression of interest. A representative with specific powers can be appointed for this purpose.

• Although prior expression of interest does not constitute prior authorization for the operation of sports betting, nor does it bind companies that express interest, the new ordinance ensures priority in the analysis of the requests for authorization made by these companies later.

Finally, it is worth noting that, currently, the Ministry of Finance is expected to publish a specific regulation including requirements and conditions to grant authorization, while Provisional Measure No. 1,182/2023 is still pending the Brazilian National Congress’s approval. Therefore, other requirements and demands can be included in the above list.

Demarest’s Public & Regulatory Law team is monitoring updates and is available to provide any further information or clarification on this matter.

[1] Prior expression of interest is a statement submitted by the legal entity interested in carrying out the commercial operation of sports betting and does not imply authorization for the activity.