I’ll share the scoop on what’s next in payment processing for sports betting in Brazil, how it impacts operators, users, and most importantly, how it’s opening up new opportunities. If you’ve been around the payment block for a while, but sports betting is a bit of a mystery, you might find this article interesting.
Currently, in the Brazilian market, we can break down betting into two types: sports betting and online casino. The first is centered on sporting events worldwide, while the casino offers a variety of games like slots, roulette, and card games.
These games are provided by Betting Operators, and their websites can only operate in Brazil if hosted in another country with the necessary licenses. Prominent jurisdictions where online gambling is legal and regulated include the United Kingdom, Malta, Curacao, Gibraltar, Isle of Man, and Alderney.
Online casinos offer virtual versions of traditional games found in physical casinos. You’ll find a wide range of slots, crash games, card games, and table games. The diversity in this mode of gaming is impressive.
Having a license means operators follow regulations set by their home country, ensuring websites are supervised and operate correctly. In Brazil, it’s mandatory for operators to be licensed elsewhere to operate online.
Moreover, it’s crucial for the operator’s website to have an effective security system to secure personal data and bank transfers within the platform. All operators conduct pay-ins and payouts via Pix, the preferred payment method among Brazilian bettors due to its speed and security.
To give you an idea, BNLData estimates online betting reached a market cap of 120 billion BRL (approximately 24 billion USD) in 2022, and that is why things are changing: because betting operators don’t pay taxes!
Since 2018, the market has been awaiting regulations, establishing clear rules for companies currently operating without any issues but hosted in other countries due to the lack of regulation. This definition is considered vital for player safety and market integrity.
On December 30, 2023, a bill regulating online sports betting in Brazil was sanctioned by President Luiz Inácio Lula da Silva. With this measure, sports betting sites can now be taxed by public authorities, potentially boosting revenue for the country in 2024.
What’s changing:
The Department of Finance will establish an office responsible for registering and onboarding betting operators in Brazil, conducting rigorous KYB, AML, and analyzing their documentation and websites.
Operators will also need to purchase a license to operate in Brazil. The office will monitor the volume of bets and operator’s revenue, ensuring greater control over this market.
According to regulations, both operators and bettors will be required to pay taxes. Players with winnings exceeding R$ 2,112 will pay 30% of winnings, the same rate applied to lottery prizes.
For operators, the government intends to impose an 18% rate on the so-called Gross Gaming Revenue, which is revenue obtained from all games played, minus prizes paid to players and taxes levied on legal entities.
Moreover, betting platforms will also be subject to other taxes required from any company, including PIS, Cofins, Income Tax, CSLL, and ISS.
Consumer risks will be reduced, from misused identities and credit fraud using synthetic identities, to alerts on betting time limits and volume, and debt control—all essential in preventing gaming addiction.
In case you’re not familiar, a synthetic identity is a combination of fabricated credentials not associated with a real person. Fraudsters may create synthetic identities using potentially valid CPFs (Brazilian Identification Number) with accompanying false Personally Identifiable Information (PII).
The regulation aims to enhance the sports betting experience, promising transparency, supervision, and consumer protection for online sports games. It will be a differentiator for operators presenting the best solutions for consumer safety.
The regulation of the betting market has the potential to create thousands of jobs, focusing not only on quantity but also on quality. It aims to generate skilled positions throughout the gaming ecosystem, ultimately placing Brazil firmly on the global stage of the entertainment industry.
