Regulated sports betting is inching closer to becoming a reality in Brazil. A bill signed by president Lula da Silva during the summer is currently working its way through the National Congress of Brazil and is expected to become law officially within the next few months.
This represents a massive opportunity for international bookmakers, due to Brazil's vast size combined with enormous, untapped potential. With a population of over 200 million people and a tremendous love and enthusiasm for sports among its populace, Brazil represents a great opportunity for bookmakers. Sports betting is already highly popular in the country; despite the fact that bookmaking has been banned in Brazil since 1946, many Brazilians place bets with entities using international servers in a non-regulated “gray market”.
At the end of 2022, this gray market in Brazil was worth R$7 billion, up from R$2 billion in 2020. Furthermore, sports bettors in Brazil tend to be very engaged; one survey showed that at least 1 in 6 bettors in the country say that sports betting is their main source of income. And nearly 50 percent of Brazilians say they have bet on a sporting event in the past year.
However, any sports betting operator coming into the country must know the ins and outs of the gambling regulations in Brazil. Here’s a primer on everything you need to know before setting up shop in Brazil.
Tax and Location Requirements
The new regulations are requiring sportsbooks doing business in the country to maintain some kind of physical presence in Brazil. Operators will also be subject to a 18% tax on gross gaming revenue, a percentage of which will be distributed to public health initiatives and anti-match-fixing initiatives.
This tax is separate and on top of any other regular business taxes applicable in the country. Betting companies coming into the country must also pay an R$30 million licensing fee.
Sportsbooks that do business in Brazil will be required to promote responsible gambling. They will be required to fund and create public awareness efforts around gambling addiction and how to bet responsibly. They must also provide responsible gambling resources to their users.
Operators also have to provide 24/7 Portuguese-language support, both digitally and via phone.
Conflicts of Interest
The government has proposed a restricted list for those prohibited from engaging in sports betting. This is a wide ranging list and includes government workers involved with gambling regulation policy, those involved in professional sports, legal entities and many more.
Bookmakers entering the Brazil market must ensure they are not onboarding as customers any persons on these restricted lists, lest they face fines or even losing their license to operate in the country.
Robust KYC Measures
In an effort to fight fraud and abuse, sports betting platforms must conduct thorough KYC checks on each user. This means going beyond just doing CPF checks. A CPF (“Cadastro de Pessoas Físicas”) is the Tax ID number given to all Brazilian citizens and foreign aliens who pay taxes.
However, CPF fraud is rampant and operators cannot rely solely on verifying CPF’s to ensure only good users are onboarded. They need thorough Know Your Customer (KYC) processes in place. This includes document verification, liveness checks, cross checking with third-party databases, compliance checks and music more.
Accurate, Fast Onboarding
The new regulations will require operators to perform accurate and fast identity verification of all new users. This means operators coming to Brazil must be able to onboard new customers quickly and safely, while rooting out fraudsters and other bad actors.
However, doing this is not simply a matter of regulatory compliance; operators that enable seamless onboarding for legitimate customers and quick payouts will gain a significant competitive advantage and engender customer loyalty.
Caf: Your Local Partner in Brazil
As a Brazil-born and headquartered company, we know the ins and outs of local laws and regulations in the country. As the fastest-growing identity verification company in Brazil, Caf.io offers a range of features that make it an ideal solution for sports betting operators looking to comply with the new regulations in Brazil. These include:
- Real-time verification: Caf can help your company to verify the identity of customers in real-time, allowing sports betting operators to quickly and securely onboard new customers and reduce fraud e.g. bonus abuse
- Robust security: We implement advanced security measures to ensure that customer data is kept safe and secure.
- Scalability: The Caf platform is able to scale to meet the needs of sports betting operators of all sizes, from small startups to large multinational corporations.
- Compliance: Our solution is designed to comply with the latest regulatory requirements, including the new regulations around sports gambling introduced in Brazil.
- Brazil-Native: Our company was started in Brazil and remains headquartered here, with offices in Sao Paulo, Rio De Janeiro, Venancio Aires and elsewhere in the country.
Contact us today to learn how Caf can help your business win in the newly regulated sports betting market in Brazil.