In the new edition of GMB Session, partners from the Entertainment area of Mattos Filho Lawyers, Lisa Worcman and Fabio Kujawski, analyze the fact that the Brazilian government has anticipated the regulatory effects by prohibiting Bets that have not yet applied for a license from continuing to explore the market. According to the experts, the measure came as a surprise to the sector and generates insecurity, due to the absence of a previously stipulated deadline.
Games Magazine Brasil - How has the recent anticipation of regulatory effects by the Brazilian government impacted your company's strategy in relation to the betting market in Brazil?
Fabio Kujawski -
The recent anticipation of regulatory effects by the Brazilian government has significantly impacted the betting market in Brazil. We were closely following the regulation process of fixed quota betting, foreseen in Law No. 14.790, of 2020, and in Ordinance SPA/MF No. 827, of 2021, which established a deadline until December 31, 2024, for the adaptation of operators interested in exploring this activity in the country.
However, Ordinance SPA/MF No. 1.475, of 2024, published on September 17, changed this scenario, by determining that only companies that had already submitted the authorization request to the Ministry of Finance by the date of its publication could continue operating during the adaptation period, and that the others should cease their activities by October 10, 2024, under penalty of blocking and exclusion of their websites and applications.
Despite this unforeseen anticipation, a positive aspect of this ordinance was the fact that all companies that filed their requests until September 17 are equated. That is, the SPA should analyze the license requests from this entire set of companies (and not just from the companies that made the protocol until August 20) and grant the authorizations until December 31.
The prohibition of companies that have not yet requested licensing to operate in Brazil was a surprise to the sector. How is Mattos Filho dealing with this unexpected change and what measures are being taken to ensure compliance?
Lisa Worcman - Mattos Filho is a law firm that advises sports betting operators and other players in this industry. We have a specialized and experienced team in this area, which is attentive to regulatory changes and the challenges they bring to our clients.
Faced with this unexpected change, we are dealing with this situation in an agile and proactive manner, seeking to guide and support our clients in making the best decisions to ensure compliance with the new rules.
We are analyzing case by case the possibilities of adaptation, according to the profile and situation of each client and evaluating what are the best alternatives for each one. An important aspect for a healthy regulatory process is to avoid changing the rules of the game during the game. This avoids litigation and ends up bringing legal insecurity to the sector.
What are the main challenges that a company faces due to the lack of a previously defined deadline – which has now been instituted - for the request of licenses? How does this affect the planning for the start of regulated operations next year?
Fabio Kujawski -
The companies that had not managed to meet the first deadline of August 20, for the protocol of the license request, were in a situation of legal uncertainty. The Ordinance 1.475 determined that the operators who had not carried out the protocol of the license request by the date of the publication of the ordinance would be banned in Brazil on October 10.
At this point, it seems to me that the SPA could have given some additional deadline to impose the burden of the banishment of the country, especially because the original deadline for this banishment would be December 31. On that same day, September 17, 4 companies managed to carry out the protocol, but others did not. This fact affected the continuity of the business of these companies until the end of the year and the companies that are in this situation should evaluate the viability of judicial questioning of this anticipation of the date of the banishment.
How do you see the new licensing requirement influencing the competitiveness and entry of new companies into the Brazilian market? Is there an increased risk of consolidation among established operators?
Lisa Worcman -
There is no limit to the number of licenses for companies interested in exploring fixed quota betting. Therefore, the market remains open. On the other hand, companies that have not made their authorization requests until September 17, will have to wait for the approval of the authorizations to start (or resume) their activities in the country.
In any case, an increasing growth in acquisition operations in the sector is already noticeable, and certainly the difficulty of obtaining a grant encourages these movements.
What impact can the measure of regulatory anticipation have on the relationship between operators and regulatory authorities in Brazil? How can this affect the transparency and trust in the licensing process?
Fabio Kujawski -
Changes in the rules of the game during the game can lead to litigation, which is not ideal in a newly born regulated sector. This can impact legal security and does not contribute to a healthy regulatory environment.
The change in regulation brought some uncertainty about future guidelines or additional regulations. How is your company preparing for possible new requirements or adjustments in the regulatory process?
Lisa Worcman - The change in regulation brought some uncertainty about future guidelines or additional regulations, as it reveals instability and unpredictability of the regulatory scenario, which may undergo new changes without prior notice or public consultation.
What is your company's perspective on adapting to the new deadlines and regulatory requirements? Are there specific strategies to minimize the impact of this transition and ensure a successful entry into the regulated market?
Fabio Kujawski -
The Brazilian betting market is one of the largest and most promising markets in the world. We understand that the regulation of fixed quota betting is an opportunity for the development of a safe, competitive, and responsible market, which generates economic and social benefits for the country. Like in all sectors of the economy, there are always the 'good players' and the 'bad players'. The government should avoid penalizing the 'good players' for individualized acts of some 'bad players'.
Source: Exclusive GMB
