In an exclusive article for GMB, João Fraga, CEO of Paag, analyzes the current state of betting regulation and the beginning of official operations in Brazil. For him, 50 days before the start of a new era, we have finally reached the phase of "a safer, regulated, and beneficial market for all, generating jobs and revenue collection by the Brazilian state." In his reflection, Fraga highlights the solutions Paag offers to operators who want to succeed in the country.
After six long years since the betting market was allowed in Brazil, still under the Temer administration in 2018, the regulation of the sector is finally near. With exactly 50 days until the start of the regulated industry, on January 1, 2025, we are in the final stretch.
It is no surprise to anyone the importance that regulation will have, creating a safer, regulated, and beneficial market for all, generating jobs and revenue collection by the Brazilian state, as well as mechanisms for the protection of both bettors and companies.
It was more than obvious that regulation was essential, amid a large industry that for a long time had no clear rules about its operation. Now, however, after Law 14.790 and a series of ordinances published by the Secretariat of Prizes and Bets of the Ministry of Finance, the situation will be different.
Among the various measures established, some already in practice and others not, what we are witnessing is the creation of a system that addresses issues for the proper functioning of this gigantic industry, such as the taxation of the sector, advertising norms, guidelines to provide support and all the psychological assistance to bettors, institutionalizing practices that must be followed in favor of responsible gaming and various other points.
In this aspect, betting houses must comply with strict regulations, as determined by the new Brazilian legislation. One of the main requirements, for example, is that bets include rigorous KYC processes and transaction monitoring to prevent illicit activities, such as money laundering.
There will be a series of changes that will lend greater credibility to the game and, at Paag, we have been following all this movement, preparing to ensure that bets, for example, comply with the new market demands from 2025.
Regarding protection against fraud, financial risks, and regulatory non-compliance, for example, we developed the Paag Shield to assist in these matters. Basically, it is a product that will provide, for the bets, real-time data on suspicious movements of players or potential risks. A complete score of each player will be presented.
Another of the main issues to be explored is the need for players to create new registrations to access betting houses. In each of them, bettors will have to undergo the identity verification process, including facial recognition.
This entire know-your-customer procedure will be much more demanding for these players, with betting houses carrying out facial and document validation to ensure that the person is indeed who they claim to be. That is why, in this scenario, we created the Paag ID, which will function like a Google login where the bettor registers once and can access all platforms using this system, in order to reduce friction in the KYC process and also decrease operational costs. The intention is precisely to promote a simple entry into the betting house, to facilitate this friction that the player has at the time of registration in a new bet.
There are a series of new possible solutions for the adjustments that betting houses will have to undergo, as soon as possible. Some of them, of course, are already widely followed within the sector, such as the prohibition on payments for bets by credit card, something that was already not allowed in our system, as well as in the main betting houses in the country.
Others still deserve a bit more emphasis, like the issue of different betting accounts that will have to be created, as determined by the government. The bets, which are outside Brazil, will enter the country and become Brazilian companies, having to have a financial structure to be able to operate the bets in the best possible way and send the information that will be necessary to the government, about the operation.
Because of this, there must be three different accounts – financial reserve, transnational, and operational –, which will be transacted, in a process that is simple but will also require adjustments and technology. For this reason, we have been creating, since the beginning of the year, technologies to assist and make the transfer of money between these accounts as automated as possible.
What we will see in the coming weeks, until the beginning of 2025, are the last adjustments for the market to be functioning in the best way. At Paag, we eagerly await the arrival of this moment, and we continue to develop new solutions.
João Fraga
CEO of Paag, techfin specialized in payments for the betting sector
