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Brazil System Standards Open Door For Loyalty Bonuses

May 6, 2024
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Brazil has continued to roll out regulations for online gambling by releasing detailed technical standards for betting and gaming systems via an ordinance that also implies that licensed operators will be able to offer retention bonuses for players.

Brazil has continued to roll out regulations for online gambling by releasing detailed technical standards for betting and gaming systems via an ordinance that also implies that licensed operators will be able to offer retention bonuses for players.

to establish technical and security standards for betting systems was published late on Friday (May 3) by the Brazilian Ministry of Finance’s Prizes and Betting Secretariat (SPA), in line with the implementation timeline that the new gambling department published last month.

The SPA’s latest regulatory ordinance covers a wide range of subjects, including certifications, information security and system requirements, while also appearing to answer one of the key pending policy questions posed by Brazil’s law for online betting and gaming as enacted in December.

Law 14.790 expressly prohibits licensed operators from offering “an advance, bonus or prior advantage” to players, but Brazilian lawyers and industry groups have since advocated for at least some forms of bonuses to be permissible under the guise of loyalty programs that could be offered to established players.

Although Friday’s ordinance does not directly address which forms of bonuses may be allowed, it specifies that betting systems must be able to register “all transactions involving loyalty programs that may be offered to the bettor”.

The ordinance defines a “loyalty program” as, “a program that offers incentives to bettors based on the gaming volume or revenue received from a bettor”.

Elsewhere, Ordinance 722 offers a further indication that live casino games will be permitted in Brazil’s regulated online market, despite the degree of doubt created by definitions within December’s law. The ordinance specifically recognises that online games can be determined both by software-based random number generators (RNGs), as well as mechanical RNGs that “generate the random results of games … through wheels, shufflers or blowers”.

The latest regulatory ordinance follows recent decrees addressing payments and independent certification labs. However, the industry is still awaiting the publication of more fundamental regulatory requirements through another ordinance that is anticipated to open a licensing process.

Along with those on payments and betting systems, that licensing ordinance was also supposed to be released before the end of April under the SPA’s regulatory timeline.

Ordinance 722 is the first to be signed by Regis Dudena, the SPA’s newly appointed secretary who took office on April 22. It came one day after Simone Vicentini, the department’s well-regarded deputy secretary who signed the earlier ordinances on payments and certification labs, confirmed she had now left the SPA.

Certification & Pending °ϲʹ Questions

On certification, Ordinance 722 will require operators to submit a certificate from an approved independent testing lab within 90 days of receiving a licence to confirm compliance of their systems with Brazil’s technical standards.

Those certifications must be specific to the Brazilian market, and systems and platforms will have to be re-certified annually or whenever there is a change to any critical components.

Elsewhere, the ordinance:

  • Requires all licensed operators to use “bet.br” domain names for the Brazilian market.
  • Requires operators to maintain their betting systems and the related data in data centres that are located in Brazil.
  • Imposes specific standards for geolocation, including a requirement for operators to be able to dynamically monitor the location of a player and apply a geolocation check every 30 minutes.
  • Requires a facial recognition check in order to verify the identity of players, with ID verification required before any player can establish a betting account.
  • Requires the use of multifactor authentication (MFA) for players to access their accounts. MFA must be applied at least once every seven days and whenever any potentially suspicious activity is detected.
  • Reaffirms that authorised online casino games will have to conform with Law 14.790’s definition of a fixed-odds bet, and involve “a multiplication factor of the amount bet which defines the amount to be received in the case of an award, at the time the bet is placed”

The ordinance does not address one of Brazil’s most critical pending policy questions by specifically defining which types of online games will be permitted in the regulated market. That is instead set to be determined by a second set of technical requirements specific to online games due to be released in June.

As previously highlighted by Vixio Gambling°ϲʹ, other key unresolved issues beyond bonuses and permitted casino games include how the statutory requirement for all licensed operators to be 20 percent owned by a Brazilian will be implemented, as well as how a 15 percent tax on player winnings will be applied.

The latter issue may be clarified later this week, however, as Brazil’s Congress is scheduled to decide whether to overturn President Lula da Silva’s veto of provisions of Law 14.790 that would have applied the 15 percent tax to players’ annual net winnings above a certain threshold.

The Chamber of Deputies and Senate are scheduled to hold a joint session on Thursday (May 9), with the winnings tax provisions among 32 recent presidential vetoes that are on the agenda for possible override by a majority vote of Congress.


         

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