Combatting Illegal Betting SPA Unveils New Payment Regulations in Brazil

The Secretariat of Prizes and Bets (SPA) has announced a new ordinance that outlines the procedures for payment institutions involved in processing transactions related to illegal betting activities. This development, marked by the release of Normative Ordinance No. 566 on March 21, directly pertains to article 21 of Law No. 14,790, also known as Brazil’s federal betting law. This law, released in December 2023, prohibits financial institutions from accepting or facilitating betting transactions with operators that lack a federal license to operate within Brazil’s legal online betting market.

The newly published ordinance sets forth specific conditions, deadlines, and protocols for reporting the payment methods utilized in placing illegal bets. Financial institutions are required to implement procedures and controls designed to identify illegal betting transactions. When such transactions are identified, these institutions must promptly notify the SPA with comprehensive details regarding the illicit activity, including the reasoning behind the report and the Individual Taxpayer Registration (CPF) number of the individual involved. Illegal Betting SPA Brazil

Upon becoming aware of suspicious activities, financial institutions must submit the relevant information to the SPA within 24 hours. If the SPA verifies that transfers related to unlicensed gambling are being processed, it will instruct the implicated payment companies to sever their financial relationship with the offending client. The SPA is committed to maintaining an updated list of authorized operators, alongside companies that have either had their license applications rejected or have been flagged for potential illegal activities by the National Telecommunications Agency (Anatel).

Non-compliance with the obligations outlined in the ordinance could lead to significant penalties. These fines, dictated by Normative Ordinance No. 1,225 on monitoring and inspection and Normative Ordinance No. 1,233, could range from 0.1% to 20% of the proceeds, with a maximum penalty of BRL 2 billion (approximately £271.5 million, €323.9 million, or $351.7 million).

The regulated online betting market officially launched on January 1, although licensed companies remain deeply concerned about the impact of the black market. They argue that illegal operators—who evade taxes and disregard stringent federal licensing requirements—create unfair competition within the industry. Anatel President Carlos Baigorri described the efforts to block illegal domains as a futile exercise akin to “mopping up ice.” The industry largely agrees that blocking payment methods is a considerably more effective approach to combatting the black market. Illegal Betting SPA Brazil

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To address this issue, the regulator has taken steps to ban illegal gambling transactions that occur through Pix, an instant payment system widely used across Brazil’s gambling sector and overseen by the Central Bank. Ari Celia, director of Pay4Fun, previously stated that he considers this action to be the most effective measure to limit black market operations. He emphasized the potential consequences for commercial banks that fail to act upon warnings from the Central Bank regarding illegal sites: “If any commercial bank isn’t aware they have a company or client that is using illegal sites, as soon as they receive a warning from the Central Bank, they will shut down their bank account immediately,” Celia explained. He concluded that tolerating such accounts is no longer a viable option for banks, as they would face substantial fines if they continued to process payments through Pix once notified. Illegal Betting SPA Brazil