Brazil’s Ministry of Finance to Impose New Sector Rules Starting January 2025

The Ministry of Finance plans to publish, by the end of this month, an ordinance authorising electronic games of chance, such as Fortune Tiger, popularly known as the ‘tiger game’. The idea is that the new rules will come into force in January 2025, putting an end to the illegality of online slot machines.

According to the Secretariat for Prizes and Betting (SPA) of the ministry headed by Minister Fernando Haddad, there will be a requirement for platforms to be registered in Brazil in order to operate, under the domain ‘bet.br’. In this way, the government intends to block domains that are not hosted in the country and is also studying the creation of mechanisms to monitor the behaviour of bettors, to prevent compulsive gambling, as well as legislation with guidelines for responsible advertising.

Currently, these platforms work thanks to a loophole in the fixed-odds betting legislation - sanctioned in December 2023 - when the punter knows how much they can win based on the risk of losing, as is the case with sports betting. ‘This includes sports betting on real events and betting on online gambling events, such as casino games,’ explained Filipe Senna, a partner at Jantalia Advogados and a specialist in gaming and betting law.

According to him, there is no difference between online gambling and fixed-odds betting in Brazilian legislation, which is why these platforms are sold as legal. ‘Online games are understood as a sub-modality of fixed-odds betting, in other words, Fortune Tiger, if it is adjusted to the determinations and rules about this sector in Brazil, can be considered a fixed-odds betting modality,’ he said.

In recent months, there has been a huge growth in influencers massively promoting some of these games on the internet, such as the ‘tiger game’. With the promise of easy money, the platform has come to the fore and has been the target of police investigations after some users reported being scammed due to the suspicion of a financial pyramid scheme. Reports of players who ended up at rock bottom, accumulating debts and having their lives destroyed by addiction to games of chance have become increasingly common.

The Treasury ordinance, according to Senna, should mainly determine rules to characterise which activities can be included in this fixed-odds betting modality, and from there to inspect suitable platforms for operation. ‘It is expected that the existence of a fixed quota will be determined, that is, a part of the combinations that can result in the game, the player will know how much he can win. It will also be required that there is an RNG (Random Number Generation), which determines that the outcome of the game is the result of a random number generator, and finally that these games are duly certified by specialised laboratories,’ he said.

Market on the rise

To get an idea of the size of this market, a recent survey published by the Brazilian Association of Financial and Capital Market Entities (Anbima) showed that Brazilians participate more in online betting platforms than in the São Paulo Stock Exchange (B3) itself. Around 14 per cent of the population - around 22.4 million people - placed bets online in 2023, while only 2 per cent of Brazilians invested in shares, 5 per cent in private bonds and 2 per cent in government bonds.

Although the survey provides a comparison between the Bets market and the financial and capital markets, the report indicates that 70 per cent of punters don't consider online betting to be a form of investment. On the other hand, 40 per cent of those who bet see it as a way of making a quick buck in a time of need.

According to gaming lawyer Fabiano Jantalia, who holds a doctorate in law from the University of Brasilia (UnB), electronic gaming platforms cannot be seen as alternatives to employment, extra income or solutions to citizens' financial problems. ‘Online betting must be clearly offered by operators as a means of entertainment, fun, and not as an investment,’ he emphasised.

For him, the figures emphasise that operators need to develop robust and consistent responsible gambling policies in order to raise awareness among gamblers and present mechanisms to prevent gambling addiction, as well as to avoid risks such as gamblers filing lawsuits.

‘The Brazilian gaming and betting market is on the rise and is proving to be one of the largest and most promising markets for the exploitation of this important economic activity, which can bring countless advantages to the country, such as the creation of new jobs and the collection of taxes. However, in order to achieve its full potential, it is essential that the structuring of the gaming and betting market and its exploitation have responsible gaming as one of its main pillars,’ added the lawyer.