iGaming News #013 | iGaming in Brazil: checklist for license applications

Opening today's edition is me, Larissa Iwai I PQO , Director of Risk, Compliance, Legal, and AML/CFT.

We'll delve deeper into the topic of licensing applications and provide a comprehensive checklist for submitting authorization requests to operate in the Brazilian iGaming market. In this edition, you will find:

• An analysis of the deadlines;
• A checklist of essential requirements;
• The main challenges encountered in the process.

We hope you find this helpful content!

?? Deadline and submission

The August 20, 2024 deadline for submitting initial applications is not final. Companies that could not finalize their documentation by that date can still enter the market.

However, those who did not submit by last Tuesday (August 20) are not guaranteed that the process will be completed by December 31, 2024. Therefore, they will not be guaranteed to operate legally from the first day of the following year and will be subject to applicable penalties.

?? Checklist: essential requirements and evaluation criteria

Ordinance 827 establishes five main criteria for evaluating applications:

• Legal Eligibility: Creation of a Brazilian company with a corporate purpose focused on betting and compliance with all legal requirements for its constitution.
• Tax and Labor Regularity: Presentation of negative certificates of debts and proof of regularity with tax and labor authorities.
• Proof of Integrity: Proof of the integrity of partners and administrators, including criminal records and the lawful origin of funds.
• Economic-Financial Qualification: Demonstrate the company's financial capacity, emphasizing the constitution of a financial reserve and proof of net worth.
• Technical Qualification: Proof of the company's experience and technical capacity to operate in the iGaming market.

The Secretary of Prizes and Bets of the Ministry of Finance must notify applicants within 150 days from the date of the protocol of the authorization request to:

• Make the payment for the authorization grant; or
• Communicate the rejection of the authorization request.

If the applicant is notified of the payment of the grant, the following proof may be requested within 30 days:

• Payment for the authorization grant;
• Constitution of the financial reserve;
• Capitalization in legal tender of the minimum share capital of R$ 30,000,000.00 (thirty million reais), as well as the declaration of the lawful origin of the funds that make up the share capital;
• Minimum net worth of R$ 30,000,000.00 (thirty million reais);
• Technical certificate, in the case of legal entities that have presented the request protocol; and
• Implementation of the customer service system.

The details of the aforementioned evidence are contained in Ordinance SPA/MF No. 827/2024.

?? Challenges encountered in the process

During the submission of licensing applications, companies have faced several challenges during the submission process:

• Definition of the Brazilian partner: There are doubts about the need to have a Brazilian natural person as a partner. Although the government has expressed itself, the interpretation of the norm and its practical application are still subject to discussion.
• Requirements of commercial boards: Difficulties in registering companies due to additional requirements of commercial boards.
• Hiring financial institutions: Difficulty in finding financial institutions willing to provide services for the iGaming sector.
• Customer service structure: Setting up an adequate customer service structure that complies with all the standards provided for in the legislation is complex.
• Proof of knowledge and experience: Difficulty in proving knowledge and experience in games of chance.
• Consumer.gov platform: Difficulties in obtaining authorization to join the Consumer.gov platform.

Submitting authorization requests to operate in the Brazilian iGaming market proves complex and challenging. Companies need to be aware of the requirements established by the new legislation and seek the assistance of specialized professionals to ensure the success of their operations.

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Let us know in the comments what you think of this edition.

Best regards and until next time!