The Prizes and Betting Secretariat improves the system for controlling the betting market in Brazil.

The Secretariat for Prizes and Betting of the Ministry of Finance (SPA-MF) is working to overcome technical and regulatory obstacles in implementing a complex control system for the online betting sector in Brazil. In an exclusive interview with the editor of BNLData, Secretary Regis Dudena explained the reasons for the delay in releasing market statistics and presented the technological solutions developed to guarantee reliable data.

Processing the daily reports submitted by operators, containing information on deposits, bets, and financial results, represented one of the main challenges faced by the department. The initial sequential data ingestion system showed flaws, as errors in a single line compromised all subsequent processing.

To solve this problem, SPA-MF implemented a system that allows for the massive ingestion of information with cascading processing. The department is also developing an internal Business Intelligence dashboard which, according to the secretary, will be made available to the public in the future, along with periodic reports that may be quarterly or semi-annually.

The secretary stated that Gross Gaming Revenue (GGR) data will be published directly on the SPA-MF website, increasing transparency in the sector. Before public disclosure, each set of information undergoes legal and technical evaluation, especially when it involves sensitive data from bettors and companies.

The regulatory gap that occurred between 2018 and 2022, coupled with the months it took for the regulations to be issued, was another topic addressed in the interview. The secretary stated that there were intense efforts to recover the time lost during the previous administration. This lack of clear rules resulted in the formation of three distinct groups of operators in the Brazilian market. The first group includes service providers who attempted to follow regulations, even without clear guidelines. The second encompasses operators who exploited regulatory loopholes, while the third consists of opportunists who used the sector for fraudulent practices. The secretary said that there are still agents who believe in an "uncontrolled market," which requires rigorous oversight.

In the judicial context, the SPA-MF representative commented on the Direct Actions of Unconstitutionality (ADIs) presented to the Supreme Federal Court (STF) by the National Confederation of Commerce (CNC) and the Attorney General's Office (PGR), which question Laws 13.756/18 and 14.790/23. Despite these challenges, he reinforced the presumption of constitutionality of the laws that regulate betting in the country.

The ban on gambling for beneficiaries of social programs presents a specific technical challenge. The secretary explained that the Supreme Court's decision extended the restriction to beneficiaries of Bolsa Família, the Continuous Benefit Payment, and "other" social assistance programs.

The solution found by SPA was the creation of a centralized list and the development of an API, through Serpro, for operators to consult. The system only returns the answers "can" or "cannot" bet, without revealing the personal data of the beneficiaries. To guarantee the protection of bettors' data, the secretariat chose not to make the complete list of CPF numbers available, maintaining only the binary query.

Additional Know Your Customer (KYC) measures and facial recognition have been implemented to prevent the use of third-party CPF numbers (Brazilian taxpayer ID numbers) on betting platforms. These initiatives aim to strengthen system security and prevent fraud in the sector.

The advertising of betting was also discussed in the interview. When asked about the existence of a bill in the National Congress that proposes a total ban on advertising in the sector, the secretary stated that SPA will respect any legislative decision on the matter, including a possible complete prohibition of advertising.

The representative from the Treasury Department observed that advertising helps bettors distinguish authorized companies from illegal operators, especially in a still nascent market like Brazil's. His recommendation is that the sector adopt conservative practices in the communication of sports betting and online gaming operators.

The Working Group (WG) 'Betting and Health' is developing a unique self-exclusion tool for bettors who wish to register. This initiative complements the individual systems already offered by each operator and integrates a set of measures aimed at protecting the health of users.

Healthcare professionals from the Unified Health System (SUS) will receive specific training to assist gamblers with gambling-related disorders. A 20-question mental health test, validated by scientific research and the Ministry of Health, is being implemented to alert gamblers about problematic behaviors.

In the fight against the illegal market, several institutions are working together. SPA-MF notifies payment processing companies that serve unauthorized websites and informs the Central Bank, while the Federal Revenue Service will seek to tax fintechs and influencers who promote illegal platforms. An agreement with the Digital Council aims to remove links from unauthorized operators from social networks and search engines posted by digital influencers.

The secretary also addressed the problem of the fraudulent sale of betting operation permits and stated that fraud involving the illegal sale of licenses is a police matter.

The authorization process for fixed-odds betting operations requires approximately 100 documents per application. The review continues until full compliance with Article 14 of Law 14.790/23, which regulates the sector. The 180-day period stipulated in the legislation is considered necessary to ensure proper verification of all applications.

The process of administrative sanctions against legally authorized operators follows defined steps: monitoring, inspection, sanctioning action, application of penalties, and appeals. Punishments are published in the Official Gazette of the Union after a final administrative decision.

Regarding municipal lotteries, both SPA-MF and the Attorney General's Office of the National Treasury – PGFN understand that the provision of public betting services does not encompass municipalities, but the matter is under analysis by the Supreme Federal Court – STF.

SPA-MF also oversees various lottery modalities operated by Caixa. A performance evaluation is underway and may result in regulatory improvements for lotteries. The plan includes a review of the rules for lottery modalities.

Regarding the creation of a National Gaming Agency specifically for games, betting, and lotteries, the secretary highlighted the potential benefits, which include a more robust regulatory structure, but depend on factors such as the institutional model, autonomy, and an adequate staff for oversight and control of the sector.

Check out the full interview with the Secretary of Prizes and Betting at the Ministry of Finance, Regis Dudena.

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One of the problems faced by the sports betting and online gaming sector was the lack of official information, which generated false narratives from various sectors that felt affected by the regulation of this sector. SPA-MF only released its first semi-annual report on August 28th. What was the reason for the delay in releasing the data?

I'll break down your response into at least three points. The care that SPA took, above all, was to ensure the complete reliability of the data before publishing it. Since January 1st, we have received daily reports from all betting operators with data on registered bettors, including how much they deposited, how much they wagered, how much they won, and how much they lost. So we receive these reports daily.

What did we realize? That, initially, the applications managing this data weren't doing so fully. So, initially, the biggest difficulty we faced was getting all the agents' systems to fully communicate with the Betting Management System – SIGAP – so that we could manage this data and, from managing this data, generate information; in other words, process this data to generate quality information.

What were the difficulties?

So, for example, when you enter the report for day 1, if the bettor with CPF XYZ made a deposit of X reais and placed a bet, it generates a chain of reports. If there's an error on day 1, you can't enter day 2, day 3, day 4, day 5. What's the problem? Initially, when you bring in a report, if there's an error in one line, it blocks everything else. If there's one wrong line, I can't block everything else until I find out where the problem is. Technically, it makes sense, because if that line 1 is your data, your bet amount, I can't know what happened to you on day 2, I can't know what happened on day 3. After a period of improvement on our side, in our system, and improvements from all the betting sites, we started receiving this data. Once I received this data, I requested the creation of a dashboard, and my wish, from the beginning and still today, is that this dashboard be public.

What was the second problem?

So, the second problem was processing the data to turn it into information. We needed to improve how we handled this data so that it would become information. Once we overcame these two problems, we were able to gain confidence in the data to structure a presentation and to actually publish this report on what we had achieved after six months.

What is the plan going forward?

To begin having periodic reports, we're considering whether quarterly or semi-annual reporting makes sense, but beyond that, the idea is active transparency in publishing sector data as we obtain it. To have a public data repository so that everyone can follow along. What's the concern here again? We're talking about various data points that may involve discussions regarding their confidentiality, some data that involve discussions about personal information. So what we're doing right now, from a technical and legal standpoint, is evaluating how far we can go with disclosing this data. But the idea is that, especially GGR data, we actively publish it on the website so that everyone can access it.

Why hasn't this been done yet?

Because I want to be absolutely certain that there are no technical or legal impediments to making this announcement. So, the delay was unexpected, much less desired. It wasn't a decision not to publish earlier; rather, we needed time to improve data reception and processing so that we could now publish with certainty.

The problems caused by regulatory gaps and the lack of official information have resulted in a negative image for the online betting sector within the government, parliament, and various segments of society. How can we minimize the impact of these criticisms and demonstrate that regulation is the best way to ensure a sustainable and long-lasting operation, while also reducing criticism?

I think that, in fact, a large part of our problems stems from this period without regulation. And here I think we have two effects of this. One main effect, which is the deleterious presence of agents who acted without regulation and a history of a period in which there was no regulation. It's possible to separate them into several groups, but it's also possible to distinguish between betting service providers who tried to do everything correctly, without having a reference point.

The second group consists of those who tested all limits and exploited the stakes beyond what is reasonable. And we have the third group that used the sector for fraud, crime, and the like. Deleterious levels of behavior, whether from the operator wanting to comply and lacking reference points, or from the operator who, lacking reference points, exploits, invades, and advances; and the third group, which consists of opportunists who exploit the sector fraudulently, who exploited it to commit crimes. So that's the first general problem; the second problem is the persistence of agents who believe it will continue to be uncontrolled.

It's a second group, already within the regulated market, and possibly even authorized, that believes the scenario remains the same in Brazil. They believe that in Brazil you don't need to comply with rules, even though they exist. This is also a consequence of a period without regulation, of agents who didn't understand, for example, that betting in Brazil is a public service and that they have to comply with the law even more rigorously than a private service provider in other regulated sectors.

Currently, the Brazilian Supreme Court (STF) is judging two Direct Actions of Unconstitutionality (ADI) questioning the legalization of fixed-odds betting through Law 14.790/23, filed by the National Confederation of Commerce of Goods, Services and Tourism (CNC) and the Attorney General's Office. In a preliminary ruling, Minister Luiz Fux granted an injunction to anticipate the terms of Ordinance SPA/MF 1.231/2024, prohibiting minors from placing bets and the use of Bolsa Família funds for online betting and gambling. Do you believe that these actions questioning the legality of the legislation on fixed-odds betting and online gambling do not create legal uncertainty for operators who applied for licenses with SPA-MF?

Here, the care we must take is to distinguish between actions that generate legal uncertainty and institutions functioning within a democratic state governed by the rule of law. It seems desirable that these decisions be accessible, meaning that anyone with doubts regarding the constitutionality or illegality of an act can appeal to a judiciary that evaluates these issues. So, in a democratic state governed by the rule of law, it's necessary to coexist with judicialization. That's one aspect.

The speed at which this is judged, the moment it is judged, can impact investment decisions or other decisions about whether you want to be in the market or not. What I have to say from the regulator's point of view is that, to begin with, we have a presumption of the functionality of the laws and we need to continue acting with that presumption.

Regarding the prohibition on using Bolsa Família funds for online betting and gambling, what will the scope be? Will it only apply to Bolsa Família recipients or to all beneficiaries of social programs?

We need to pay close attention to the text of Minister Luiz Fux's decision and another decision by the Federal Court of Accounts (TCU), which the TCU itself reviewed. In fact, he refers to two programs: Bolsa Família and the Continuous Benefit Payment (BPC). But he then mentions 'and others,' which has been our concern from the beginning?

The first issue is that he was restricting himself, on the one hand, to referring to "sources originating from" the social program. And there would be a technical difficulty in separating what is a resource originating from the social program from another resource that, as you said, may be present in the account, in the assets of that beneficiary of social programs. So that was a concern.

The second concern was precisely to understand how far the Supreme Court intended to go when referring to 'others'. Therefore, we asked the Attorney General's Office to file an appeal to try to get the Supreme Court to be a little more specific about this. In response, the minister did not find this clarification necessary.

What procedures were followed to comply with this decision?

So, what have we been doing since then? We've been focusing on these two programs, Bolsa Família and BPC, and the idea, which is being carefully developed both legally and technically, is how to ensure that betting operators comply with this measure. Therefore, seeking to comply with the Supreme Court, a centralized tool is being prepared that will contain a repository of all beneficiaries of these programs, and betting operators will be required to query this centralized list via API and receive a response indicating whether or not they can receive funds from these individuals. Objectively answering your question, the idea is to have a centralized solution at the Secretariat that will be consulted via API by betting operators at times determined by the ordinance, to guarantee that this influx of funds cannot come from these beneficiaries. We are already testing this solution, and the idea is that it will be implemented soon to comply with the Supreme Court's decision.

Does this decision affect the General Data Protection Law – LGPD?

When I mentioned both technical and legal concerns, it was precisely for this reason: to ensure that compliance with the decision did not violate other rights. The easiest operational solution would have been to provide a list of CPF numbers (Brazilian taxpayer ID numbers) for all operators to see who cannot place bets. We will not make the list available. They will not have access to a list of beneficiaries of social programs. What they will have is a query, via API, and the response to that query will be a binary element: can proceed, cannot proceed. So the idea is to protect the rights of all Brazilians who are beneficiaries of these social programs.

And what about the possibility of this insured person using someone else's CPF (Brazilian taxpayer ID)?

Regarding the use of other people's CPF (Brazilian taxpayer ID), we have another part of the regulation aimed at curbing this type of activity. So we have all the procedures for knowing the customer, check-in, how it's done, the moments when facial recognition is performed, and things like that. It's also important to remember that, from a payment methods perspective, we require that the bettor register an account in their own name, of which they are the account holder. There are all the controls in place to ensure that the beneficiary cannot access an authorized company without being the account holder themselves.

Will this list of beneficiaries be updated?

Yes. It's also important to remember that there's a certain fluidity among these beneficiaries. A person isn't always, wasn't always, and won't always be a beneficiary. That's why we have different verification points. The central focus of our concern here is the inflow of money. So, when money is withdrawn from a person who is already registered, there will have to be a new check. If they are a beneficiary, then they cannot authorize it. And every time there's a new registration, a check will also be done. This applies both to those who joined before the regulation, and those who joined without being beneficiaries and became beneficiaries, as well as beneficiaries who try to join for the first time.

In May of this year, the Senate approved Bill 2.985/23 imposing restrictions on the advertising and websites of bettors, such as prohibiting advertisements or publicity campaigns featuring athletes, artists, media personalities, influencers, or authorities. Currently, the proposal is in the Chamber of Deputies. Do you believe that the approval of this proposal could benefit illegal and offshore operators?

The first and most straightforward opinion is that laws must be obeyed. If the bill is approved by both houses, receives the sanction, and is signed by the president, it will be enforced. And, again, in a democratic state governed by the rule of law, it is expected that laws approved by Congress will be obeyed. So, that's the first point. And I think we have to know how to deal with the attribution of powers and responsibilities of the State. Our competence is regulatory in the administrative sphere, and the competence of Congress is legislative in its sphere of action.

From a regulatory standpoint, what comments could you make?

The market trend is for advertising to have a positive value in identifying authorized betting sites. Therefore, a complete ban on advertising could have a significant impact on something very relevant in the first instance: the public's ability to identify authorized companies and differentiate them from illegal ones. Our concern here is that, if we have to ban advertising, we will have to find other mechanisms to help point out authorized companies so that bettors can distinguish them from illegal ones. Furthermore, I think that as a sector, it's necessary to understand this message given by society, due to pressure, possibly even from the press and ultimately from the activity of parliamentarians, that the sector needs to understand that advertising activity may, in some cases, be exceeding certain limits.

How can the sector help?

The care that the sector itself must take in its actions, including beyond the restrictions that have already been put in place – and I think it's also important to make this clear – there are several mechanisms in Law 14.790/23 regarding restrictions on advertising. As for regulation, especially in the responsible gaming ordinance (1231), we already have restrictions on advertising. What I think the sector needs to understand is that perhaps it's time to also be conservative in its advertising practices. Because the signals the sector sends will provoke a response, whether from society, opinion leaders, or parliament.

I think there are a few issues here. The first one, for me, is absolute. Congress's decision on this must be respected; there's no discussion about it. From a regulatory standpoint, I think advertising can be an ally in this nascent market, and if we remove advertising, we'll need something to replace it. The third point is that the sector needs to understand this as a message regarding its operations.

In January of this year, a joint decree from SPA-MF and the Federal Revenue Service created the Intersecretarial Group entitled GTI-Bets to monitor and support a proposed compliance program for the regularization of tax obligations related to the period prior to authorization. Regulated operators are apprehensive about the possibility of being penalized with retroactive payments for the period of offshore operations. Would this be legally possible?

A recurring joke I make when we get into tax issues is: 'if you really want to know about tax issues, you have to go to the seventh floor [of the Ministry of Finance building] and talk to the Secretary of the Federal Revenue Service'. But what I have to say is that there is an interest in addressing this topic also because of its regulatory effects. And there are two things that are quite important to me in this working group.

The first point is that the sector, and all those who operated in it and earned revenue, who made a profit in a past period, need to understand that if the tax is due and they did not pay it, that tax needs to be collected. Therefore, everyone, regardless of whether they remained in the market or not, whether they sought legal compliance or not, it is important to understand that the tax law dictates that once the taxable event occurs, with a legal requirement for tax payment, if this was not done, it needs to be corrected.

So that's the first issue that I think everyone needs to be clear about. What's the second thing that's relevant to me? We need to understand that the treatment for those who sought to legalize their activities, sought authorization, and who today operate legally, cannot be exactly the same as for those who exploited this activity, should have paid taxes but didn't, and aren't even operating legally today.

One important legal point to consider here is that we're not talking about retroactive collection per se. What we have here is, if the taxable event occurred from a legal standpoint, if the tax is due and nobody paid, then it needs to be collected, and we need ways to reach those companies that should have paid taxes but didn't. The working group serves, to some extent, to address these two fronts. It's not about creating rules retroactively, it's about applying a rule that should have been followed but wasn't.

Sometimes I hear some operators say, "But I paid everything I owed. So there's nothing to worry about." What I ask in our work as this task force is that we don't start with those who are authorized. That we actually start by focusing on those who haven't paid and haven't even remained in the legalized activity. But I think it's important for everyone to know that even though the government didn't regulate betting at the time it should have, the tax rule was already in effect and should have been complied with.

Even if these companies are not domiciled here in Brazil?

These are tax rules that need to be followed. If it was due, that's the point; the taxable event occurred, the tax was due, someone should have paid. We need to identify who should have paid and go after that person to make them pay. It's more of a procedural matter; in criminal law, you'd say it's about gathering evidence rather than proving the right.

And then there's going to be a huge discussion, right? Why charge under which law? Will it be under Law 13.756/18? Will it be under Law 14.183/2021? Which made an adjustment to the taxation? That's what I have difficulty understanding.

The specific details of how and how much will be charged are known to the tax authorities. They will know which law applies. I'm not saying there aren't challenges. If there weren't, there would be no need for a working group. But the idea is that we are, in fact, compliant with both rights and duties.

In February of this year, the Interministerial Working Group on Mental Health and Prevention and Harm Reduction of Problem Gambling was created to formulate and plan actions for prevention, harm reduction, and assistance to individuals and social groups experiencing problem gambling behavior. What were the main conclusions of the Interministerial Working Group, and are these decisions being implemented?

We are about to publish a report that will provide even more detailed information, but we already have some measures planned for implementation this year. One of the most important decisions is the centralized self-exclusion tool.

One of the discussions that arose in this working group is that the tool for individualized self-exclusion by operating agent needs to exist, but it is not sufficient in the working group's opinion. There was an increase in this solution, which is also being developed in parallel with the discussion of Bolsa Família and BPC beneficiaries, which is to have a centralized mechanism at the Ministry of Finance, on our website, where any citizen who does not want to gamble, whether temporarily or indefinitely, can access this tool. So that is one of the solutions.

And what about the SUS (Brazilian public healthcare system)?

Furthermore, there is an increase in activity within the Unified Health System (SUS) aimed at improving initial care for people with gambling-related problems. There are also training courses being developed for those providing frontline care within the SUS to better equip them to receive individuals experiencing gambling-related issues.

And what about manipulation of results?

There are at least two campaigns being planned here, in conjunction with the Ministry of Sport, one focused on match-fixing and a second on training athletes in the activity of betting. We perceive a particular appeal here, especially regarding sports betting for the athletes themselves, stemming from the Ministry of Sport's action to provide targeted training for athletes, and the Presidential Communications Secretariat also intends to present communications to educate the public about the activity. The idea is that this will be launched soon.

Regarding the identification of problematic players, is there any mechanism that could be made available to bettors?

We were already advocating for operators to have mental health-related tests linked to their betting activities. Our idea, developed within the group and validated by the Ministry of Health, is to prepare this test and present it to the operators on the platforms. This is because there's a significant difference in the levels and complexity of how these tests have been presented, and the idea is to have a relatively simple and targeted test that can trigger these alerts for bettors. [Editor's note: the questionnaire in question is '20 questions that define a pathological gambler'; if a bettor answers seven questions positively, they should seek help or treatment].

Industry representatives report that illegal operations account for 50% of bets in the country. More than 18 websites belonging to irregular betting companies have been taken offline by the National Telecommunications Agency (Anatel) since October 2024. Furthermore, the Central Bank, the Federal Revenue Service, and the SPA-MF (Special System for Monitoring and Supervision of Financial Transactions) have announced a series of measures that could represent a severe blow to illegal online gambling platforms, such as limiting financial transactions, retroactive tax collection, and expanding regulations for game providers in the betting sector. What else can be done to limit illegal operations?

I think all these actions help, and specifically regarding financial service providers, we've already been acting due to an interaction with the Central Bank, which understood that we have this responsibility when it comes to betting. We made an agreement with the Digital Council (an association representing major social networks and search platforms) to remove links from unauthorized operators. What we are asking of them is, initially, that they have a dedicated channel through which we can notify them about the presence of links from illegal companies so that they stop providing access to the link in their tools. Our goal is that they also proactively help us in not making this link available. So, initially, it's about receiving our notification and taking it down, but the idea is that they also help us in the identification process itself, given that here, strictly speaking, we are talking about something binary: that is or is not illegal.

Once a site is deemed illegal, if it's available, it must be taken down; in other words, it shouldn't even be allowed to be uploaded. So our goal with them is for them to also partner with SPA and the State in this endeavor, by not making these links available on their platforms. And the idea is that, by combining all these factors, we can significantly mitigate the problem.

Currently, there is an informal trade in licenses (GRUs and slots) with high values ​​for companies that want to immediately start online betting. This market only exists because a license for a company to operate takes 180 days to be issued by SPA-MF. Furthermore, there are reports of a group that scams companies by buying and selling these licenses in exchange for an upfront payment. Would it be possible to reduce this timeframe to end this trade?

Here are a few issues. The first is the authorization process, and it's quite complex. To understand, we have about 100 documents for each authorization request. And we need to evaluate these 100 documents, be sure of their accuracy, so that we can reach what we call compliance with Article 14 [ Law 14.790/23 ], which are the final requirements, mostly related to financial matters. So, payment of the grant, demonstration of the origin of the resource, and in parallel, the presentation of certifications for those who had not yet presented them. If we look only at this initial part, it's no longer 180 days, it's 150. Because 180 is the 150 plus the 30 from Article 14.

What we try to do is, in fact, provide the greatest possible agility within all the demand we have here at the Secretariat, given that, in addition to authorization requests—and this relates to the initial part of your question—any legal changes within already authorized requests also fall under our authorization area. For example, requests to change trademarks, things of that nature. Our desire is not to use the entire timeframe, but it doesn't make sense for us to forgo the rigor we need to have, and for that reason, it's important that we have the timeframe and, eventually, we need to use that timeframe. Regarding these other activities, what is important here is, again, to separate competencies and, within our competencies, to be guided by what the law says.

And what does the law say?

So the law says, for example, that the authorization is strictly personal, that I cannot sell the authorization. Eventually, and this is permitted by law, and this is in our regulations, you can have corporate changes and, obviously, within the commercial proposals of each one, the business plans of each company, you can have some adjustments, as long as it remains the same company, the same CNPJ (Brazilian tax ID), that requested authorization and operates in the authorized market. Regarding the use of this sector for the practice of fraud, for possibly other crimes, I would say that this is a matter for the police. Once it reaches us, we notify the competent authorities so that this is taken into consideration, and on our side, it is up to us to monitor, supervise, and impose sanctions for those actions that are, in short, also administrative infractions, which is the part that falls to us.

Are there still many licenses to be issued?

I would say that we have continuous demand. We already have enough understanding of this market to realize that there isn't an elastic demand for new authorizations. But new authorizations are still being issued regularly, albeit at a much slower pace.

You mentioned at an event and in an interview that SPA-MF has already sanctioned several companies, but I notice that when you sanction a commercial promotion company, it's published in the Official Gazette. Why don't you publish the sanctions for betting companies?

What is the focus here? We have ongoing monitoring. We have specific and more in-depth activities, which is the inspection process, that can lead to a sanctioning action. This process can result in the application of a penalty. Once all these stages of administrative law have passed, allowing for rebuttal and full defense, you still have the appeals process. We will only publish all sanctions when we are in the final stage where there are no more appeals, that is, when I have a definitive administrative decision.

The SPA-MF (Social Action Plan for Financial Institutions) enabled the creation of collection offices to transfer funds to the legal beneficiaries stipulated in the legislation that legalized this modality. Some entities are complaining about delays in the transfers. How can this be avoided to prevent friction with the SPA-MF?

If we look at the legal allocations, we have, strictly speaking, three destinations, three groups of destinations. One group is strictly public, which is paid for and will be distributed according to the law within the public budget. We have a second group, which are the institutions determined by law, but which are private and receive these allocations through committees. And we have a third group, which is that resulting from the exploitation of image rights.

As defined by law, especially this last group, it presents some difficulties for the operating agent to comply with. Basically, the law states that the operating agent must pay directly to those who hold image rights in the sports field, ranging from individual athletes to clubs, federations, and confederations. Strictly speaking, this payment is a legal obligation of the operating agent towards those individuals or legal entities that hold the exploited image rights.

What we tried to do with our allocation regulations was to make it easier to move funds from one place to another. We allowed for the creation of an association that, on behalf of its members, would operationalize this transfer. The association that was created fulfills the requirements of the regulations to facilitate the process of fulfilling this obligation.

What was the objective?

What we identified when we drafted this regulation at the beginning of the year was that some adjustments would eventually be necessary. This is because there are, above all, differences between sports modalities in how they handle the image rights of each of their athletes. We already anticipated in the January regulation that this model would be reconsidered mid-year. We opened a public consultation again, we are finalizing it now, and we will see exactly what came out of this public consultation with the aim of improving it.

Specifically regarding this last group, the law simply states "pay directly." What we are trying to do is make it possible for the funds to leave the operating agent, which is our regulated entity, and reach the recipient. This is not a trivial matter, because the law does not specify exactly how and who should receive these funds.

If you are familiar with the sports field, there are many differences within some sports. The main sport in terms of volume is football, and there is still a significant difference between the Série A, Série B, and Série C of the Brazilian Championship, between national and state championships. There is also a variation in remuneration models for the activity, which also creates this difficulty. The million-dollar question is: did the athlete, in their contract, eventually cede their image rights to the club, or did they cede their image rights to the Federation, or to the Confederation? All of this has to be taken into consideration when making this arrangement. And that is what this association that we facilitated the creation of aimed to solve.

Which model is desired?

The goal is to identify the regulations for that specific sporting event and ensure those regulations take that into account. This is what Americans call a regulatory nudge , or regulatory push, which involves indicating to the recipient of these funds that if they want their activity to be eligible for betting, they need to create a rule in their regulations to ensure the money reaches the rightful recipients. That's our proposal, which is included in the allocation guidelines and which we put to the test in this consultation.

Legal or not, municipal lotteries have become a reality in the country. ANALOME recently announced that there are already more than 300 municipalities with approved legislation and in various stages of implementation. The Solidarity party questioned the legality of this initiative in the Supreme Federal Court (STF), and the ADPF (Arguição de Descumprimento de Preceito Fundamental - Claim of Non-Compliance with a Fundamental Precept) is under analysis by Justice Nunes Marques. Supporters of municipal lotteries believe that the votes of Justices Gilmar Mendes and Alexandre de Moraes in ADPFs 492 and 493, by citing 'federative entities,' included the right of municipalities to provide lottery services. What is the understanding of the Secretariat of Prizes and Bets regarding the operation of municipal lotteries?

Here I have two questions on the subject. The first is that the operation of fixed-odds betting, being a service provision regulated by law as a public service, is very clear, from a technical point of view, that there is no possible and available service provision for municipalities. Why? Because the legislator did not recognize it as such in the legislation.

So, from the regulator's point of view, tested here with our Attorney General's Office for the National Treasury – PGFN, our understanding is that it is not possible, under current legislation, for municipalities to provide betting services. In parallel, as I said, it is a constitutional right of individuals to take this to the Judiciary, to the Supreme Court, and once questioned, the Supreme Court will eventually rule on it. And it is not up to an agent of the direct administration to speak about the activity of another state, of another branch of government. It is up to the Supreme Court to evaluate the action that was filed there. Our expectation is that what is in our national legal framework will be enforced. Our understanding at the moment is that this provision of services is illegal.

The Union lotteries, operated by the subsidiary Caixa Loterias, are regulated by SPA-MF. Currently, most of the products are outdated and unattractive, with low prize percentages, low draw frequency, and/or no entertainment value. Even the operation of the instant lottery, granted to Caixa for 24 months, is not going well. There are two lotteries approved by Congress, Health and Tourism, which could be more successful due to their high prize percentages. Will SPA-MF treat the Union lotteries operated by Caixa with the same attention it gives to fixed-odds betting?

I think it's important that we look at the entire spectrum of the Secretariat's responsibilities. Beyond the quite challenging activity of fixed-odds lottery betting, SPA-MF also handles other modalities, and you know each of them better than I do. From the most traditional numerical and specific predictions, to instant betting, and in addition, we also take care of commercial promotion and the advance collection of popular savings.

We intend to address all our competencies within our capabilities. Initially, what we have already addressed in our regulatory agenda is one specific modality, which is the instant lottery. We do intend to enhance and improve each of the other modalities from a regulatory standpoint. What we cannot do is do everything at once. We plan to focus on other lottery modalities, but this needs to be arranged within the operational capabilities of our Secretariat.

The Senate may approve the legalization of casinos in resorts and tourist areas, bingo halls, and the jogo do bicho (a type of illegal lottery). What is your opinion on the bill that legalizes land-based gambling?

As I said, laws are made to be obeyed. So, once this possibility is recognized by Congress, and once it becomes the responsibility of the Prize and Betting Secretariat, we will get to work.

BNLData appreciates the lengthy and comprehensive interview and, to conclude, we ask if Brazil shouldn't have a national agency for games, betting, and lotteries?

I think it's a possible model. I think it's a model that can bring improvements to sector regulation. However, it depends on how it's structured, on its institutional, legal, and personnel apparatus. I think it's a possible solution that can bring improvements. It depends a lot on the actual model, beyond whether it's direct or autonomous administration.