As Brazil prepares for the official launch of its regulated online gambling market, conflicts between state and federal licensing regimes underscore the complexities of implementation. These tensions, outlined in Vixio’s playbook, could significantly influence the market dynamics.
Law 14.790, enacted in December 2023, established a centralised federal licensing system, overseen by the Secretariat for Prizes and Bets (SPA). By mid-2024, 114 companies submitted applications for federal licenses, with an upfront fee of R$30 million (~US$5.3 million) required from successful applicants. However, certain states, including Rio de Janeiro, Paraíba, Paraná, and Maranhão, have issued local-level licenses, complicating the regulatory landscape.
One notable flashpoint is Rio de Janeiro’s licensing framework, which permits state licensees to operate nationwide and internationally, provided certain conditions are met. This has prompted the federal government to file a lawsuit with the STF, arguing that such practices violate Law 14.790. The state’s position hinges on a clause exempting regulations enacted before the federal law’s cut-off date, leading to a high-stakes legal battle.
The federal government’s concerns are clear: Rio’s alternative licensing model could undermine the national system by offering operators lower fees, reduced tax rates, and lenient suitability standards. For instance, while federal licenses require a R$30 million fee and compliance with stringent requirements, Rio’s model presents a potentially less demanding path for operators.
Additionally, challenges arise from state-level advertising practices. Justice Luiz Fux’s October ruling suspended provisions barring cross-border advertisements by state licensees, further fuelling the regulatory discord. This ruling enables state-licensed operators to market their services beyond their jurisdictions, potentially drawing customers away from federally licensed platforms.
As the federal and state governments vie for control, the broader implications for market growth and regulatory enforcement remain uncertain. The Vixio report states, “Any ruling in the state’s favour [Rio de Janeiro] could potentially undercut the new federal licensing regime.”
With January 1, 2025, fast approaching, these regional conflicts highlight the critical need for harmonised regulations to ensure a stable and equitable gambling market in Brazil.
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