Brazil’s government is ramping up efforts to tackle illegal betting operations, focusing on preventing unlicensed operators from processing payments. These actions are being implemented in anticipation of the country’s legal betting market launch on January 1, 2025.
According to Ari Celia, director of Pay4Fun, a licensed payment provider authorized by the Central Bank of Brazil, a new department within the Ministry of Finance will be responsible for ensuring that illegal gambling sites cannot conduct transactions in the country.
Government Establishes Civil Service Team to Block Payments
As part of this crackdown, the Ministry of Finance in Brazil is creating a dedicated team of eight civil servants who will oversee complaints from the betting sector and take punitive action against unlicensed payment providers. This group will also work closely with the Central Bank of Brazil to ensure that illegal operators cannot utilize Brazil’s most popular payment system, Pix, for processing transactions.
The decision to block Pix transactions stems from the platform’s widespread use in the Brazilian betting market. Celia emphasized that because Pix is controlled by the Central Bank, Brazil has a significant advantage in enforcing these restrictions compared to other countries where regulators have struggled to stop illegal betting payments.
Celia explained:
“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.”
Challenges for Unlicensed Operators
Blocking Pix payments will leave unlicensed betting sites with few options to receive money from Brazilian players. Celia pointed out that the use of cash is declining, and cryptocurrency will not be a viable solution, given Brazil’s regulatory landscape.
He highlighted the difficulty of using cash for online operations, noting that it would require local brokers or affiliates to handle payments, a complex and risky process, noting that:
“Cash is limited, and a lot of people in Brazil are not using it anymore. And how do you get cash for an online operation? You need local people, brokers, affiliates, to receive and send money to operators. This is very complicated, and it’s almost impossible to send money out of Brazil using illegal channels.”
In addition, Brazilian law explicitly prohibits licensed operators from accepting cryptocurrency payments. Normative Ordinance No. 615, which governs the legal betting market, outlines strict regulations against the use of crypto as a payment method for gambling.
Celia is confident that the Central Bank will be able to monitor and block any attempts by illegal operators to process cryptocurrency transactions. At the time being, crypto in Brazil is not considered a payment method, and it can only be used as an asset for investments.
Enforcing Regulations to Ensure a Smooth Market Transition
With the legal betting market set to launch in just a few months, these measures are designed to ensure that unlicensed operators have minimal opportunities to operate in Brazil. The Central Bank will play a crucial role in regulating the market, as all payment providers will require its authorization to operate legally.
The government’s strategy reflects a broader effort to bring stability and legitimacy to Brazil’s betting market, ensuring that only licensed operators can provide services to consumers. By targeting illegal payment channels, including Pix and cryptocurrency, the Brazilian authorities aim to establish a secure and well-regulated betting industry that benefits the country’s economy and protects its consumers from unregulated operators.
Source:
“Brazil government preparing heavy crackdown on illegal betting payments”, igamingbusiness.com, September 9, 2024.