The licensed companies inhabiting Brazil’s betting market have made their goal of confronting and eradicating the black market very clear – but how exactly do they intend to do this?
Secrets to success lie in learning from more established markets while also making the most out of available and emerging technologies, according to industry stakeholders at the recent SBC Summit Rio.
“Challenge is a part of life … and we have regulatory challenges,” said Daniel Eskinazi, Managing Director of Rivalo, a Colombia-headquartered company and one of the first licence holders in Brazil.
“The issue is how we are able to do those things and think about the alternatives for players and what is needed and what is not needed.”
The grey market transition
Brazil is making a significant transition from an unregulated grey market to a fully regulated and licenced one. As with any transition of this magnitude, it has not been an easy task and will continue to pose challenges.
The presence of a grey market in Brazil prior to the 1 January 2025 white market launch day means many operators have experience of the average Brazilian customer’s demands.
The challenge now is meeting the strict requirements of the new ‘Bets’ regulatory framework but also, as Rio attendees expressed, taking on operators which continue to carry out unlicensed activity.
Stakeholders had a range of terms to refer to Brazil’s lingering grey/black market – a ‘silent disease’ as Rivalo’s Eskinazi put it. Looking to other sectors for examples of best practice is the first port of call for many.
“The mature European markets are the reference ones, and the competitive ones will bring more insights – England, Denmark, Italy, Spain,” said Andre Gelfi, President of the Brazilian Institute of Responsible Gaming (IBJR).
“These are references for us because of the competitive aspect, and this is about a market that has more history. Some markets will impress, like the market of Ontario in Canada.”
The markets noted by Gelfi, who shared a panel with Eskinazi and others at the Summit, offer a lot of lessons for emerging giants like Brazil. The UK completed a huge review of its gambling regulations in 2023 with recommendations around financial vulnerability, marketing and the relationship between sports and betting.
Italy and Spain, meanwhile, stand out as two of the most notable markets to have imposed strict requirements around advertising, notably banning sports sponsorships – though the former looks likely to repeal this after years of criticism from both the industry and football clubs.
Lessons don’t need to be learned from countries as far afield as Europe, however.
Colombia, which as noted above is home to the Brazil licence holders like Rivalo, has had a legal gaming sector since 1943, and so Brazilian firms may want to look to their neighbours for examples of how to successfully counter a black market.
“We should look to other countries for what to do and learn from them,” Eskinazi explained.
“Our experience of Colombia was good, and in recent weeks we had some unexpected challenges, but in the long term this market has had some growth.”
Learning from other countries will be critical, and logical, for Brazil’s regulators and operators. However, to effectively counter the black market and better inform regulatory development Brazil’s new sector will have to tailor approaches to local conditions.
A unique approach
A one size fits all approach rarely works. Ahead of the 1 January launch date, this was a common talking point among operators, who noted the importance of ensuring marketing lines up with Brazilian consumers’ interests and that products meet the specific demands of the market.
It may seem like stating the obvious, but the same needs to be said for compliance, regulation and technology. Companies cannot expect to simply transplant a technological or regulatory approach to countering the black market from say, the UK, to Brazil, and for this to work out smoothly.
“The regulator will work off the experience of other countries, but you can’t copy one thing from one country to another because the legislative habit is different,” said Volodymyr Taftai, Country Manager at AtlasLive, an iGaming software company.
“You have to adjust to the culture of each country and environment.”
He continued: “There can be references, but you cannot copy. Brazil is a different country with a different culture and different people, you cannot copy a rule from Germany and bring it here.
“That’s where the balance should be somewhat different, with different accents but in the Brazilian way.”
So with the regulation set and plenty of other markets to learn from, what technologies stand out to the licence holders in Brazil’s young but already highly valuable betting marketplace?
Tapping into tech
Brazil is already home to an extensive tech sector, primarily based around its economic and business capital of Sao Paolo. Fintech firms in particular have already built up strong links with and experience of the gaming sector, even from its grey market days.
Tech solutions like AI are being touted as a way for companies in Brazil to carry out customer background checks and assess source of funds just as much as in more mature gaming markets.
To counter their illegal competitors, Brazilian firms need to have as complete a view of customers as possible. This not only assists with the anti-black market goal but also player protection and meeting regulatory AML and compliance requirements.
“The more you know the user, the more you can do something more effective via security information based on the information captured by the regulated market,” explained
Bruno Motta, Country Manager and Wooeen, a cashback browser firm from Minas Gerais.
Technology, particularly paytech and fintech, was high on the agenda for many Rio attendees. Many expect Pix, Brazil’s nationally used instant payments service which is the only payment method permitted for the gaming sector, to be further expanded on, possibly with the addition of crypto.
The IBJR’s Gelfi told the crowd that he expects facial recognition to make a big impact on the Brazilian betting space. This technology is nothing new to Brazilians overall, he noted, but for the betting sector it is.
“This is a measure that the regulated market will present to us,” he said.
Further challenges, or perhaps opportunities, for the industry to grasp as it continues to develop are onboarding, Gelfi said, adding that the market as a whole must ‘maintain a competitive experience’ to remain sustainable.
An important fact to reiterate though is that the industry is still in its early days. Challenges will present themselves and operators and the regulator will have to deal with them – and this process will likely be drawn out, as most regulatory adjustments are.
“We have clear rules around money laundering, advertising and payments, and the process is moving forward,” said Gelfi. “The operators are going through a difficult moment and the regulators are as well.
“This won’t happen overnight, we won’t be fully aware of what needs to be done. It will be a challenging process but a healthy one because we will make sure this is a safe activity for Brazilians.”
