Law 14.790/2023: Everything You Need to Know About the Regulation of Online Casinos and Betting Houses in Brazil

Recently, we have received questions from our clients regarding the new Law 14.790/2023, which addresses the regulation of online casinos and betting houses in Brazil. To clarify these doubts and provide detailed information about the legislation, we decided to draft this article based on the questions submitted by our clients.

Law 14.790/2023 represents an important milestone in the regulation of the gambling market in Brazil, bringing significant changes to the sector and offering new opportunities for entrepreneurs and bettors. Our goal is to provide a clear and comprehensive understanding of the implications of this law, answer the most usual questions, and help our clients adapt to the new regulations.

If you have any further questions or need specific assistance, please do not hesitate to contact us. We are here to help.

1. Is it possible according to the Law 14.790/2023, to obtain a B2C license for online casinos in Brazil?

   Answer:

   Yes, Law 14.790/2023 was enacted to regulate the online casino market in Brazil, given its significant growth in recent years. Provided all legal prerequisites are met, licenses can be granted for operations within national territory.

2. Could we operate with a state-level B2C license for online casinos (federal level) or we must obtain separate B2C licenses for online casinos in every state (e.g., Minas Gerais, Paraná, Rio de Janeiro, etc.)?

   Answer:

   The license is valid nationwide. Once obtained, only state and municipal procedures are needed for business activity in each territory for the purpose of meeting state and municipal tax requirements.

3. Who provides the state-level B2C license for online casinos – Ministério da Fazenda?

   Answer:

   Yes, the application for a license is made to the Ministry of Finance.

4. Is it obvious for operators applying for a B2C license to establish and have an administrative headquarters in Brazil?

Answer:

It is mandatory that the company intending to engage in online casino activities in Brazil has a legal representative in Brazilian territory, as well as is registered with Brazilian public authorities and obtains a registration number in the National Registry of Legal Entities (CNPJ). The law establishes that the administration of the company must be carried out within national territory, but as long as the company has a legal representative and other representatives of functions established by law, there is no requirement for the partners to be in national territory.

5. What is the term of the B2C license – 5 years?

Answer:

   Yes, the license term is 5 years. While the law is recent and does not have a determination regarding it, everything points to a period of five renewable licenses being possible.

6. Could you clarify this Law provision: "Operators will be required to pay a maximum upfront fee of R$ 30M (approximately US$ 6.1 million) for a license, but may offer up to three brands or skins for online betting and gaming" – is its one-time prepayment before obtaining license?

   Answer:

   "Operators will be required to pay a maximum initial fee of R$ 30 million (approximately US$ 6.1 million) for a license (...)": According to this excerpt, the law establishes the maximum fee that can be charged for granting the license, of R$ 30 million, which could be lowered as determined by the Ministry of Finance (Ministério da Fazenda). It also requires that payment be made within 30 days after the license-granting process is complete. There is a dissatisfaction in the betting industry in the country, which may result in the reduction or installment of the license fee.

   "(...) but may offer up to three brands or skins for online betting and gaming": In this excerpt, the law stipulates that each granted license gives the licensee the right to operate in the national territory through three varied brands, which allows for branding diversification.

7. Who must be the founders of a Brazilian company – just individuals or entities? Is it correct that "to qualify for a license, applicants must have a Brazilian investor that owns at least 20% of their capital"?

   Answer:

The Law 14.790 does not differentiate between individual or legal entity partners. Therefore, following the principle of legality in the country, the composition of the company's shareholder structure can be comprised of both individuals and legal entities.

The law indeed stipulates that 20% of the company's share capital must be held by a Brazilian partner. However, following the same reasoning, the law does not specify whether this partner must be an individual or a legal entity, allowing another Brazilian company to hold 20% of the gambling company, enabling the creation of related companies. This understanding, however, is not settled. If legislative acts governing corporate compositions (Lei das Sociedades Anônimas) and law interpretation (Lei Complementar 95/1998) are observed, one may conclude that even if the 20% are held by another Brazilian company, its controller or ultimate beneficiary must be a Brazilian individual. However, this understanding may be subsequently regulated by the Ministry of Finance (Ministério da Fazenda).

8. What should be the authorized capital for B2C online casino operators in Brazil?

   Answer:

Law 14,790 determined that the minimum amount of share capital would be established in subsequent regulations. However, the regulations published so far have not addressed the minimum share capital, allowing the company to be licensed with any share capital, until this value is determined.

9. Does the EU company need to establish a subsidiary in Brazil to operate a B2C license? 

   Answer:

In Brazil, we do not recommend opening a subsidiary (in the technical sense) of a foreign company in Brazil. We recommend opening a controlled company, which will be registered and have the foreign company as a partner, facilitating procedures and requirements, and guaranteeing the same rights as any other Brazilian company. Therefore, the company can conduct its activities through the Brazilian company.

10. Is it correct that "licensed operators will be required to pay monthly regulatory fees of R$ 54,419 to R$ 1.9 million (approximately US$ 10,000 to US$ 400,000) based on their adjusted monthly adjusted revenues"? 

    Answer:

Yes, this information is correct. The law establishes this monthly amount to contribute to the supervision of companies operating in the gambling market. It should be noted that these amounts do not include income tax, service taxes, and other applicable taxes.

Conclusion about bet in Brazil

Law 14.790/2023 marks a significant moment for the gambling sector in Brazil, bringing clear regulations and promising opportunities for online casino operators and betting houses. We hope this article has clarified your doubts and provided a detailed understanding of the changes and requirements imposed by the new legislation.

If you have further questions or need additional assistance, please do not hesitate to make a comment below or contact us in our mail contato@albuquerquegabriel.com. Our commitment is to ensure that you are well-informed and prepared to seize the opportunities that come with the regulation of gambling in Brazil.