Tell us a little about Lazarus Legal and any clients you may have advized that are looking at the Brazilian market?
Lazarus Legal has been advising clients in the gaming space for nearly 30 years and has helped launch worldwide industry giants in their quest to further their business achievements. Lazarus Legal has an international client base who seek to establish a foothold on numerous territories and jurisdictions. We help start-ups and mature businesses with all their regulatory, compliance and licensing needs. Brazil is a huge market, the largest in South America; naturally many clients are looking to start doing business in such a jurisdiction, hopingto reach a large client base.
Is the opening of the Brazilian regulated market the biggest opportunity in gaming for some time? How does it compare to the opening of individual US states or perhaps Canadian jurisdictions?
Brazil is a large market with a population of well over 200 million and a diverse multicultural society. That being said, the population does not have the same amount of disposable income that US and Canadian citizens do. But gaming is prevalent all over Brazil, so the propensity to establish oneself in the market is high among industry leaders. Many see it as an opening to the South American market if future countries also create similar licensing regimes.
Have developments for Brazilian regulation to date actually been too slow?
Gaming legislation, in general, takes many years before it is enacted, as governments and industry compliance norms change rapidly before a uniform set of regulations can be enacted. Furthermore, once enacted, those regulations and legislation are constantly modified so international operators can adapt to the new licensing jurisdiction. Brazil is no different in this regard.
Are there any particular laws/regulations that concern you?
The Brazilian market will require license applicants to have deep pockets. Once an application is successfully accepted, it will require a substantive licensing fee that will allow your license to be valid for five years. To operate in Brazil, you must be incorporated in Brazil and under Brazilian law, with headquarters and management located within the country; only such entities are eligible for authorization to operate fixed-odds betting sportsbook and casino.
- Companies may be structured as either limited liability companies or corporations.
- They must provide proof of integrity and compliance with their tax obligations.
- Demonstration of the operator’s technical qualifications.
- Proof of the company’s economic and financial qualifications.
- Presentation of accounting documents.
- Timely payment of BRL 30m ($5.3m) for the license.
- Additional requests may be required.
- Income tax of 15% on net revenue, after deducting losses
- A bond of BRL 5m.
So with the licensing fee and bond requirements, an applicant should be ready to have roughly $6.3m available, and that does not include any legal, marketing, compliance or accounting costs. Additionally, from a payments perspective, the Brazilian market has imposed that operators shall be prohibited from accepting payments in the forms of credit cards and cryptocurrencies; instead payments are to be facilitated between the operator and player via electronic transfer. The idea behind this requirement is to encourage locals to use only licensed sites and get the local Brazilian banks involved. In both instances, companies looking to start under the new legislation will have no choice but to adhere to the above, which is not an easy feat for many operators.
Generally, what do companies make of the demand to have an office and company headbased in Brazil?
Gaming operators and companies are very used to certain obligations put forth by the new licensing jurisdiction, which are designed to help revitalize the local and national economic outlook. Aside from the tax revenue, gaming operations that have offices, employees and a local presence, despite being an international company, all help the economy of the jurisdiction. Brazil is no different in this regard; additionally, having a Brazilian company helps authorities track the movement of capital within the context of the gaming operations and therefore allow such authorities to ensure taxes are being paid.
Have you heard much about Fortune Tiger, a game by PGSoft, that has led to arrests and an amendment to the proposed Brazilian regulation?
The Fortune Tiger phenomenon in Brazil became popular as Brazilian digital influencers utilized platforms such as TikTok, YouTube and Telegram to flood the market with posts and videos about the game. The fact, however, is that the uncoordinated marketing effort led by influencers and promotion of affiliated links led many to believe, falsely, that a lifestyle of luxury can be achieved by playing a game that is no different than any slot game; which means results are generated randomly and no outcome is certain.
This form of predatory marketing goes against standard industry norms in tier-one gaming jurisdictions and cannot be practised in places that have a regulatory regime that protects its citizens. The arrests that followed the deceptive marketing campaign, undertaken by a slew of influencers, forced the hand of the Brazilian legislator; and the game highlighted the urgent need for stricter regulations regarding consumer protection and online gaming.
Overall, how excited should the industry be about the regulated Brazilian market heading into 2025?
We do believe the industry should be excited about the prospects of the new licensing jurisdiction of Brazil. The industry is moving towards a highly regulated environment, because gaming is no longer looked upon in
the negative way it was in the past. The arrival and expansion of online gaming has created a situation where national and local governments see a way to stimulate their respective economies, with the arrival of hundreds of international businesses seeking to enter their market. The industry should adapt to these ever-changing measures as they will continue to become more prevalent. Indeed, having experience in a large market like Brazil will only help operators once other Latin American countries establish their own regulatory regime.
Bio: Monzon is the Managing Partner of Lazarus Legal and was called to the Quebec Bar in 2004. With a strong business focus and a reputation for providing comprehensive tailored solutions, Monzon continues to be a trusted advisor to his clients seeking expert legal counsel. Monzon’s dedication his clients, combined with his legal background, has allowed him to build relationships and foster trust among his clientele. Fluent in English, French and Spanish, Monzon has built a client network around the world.
Bio: Giammarella is a specialized gaming attorney, experienced in assisting online and land-based gaming entities meet their objectives regarding their platforms and betting products. He has provided
services in assisting clients in registering Ontario’s regulated gaming and betting market and regularly drafts legal opinions on Canadian gaming and betting related issues.
Worldwide clients include Land-based and Online Casino Operators, Gaming Regulators, Policy Makers, Lotteries, Horse Racing Operators, First Nation/Native Casino Operators.
