BRAZIL Trends and Developments Contributed by: Thomas Gibello Gatti Magalhães, André Dágola Brostoline and Luisa Grespan Danhoni Neves, Magalhães & Zettel
13,756/18 was enacted by the Federal Execu - tive, which expressly allowed the commercial exploitation of fixed-odds betting. Fixed-odds bets are those in which the bettor tries to predict the result of a specific act that has as its object real or virtual events, such as sports and online games. Therefore, as of 2018, the world-renowned Bets or bookmakers were able to carry out their activities in Brazil or through internet domains in Brazil. This law determined that Brazil’s Ministry of Finance would regulate this activity. Thus, a market of 210 million people was opened up to the Bets, and this unexploited market was not used to placing legal bets (except lotteries). Therefore, it was necessary to enact Law No 14,790/23, which aims to regulate the betting market, focusing on consumer protection and promoting the sustainable development of the betting sector. BCB is involved in the betting market, as Law No 14,790/23 establishes that only Brazilian institu - tions authorised to operate by BCB can offer transactional accounts or financial services that allow bettors to make deposits and withdrawals to their accounts linked to the betting operator. Therefore, companies that offer processing and payment services for bettors and Bets shall be regulated by the government, while betting operators must be authorised by other gov - ernment agencies (in this case, the Ministry of Finance). This covers, among other require - ments, the implementation of risk management policies and processes, internal controls and fraud and money laundering prevention mecha - nisms. This opens a new area of regulation for BCB, and financial institutions that have already been authorised will also be able to expand their
services to include financial operations linked to the Bets. Prudential updates – Basel III As a member of the Basel Committee on Banking Supervision (BCBS), Brazil has been implement - ing the Basel III rules since 2013, in response to the 2008 subprime crisis. These rules aim to strengthen the ability of financial institutions to absorb systemic shocks from the financial system in which they operate, as well as global shocks to the economy. Therefore, the aim is to provide greater resilience to the financial system. To this end, the rules act to increase the qual - ity and quantity of regulatory capital of financial institutions, improving the weighting factors of assets based on their risks. They also introduce capital buffers with the intention of countercycli - cal action and the conservation of institutions,as well as establishing new leverage and liquidity requirements. In addition, the Basel III rules implement the “Too Big to Fail” saying in the financial system, by determining different rules for institutions of domestic systemic relevance and institutions of global relevance. BCB is finalising the applica - tion of these rules, providing for the issuance of a normative act that implements the new capital requirement for market risk (Fundamen - tal Review of the Trading Book – FRTB, stand - ardised model) and reviews the leverage ratio. These changes will be effective as of 2026. Future challenges and opportunities The regulatory challenges described above are integrated, and an institution regulated by BCB may offer PIX services to a Bet, which may have its own BaaS White Label to carry out its trans - actions. Therefore, by connecting SPB to the betting market, maybe, in the near future, these
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