Category: News

The latest budget proposal Saturday afternoon included a graduated wagering tax structure that would set rates between 20-40%, depending on an operator’s adjusted gaming revenue (AGR).

Those with AGR of $30m per year or less would be taxed at 20% while those with AGR of $200m or more would be taxed at 40%.

Here’s a look at the proposed breakdown:
20% tax on AGR up to $30m

25% on AGR on revenue over $30m-$50m

30% on AGR on revenue over $50m-$100m

35% on AGR on revenue over $100m-$200m

40% on AGR on revenue over $200m

Top operators would see taxes nearly triple

Companies like DraftKings and FanDuel, the biggest operators in Illinois, would easily fall in the 40% tax category, based on AGR from previous years.

Smaller operators, like Circa Sports, would likely fall into the 20% tax category. Most other operators in Illinois would fall somewhere in between.

At 40%, Illinois would be the second-most expensive competitive market to do business in.

New York has a 51% tax rate, and operators there are struggling to profit. The top tier of the tax on the proposed sliding scale is higher than the 35% rate Governor JB Pritkzer initially proposed. Major operators have been lobbying against Pritzker’s proposed increase for weeks.

“The notion that you would punish the operators who invest the most and create the most jobs in the state is totally backwards,” an industry source who wished to be unnamed told iGB. “Policymakers should be incentivizing operators to create jobs and invest resources on building the Illinois market. This does just the opposite.”

Pritzker’s proposal was for a flat tax rate that would more than double the current 15% tax rate. Sources said Saturday that the flat tax idea was back on the table. It seems likely there will be an increase, the question is how much.

Should Pritzker succeed in getting the increase, he would be the second governor in a legal sports betting state to do so. At the behest of Governor Mike DeWine, Ohio legislators last July doubled the wagering tax from 10% to 20%.

Other states weigh raising rates

Lawmakers in multiple states have considered wagering tax increases over the last year. But so far, only Ohio lawmakers have taken action.

Massachusetts lawmakers last week shot down a proposal to increase the tax rate there from 20% to 51%.

A bill in New Jersey would increase the tax on digital wagering from 13% to 30% and on online gambling from 15% to 30%. The bill is still in committee.

Eight digital platforms are live in Illinois, and in 2023 generated $1.03bn in adjusted gross revenue. The state took in $151.4m in taxes.

Budget deadline is next month

Illinois lawmakers were scheduled to adjourn at the end of Friday (24 May), but agreed to extend the session in an effort to approve a budget. The legislature technically has until June 30 to pass a budget, but generally adjourns well before that.

According to NPR, if the budget is approved after May 31, the number of votes needed for approval increases.

Capitol News Illinois reporter Hannah Meisel tweeted a statement from House Speaker Emanuel Welch late Saturday:

“The House and Senate are very close to an agreement on a final budget. Procedurally, the earliest an agreement could pass both chambers is next week. To let members and staff rest and spend time with family, we are adjourning for the holiday weekend and will return to complete this work.”

Lawmakers did tackle several key issues late Friday and Saturday, advancing bills about abortion, maternal rights, carbon storage, and health insurance reform.

In what was another financially positive year for Paf, revenue was 6.9% higher year-on-year. The operator also had a 23.0% rise in net profit to €55.1m, another new annual record.

However, while CEO Christer Fahlstedt welcomed the news and praised Paf’s performance, he also warned over future profit prospects. In particular, Fahlstedt picked up on how rising gaming taxes in various markets will likely hit net profit levels in years to come.

In Finland, a temporary reduction on lottery tax has ended, with rates now rising from 5% to 12%. Meanwhile, Swedish gambling tax is increasing from 18% to 22%, Estonia 5% to 6% and Latvia from 10% to 12%.

“We can be happy and proud with the past year,” Fahlstedt said. “We have gained a larger customer base, and the number of active customers has increased by 27%, which explains some of it. 

“However, we are also well aware that the temporarily low gaming taxes in Finland have helped the result. The trend of increasing gaming taxes will continue.”

Fahlstedt also references the impact of what he describes as “much needed” demands for increased responsible gaming measures. Incidentally, Paf this month took the decision to further reduce loss limits for players aged between 20 and 24 to €8,000. This follows Paf overhauling its mandatory online loss limit in April 2023 lowering it from €20,000 to €17,500.

“Changes will result in reduced profitability and many operators will find it more difficult,” Fahlstedt said. “But Paf is well prepared for the times ahead.”

Online growth drives revenue up at Paf

Analysing revenue performance in 2023, it is clear to see where growth is coming from at Paf. Revenue from its online business climbed 8.2% to €153.8m, with Paf noting strong growth across Sweden, Spain and Latvia.

The latter was helped by its acquisition of Latvia-facing William Hill Latvia SIA and SIA Mr Green in June 2023. These deals, Paf says, generated an additional €5.1m in online revenue.

Paf also reported a 27.3% increase in registered online customers to a record 615,557. On this, the operator expects this total to continue to grow in 2024 with support from ongoing marketing efforts.

As for Paf’s other business, revenue from the land-based and ship segment slipped 0.9% to €23.3m. This was despite a 4.0% increase in the overall number of ship passengers in 2023.

Here, Paf agreed new deals with Tallink Group and Eckerö Linjen and welcomed Finnline’s new ship, M/S Finnsirius. Paf also launched its first land-based GameRoom in collaboration with Pikseli in Helsinki. The GameRoom concept offers a mix of amusement games and entertainment

Paf also noted an increase in cashless payments, with all amusement games and nearly half money slot machines now offering cashless options. This, Paf says, meets customer demand for smoother payment options.

“Through these actions and innovations, we look forward to continued growth and improvement of our service and offerings,” Paf said.

Net profit rises on revenue growth

Turning to costs, materials and services expenses edged up 7.9% to €42.6m. Staff costs were level at €24.2m while depreciation and impairment was only marginally higher at €10.6m.

Other operating expenses were reduced by 2.0% to €52.9m while Paf was slightly boosted by €723,605 in net financial income. 

As such, it was left with a pre-tax profit of €60.0m, up by 27.9% year-on-year. After paying €5.2m in tax and accounting for the impact of €305,468 in deferred taxes, net profit for 2023 increased 23.0% to €55.1m.

Paf also noted that higher revenue and profit allowed it to distribute €31.4m in funds during 2023. These funds are used for the benefit of society including third sector organisations that work to promote society in social activities, culture, youth work, sports, environmental activities and more.

“It’s undeniably great that Paf is achieving a great result, allowing us to distribute a total of €31.4m,” chairman Jan-Mikael von Schantz said. “The employees have done a phenomenal job over the past year, and the board would like to thank all Paf employees who have made this possible.”

So far, there’s no consensus, which means that the Illinois legislature will extend its session into the Memorial Day weekend.

Governor JB Pritzker earlier this year began pushing to increase the Illinois betting tax rate from 15% to 35%. Pritzker has argued that his state isn’t getting the kind of revenue that bigger states like New York (51% tax rate) and Pennsylvania (36% tax rate) are reaping.

A key difference, however, is that more-comparable Pennsylvania allows promotional deductions, making the effective tax rate 24%, according to Vixio. Illinois and New York do not allow for promo deductions. New York has the biggest competitive marketplace in the US, and operators were willing to weather the high tax rate in exchange for the exposure. According to one industry group, at least some legal operators are in the red in Illinois.

Pritzker’s proposal is part of a bigger trend. Last July, Ohio Governor Mike DeWine put a 10% wagering tax hike in his budget and it passed. Operators went from paying a 10% tax to a 20% tax. Ohio also allows for promotional deductions, which means that the stated tax rate is lower than the stated rate.

Massachusetts lawmaker reject 51% tax rate

Massachusetts lawmakers Thursday (23 May) rejected a proposal to increase the tax rate from 20% to 51%. The proposal in the Bay State came from Senator John Keenan, and would have been wrapped into the state budget. Keenan leaned into problem gambling and the idea that operators should pay to treat those who develop an addiction during debate.

But Massachusetts already has some of the most stringent responsible gaming regulations in the country, and has the most well-funded problem gambling program in the US. According to the National Association of Administrators for Disordered Gambling Services, in 2021, Massachusetts earmarked $10.2m for problem gambling as compared to $5.6m for New York, which is nearly three times as big.

New Jersey lawmakers are also considering a hike. A bill filed in April would more than double the wagering tax from 13% to 30%. It would also raise the online gambling tax from 15% to 30%. The bill is in the Senate State Government, Wagering, Tourism, and Historic Preservation Committee, but doesn’t have a hearing date.

Illinois betting tax rate increase would ‘change calculus’

There’s been pushback against an Illinois betting tax rate increase from the industry, and Thursday, the state’s unions added their voices. The Sports Betting Alliance (SBA), comprised of BetMGM, DraftKings, Fanatics Betting & Gaming, and FanDuel, is campaigning against the increase. A spokesperson said that 53,000 e-mails have been sent from constituents opposing the hike to state lawmakers.

“These companies entered in Illinois with the understanding they would be operating under a 15 percent tax rate,” SBA spokesman Nathan Click said via e-mail. “All the companies I represent are currently operating in the red in the state, but are still investing in Illinois based on long-term potential under a 15 percent tax rate.

“Doubling the tax rate massively changes the calculus – and basically makes these investments exceedingly harder to recoup- much less turn a profit. The state taxes promotions, so operators effective tax rate is actually between 30-60 percent.”

In a statement, the SBA pointed to legalising online gambling as an alternative way to drive tax revenue. Online gambling has broader reach and a bigger profit margin. The SBA projects Illinois could bring in $750m in annual revenue from online gambling. Lawmakers earlier this year declined to consider a bill legalising it.

The Illinois legislature had until 22 May to approve a budget and adjourn on time. As of Thursday night, a budget had not been approved and the expectation is that the session will run into, if not through, the holiday weekend. In 2019, sports betting was legalised in an extended legislative session.

The announcement was made following the Switzerland casino industry’s delegate meeting on Wednesday (22 May). With current licences lasting until the end of 2024, the new agreements will be granted for 20 years and start from next year.

New casinos were approved in Prilly and Winterthur, with the latter replacing the current venue in Schaffhausen after no licence application was submitted.

Gerhard Pfister, Swiss Casino Association president, believes the new licences mark a landstone moment in Switzerland’s gambling history.

“The granting of the new concessions is a milestone,” Pfister said. “The federal government has recognised that today’s casinos ensure safe and responsible operations and generate great economic benefits in their region.”

All Switzerland casinos now members of association

Additionally, the Swiss Casino Group venues in Zurich, Schaffhausen, St. Gallen and Pfäffikon have all joined the Swiss Casino Association following a unanimous agreement. Winterthur will submit a membership application to the Swiss Casino Association after it opens.

It means that all of the 21 land-based and 10 online casinos are now members of the Swiss Casino Association.

Pfister feels the enhanced collaboration of all Swiss casinos being part of the association will prove beneficial for the industry.

“I’m pleased that Swiss Casinos has joined the association and with it the entire casino industry with one voice can speak,” Pfister said.

Swiss Casinos board member Marc Baumann added: “The online business is changing the Swiss casino industry sustainably. We are happy to work together with the Swiss Casino Association to help shape the future.”

Land-based GGR decreasing but online on the up

Over 2023, Switzerland saw a slight decline in revenue from its land-based venues, though online casinos showed significant year-on-year growth.

Last year, land-based venues generated CHF623m (£536m/€629m/$681.2m) in gross gaming revenue (GGR). That was down 1.1% on the year prior.

However, the 10 online casinos accumulated CHF286m in GGR, a 14.3% year-on-year increase. The Swiss Casino Association noted that the change in popularity from land-based to online offerings matches other industries aside from gambling.

Casinos also paid 3% more year-on-year in tax, with the state receiving CHF409.3m in contributions over 2023. Swiss casinos have contributed over CHF8bn in taxes over the last 20 years. The majority of that total has gone towards the country’s AHV pension system.

Switzerland lottery reports record profit

Earlier this week, the Loterie Romande public lottery in Switzerland posted an increased net profit of CHF5.1m for 2023. The lottery will also pay out a record CHF243.7m to good causes.

This was despite Loterie Romande’s GGR dropping 3.4% to CHF420.7m in 2023. 2022 saw the lottery post record GGR of CHF435.5m.

Loterie Romande chairman Jean-René Fournier attributed the rise in profit to reductions in marketing and administrative costs.

“This result can be attributed in particular to the rigorous management of operating costs, the strengthening of our digital offering, and – with the launch of the European draw game EuroDreams in October 2023 – the diversity of our product range,” Fournier said.

An experienced industry professional, Kopjo will officially take on the CFO role at Galaxy on 28 May. He is replacing Harry Hagerty, who is moving to a strategic advisory role after seven years as CFO.

Kopjo joins Galaxy after three years at Everi. Here, he spent time as vice president of finance and director of investor relations.

Prior to this, he worked at PlayAGS for five-and-a-half years. This also included a spell as director of investor relations, serving in the role from January 2018 to December 2020.

His other industry roles include 18 months as senior manager of financial reporting at Wynn Resorts. In addition, he spent time as financial reporting manager at Shuffle Master.

Kopjo backs Galaxy to achieve continued growth

Speaking about his appointment, Kopjo said he is honoured to be considered and ultimately selected as CFO.

“I’ve watched Galaxy from afar and always believed it was poised for continued growth,” Kopjo said. “I can’t wait to join the team and support the commitment to strategic product innovation. I look forward to bringing my experience to bear as we explore ways to maximise shareholder value, ensuring Galaxy Gaming remains at the forefront of industry excellence.”

Galaxy president and CEO Matt Reback also welcomed the appointment. He said Kopjo has skills that are a strong fit for Galaxy.

“His experience, leadership, work ethic, and contagious energy will without a doubt contribute to our continued growth and success,” Reback said.

“While it is never easy to replace someone like Harry Hagerty, we are proud of how we have supported his transition from a full-time C-suite role and continue to leverage his valuable experience as a strategic advisor.”

Record Q1 for Galaxy

The appointment comes after Galaxy this month published its Q1 results. These include an 8.1% rise in revenue to $8.0m (£6.3m/€7.4m), a record quarterly figure for the group.

Revenue was higher across both the GG Core and GG Digital segments at Galaxy Gaming in Q1. While the GG Core land-based business remains its primary source of revenue, the GG Digital division posted more growth.

Other key figures from Q1 include total operating rising 9.6% to $5.7m. However, finance costs were cut by 3.1% to $2.1m.

Lower overall spending, coupled with revenue growth, meant net profit increased 40.2% to $178,514. In addition, adjusted EBITDA edged up 2.8% to $3.2m for the quarter.

The partial merger will create the Audit and Risk Committee, which will be chaired by Ian Penrose. A senior independent non-executive director, Penrose has served on the Playtech board since 2018.

Joining Penrose will be non-executive directors Linda Marston-Weston and Samy Reeb, both serving as ordinary members. 

Meanwhile, the compliance aspect of the existing Risk and Compliance Committee will now become part of a new committee. This, Playtech said, will be named the Regulatory and Compliance Committee.

Reeb will lead the new committee as chair, with support from Penrose and Anna Massion, another non-executive director, as ordinary members.

Changes will come into effect from 1 June. No other committees at Playtech will be impacted by the reshuffle.

Playtech revels in Americas B2B growth

The announcement comes just days after Playtech published a trading update for the first four months of the year. Playtech said it delivered a “solid” trading performance across both its B2B and B2C segments.

In terms of B2B, Playtech referenced revenue growth in regulated markets, led by the US and Canada. The group also said it continues to benefit from tighter cost control as well as “rapid expansion” in the live market.

Looking to B2C, praised Italy-facing Snaitech, which it said performed well on an underlying basis. The group also noted wagers showed strength across the online and retail betting segments.

Caliplay uncertainty remains

The publication also featured an update on the ongoing dispute with Caliplay. A joint venture with Mexico-facing operator Caliente, Caliplay is seeking to end its legal relationship with Playtech.

The case dates back more than 12 months, with both parties going back and forth over a disagreement on certain fees. This eventually led to Caliplay launching legal proceedings to annul its partnership with Playtech in October last year.

Hitting back, Playtech set out steps to resolve the dispute. It also said actions by Caliplay in Mexican court proceedings contravene contractual agreements under an agreement that was established in 2014.

Playtech went on to make further claims against Caliplay in terms of unpaid fees when announcing its full-year results in March, Playtech has made further claims against Caliplay in terms of unpaid fees. 

As for the latest development, Playtech believes it has visibility over substantially all revenue generated by Caliplay, and that Caliplay continues to perform strongly, it has been unable to obtain full financial information from Caliplay during the period. 

As such, revenue generated from the additional B2B services element of the agreement is partly based on an estimation. This, it adds, takes account of prior trends and information provided.

However, Playtech also took the opportunity to reiterate that Caliplay is a “highly important customer” and it continues to maintain an open dialogue to discuss a path forward. 

PA, MA issue fines

The Pennsylvania Gaming Control Board on 22 May announced that it had fined Wind Creek Bethlehem $125,000 (£98,089/€115,156) for 10 times allowing minors onto the gaming floor. The regulator wrote in a press release that the incidents occurred over a 20-month period and involved 11 people.

A day later, on 23 May, the Massachusetts Gaming Commission issued a $10,000 fine to Fanatics Sportsbook for allowing a bet to be placed on a Boston College team. A consumer placed a $50 futures bet on the Golden Eagles bowl game against SMU 5 December 2023. Fanatics discovered the bet a day later and cancelled it. Betting on in-state college teams is not permitted in most cases in Massachusetts.

SI to exit Michigan by end of 2024

Michigan’s SI Sportsbook will exit the state by the end of the year, according to a report from PlayMichigan. The SI Sportsbook platform, now owned by Evoke, was the worst performing iGaming operator in Michigan for the first quarter of 2024. In addition, its sportsbook was in the bottom tier for revenue during the same period. SI Sportsbook launched in September 2022 and is partnered with Island Resort & Casino.

It appears likely that Hard Rock Bet will replace SI Sportsbook. Evoke, formerly 888 Holdings, bought 888’s US assets earlier this year. The Michigan Gaming Control Board would have to vet and approve a new operator.

SI Sportsbook is one of two operators leaving the state in 2024. WynnBET is winding down its business and exiting multiple states. Caesars Sportsbook bought the WynnBET license earlier this year. Digital platforms in Michigan must be partnered with one of the three commercial casinos in Detroit or a tribal casino. SI Sportsbook is partnered with Hannahville Indian Community on Michigan’s Upper Peninsula.

More credit?

A pair of bills making their way through the Rhode Island legislature would allow Bally’s to extend $100,000 in credit at its casinos. The senate bill is backed by President Dominick Ruggerio, author of the state’s legal sports betting bill.

The Providence Journal reported that Bally’s reason for increasing credit is to stay competitive. Neighbouring Massachusetts does not have a limit on how much credit a patron could be offered. And Connecticut’s two tribal casinos can choose their own credit limits.

Nevada: Made a bet? Keep your ticket

The Nevada Gaming Control Board Thursday (23 May) said no to the idea of allowed bettors with wagering tickets to cash out early by selling them. PropSwap, which operates in other states but not Nevada, made the proposal, according to SBC Americas. The NCGB determined that PropSwap’s business model is illegal, in part because Nevada does not licence such businesses. The proposal included creating a licensing category.

Illinois Dave & Busters could get a vote

The Illinois bill that would ban Dave & Buster’s from “facilitating” gaming Wednesday (22 May) was folded into a horse-racing bill. The amended bill, HB 394, got approval from the rules and gaming committees Thursday (23 May) and is on the House floor. The language would prevent amusement centres from offering customers the opportunity to bet against each other. Dave & Buster’s is proposing such betting through its loyalty app, and multiple states have voiced concern. Illinois is the first state to have a bill about the issue.

Illinois’ legislative session is scheduled to end today, but since the budget bill — which includes a wagering-tax increase hasn’t passed — it will be extended into the weekend.

Big money

Circa Sportsbook announced Thursday (23 May) a $16m payout in its Circa Million VI and Survivor NFL contests. The Survivor contest will have a $10m guaranteed prize and Million VI will have a $6m gaurantee. In-person signups begin today (24 May) at any Circa Sports Nevada location, and open until 7 September at 2 p.m. local time.

The contests have no rake, and will have mini contests throughout the year. The Survivor contest requires bettors to pick one winner, straight up, each week of the season, and a team cannot be reused. The Million VI requires five picks against the spread weekly. Entry fees for both contests at $1,000 and players can submit multiple entries.

Worth the read

Are sports betting companies targeting Blacks? James Trumm of the Toledo Blade took a deep dive into the question, and found conflicting opinions.

In other news …

Beth Bresnahan, the former Massachusetts Lottery and DC Office of Lottery and Gaming executive director, was introduced Monday (21 May) as SciGames’ chief communications and brand officer. She was previously the company’s vice president of strategic communications.

BetMGM announced Thursday (23 May) that it’s now the official odds provider for the Associated Press. BetMGM odds will be in AP’s daily sports odds fixtures and other sports stories.

The Maryland Lottery Thursday (23 May) granted Betr initial license approval. When Betr, currently live in Ohio and Virginia, will launch was not revealed. The company exited the Massachusetts market earlier this year.

ICYMI on iGB

Tax-rate increase coming in Illinois? We’ll find out over the weekend

West Flagler files response to federal government in US Supreme Court

Massachusetts operators jilt gaming commission

FanDuel’s first 30 days in DC nearly 900% better than GambetDC in same period last year

DraftKings-Jackpocket integration underway

Introduced in April, House Bill 365 is seeking to open up the Delaware online market to more operators. This comes just months after the Delaware Lottery launched its first online sportsbook with Rush Street Interactive and BetRivers.

The Lottery’s sportsbook went live in January and has already had a marked improvement on the Delaware sports betting market. Monthly handle and revenue totals are higher, with this trend continuing into April.

Against this background of early success, lawmakers are already looking at ways to grow the market further. 

At the centre of this is HB 365, which this week was assigned to the House Appropriations Committee. The bill had been assigned to the House Administration Committee upon its introduction in mid-April, but no further action was taken. 

What is in the new Delaware sports betting bill?

The bill takes recommendations from a legislative study group, which was approved last year and posted its finding shortly before the Delaware Lottery’s online sportsbook went live.

The main takeaway from the group was that state tax revenue would increase more if the online market were to expand and become competitive. Estimates for the current market suggest handle will top $186.1m (£146.6m/€171.9m) in FY25 and $223.5m in FY26, then 5.0% growth in 2027. 

To put this into context, handle for FY23, which includes just four months of one online operator, was $65.3m. In FY22, prior to any online betting, player spending amounted to just $19.5m.

The bill aims to improve on these estimates by opening up the market to additional online brands. Each Delaware racetrack would be allowed to partner with up to two betting operators, which means as many as six online operators could join the current market.

Licences would cost $500,000 each and run for five years. As for tax, those successful in securing a licence would pay at a rate of 18% of sports betting revenue in Delaware.

Other aspects of the bill include an additional 1.5% charge on revenue. Funds from this would be sent to the Delaware Thoroughbred Racing Commission or Delaware Harness Racing Commission to support the state’s horse racing industry.

There is currently no date set for when the bill would come into effect if it is approved.

Revenue and handle up in April

Focusing now on Delaware in April, total spending on sports betting hit $15.5m. This is some 400.0% higher than in April last year, with the state following a similar growth trajectory since the turn of the year. However, total spend in April was down 18.0% from $18.9m in March.

January saw Delaware Lottery roll out the new online sportsbook, powered by Rush Street Interactive and BetRivers. This has had a marked improvement on the state’s sports betting market over the past few months, including April. However, total spend in April was down 18.0% from $18.9m in March.

In terms of revenue, this amounted to $1.0m in April, up 171.0% year-on-year and level with March’s total. 

Delaware Park remains the runaway leader in the market, posting $622,160 in revenue from $10.7m in total bets.

Harrington Raceway placed second with $114,792 off $2.9m, then Bally’s Dover on $77,115 from $1.3m. An additional $86,049 in revenue came from $715,036 bets placed with retailers across the state.

Delaware igaming revenue tops $4.4m in April

Looking now to the igaming sector, total revenue in this market hit $4.4m in April. This is up 238.5% from the same month last year and only slightly behind March’s $4.6m.

Of this total, some $3.3m came from online slots, while the other $1.1m was generated by table games.

As for spending, players wagered $134.5m on igaming in April, up 240.5% from $39.5m last year and just 1.1% lower than $136.0m in March this year.

Consumers placed $85.7m in online slots wagers during the month and also spent $48.8m on internet table games.

As was the case with sports betting, Delaware Park again claimed top spot, reporting $2.0m in total revenue. Harrington Raceway took second with $1.4m in igaming revenue, ahead of Bally’s Dover on $1.0m.

Each of operator rolled out new online casino platforms in January, around the same time that the Delaware Lottery’s internet sportsbook launched.

The latest order from Brazil’s SPA – Interministerial Ordinance No.28 – was published on 22 May in the country’s Official Gazette. The SPA was established in April as part of an ordinance outlining the first steps for implementing betting regulation.

Ordinance No.28 gives a set of responsibilities to the ministry of sport – including a 45-day period to comment on applications. Earlier this week, the ministry of finance published Ordinance No.827. This outlined that the SPA would receive 150 days to assess applications for licences. The SPA must also notify the applicants of their acceptance or rejection within this timeline.

Ordinance No.827 set a deadline of 31 December for operators to comply with the regulated market. From 1 January 2025, operators will be subject to penalties. The 45 days allotted to the ministry of sport could delay the licensing process further, according to Fabio Kujawski, partner at Mattos Filho.

Will Brazil’s regulated market launch on schedule?

Kujawski also points out delays could effect how operators advertise in Brazil. From 1 January onwards, it will be illegal for unlicensed operators to advertise.

“As of Jan 1, 2025, all operators that have not secured a license will be deemed as operating illegally and may have its URLs blocked by determination from the ministry of finance,” he says.

“So, the problem is actually bigger than simply receiving the license later, but to be no longer authorised to operate or to advertise – note that advertising from unlicensed operators will also be deemed unlawful as of 2025.”

Brazil sports betting timeline is ‘daunting’ but MoF confident

Andre Santa Ritta, associate lawyer at Pinheiro Neto Advogados says that on a general level, the timeline was “well-received”. But he admits that the industry will have to put in the work to make it happen – a pressure that will surely increase with this new 45-day allottment.

“Indeed, the timeline is daunting to say the least, but the ministry is confident they should be able to achieve it,” Santa Ritta says.

“My expectation is to see significant increase in the workforce at the authority in the upcoming weeks to meet the deadline. This happened before in other industries, such as finance.”

Further steps to Brazil’s betting and gaming licensing process

The latest ordinance also outlines that applications will be registered with SIGAP, Brazil’s betting management system. Applications will then be passed on electronically to the ministry of sport.

Applications will also be submitted to the Attorney General of the Union. This is to prevent discrepancies between the SPA and the ministry of sport.

Both the SPA and the ministry of sport will be responsible for monitoring betting integrity in Brazil. The ministry of sport must communicate all suspected instances of match fixing to the SPA.

“The Prizes and Bets Secretariat of the Ministry of Finance and the Ministry of Sports are responsible for ensuring, within the scope of their powers, the integrity of the unpredictability of events and sporting results, which are the subject of fixed-odd bets,” Ordinance No.28 reads.

The ministry of sport is separately charged with keeping and updating a list of sports entities that can be the subject of bets during sports events.

Ordinance No.28 will be enacted on 3 June.

Nearing the end of a long journey for Brazil regulation

If the ministry’s timeline is followed, Brazil’s igaming and sports betting market should be regulated by the end of July. The roll-out is set to take place in four stages, and is already almost halfway through.

Stages one dealt with technical, payment and security requirements that operators must follow. Stage two – which concludes at the end of May – will see the SPA publish anti-money laundering and anti-terrorist financing policies.

Stages three and four will see the SPA publish rules on security requirements for online gaming and how the industry will contribute to socially responsible causes, respectively.

President Luiz Inacio Lula da Silva approved Bill 3,626/2023 in December. The bill officially permitted a regulatory framework for gaming in Brazil. It officially brought an end to a long road for the industry in one of LatAm’s most thriving sporting nations.

Normative Ordinance 827 was published in Brazil’s Official Diary of the Union on Tuesday (21 May), sets out the requirements for those hoping to secure sports betting and gaming licences in Brazil. 

It kicks off an “adjustment period” in which gaming operators active in Brazil have until 31 December 2024 to comply with the regulatory framework for sports betting and igaming. Companies’ applications submitted within 90 days of Ordinance 827’s release will be prioritised for assessment.

Authorised operators will be granted a licence lasting five years, once a BRL30m (£4.6m/€5.4m/$5.9m) fee is paid, and able to offer gambling via three skins.

Those that fail to secure a licence by that cutoff date will face penalties from 1 January, 2025.

Is the timeline for Brazil sports betting achievable?

The ordinance comes as the Ministry of Finance works its way through the process to finalise regulations, with a four-stage process underway.

While some sources suggested the government aimed to issue licences in the fourth quarter of the year with a plan to launch in January 2025, others argued this timeline was far too ambitious, expecting delays. The ordinance setting out how operators must apply was originally expected in April.

Following the Ordinance, one lawyer admitted the timeline was “daunting”. However the Ministry believes it is achievable, they added, supported by a higher headcount at the Secretariat of Prizes and Bets (SPA). 

“My expectation is to see significant increase in the workforce at the authority in the upcoming weeks to meet the deadline,” they explained. “This happened before in other industries such as finance.”

Who is eligible for Brazil sports betting and igaming licences?

Licence applicants must be headquartered on Brazilian soil. Foreign companies will still be eligible, but with a local subsidiary in which a Brazilian owns at least 20% of the share capital. 

What this actually means for operators remains up for discussion with experts unclear on how these arrangements will work in practice. The lack of new information on this requirement is disappointing, one lawyer said, and hoped for additional guidance from the Ministry.

This setup would need to be established before the operator applies for its licence, as any merger, split or change in corporate control would prompt a review of a licence by the Secretariat of Prizes and Bets (SPA).

What must operators prove to secure a Brazil gaming licence?

As with regulations in many other countries, companies must provide documentation proving they are legally qualified to operate in Brazil, including identification and registration forms for controlling entities. They must also submit a declaration of compliance with payments regulations, supported by certification from the Central Bank of Brazil. 

The businesses will also have to provide a joint certificate from the Special Secretariat of Federal Revenue and the Attorney General’s Office of the National Treasury to show they are registered to pay tax in the country.

All key personnel and financial beneficiaries must also have a clean criminal record, with no bankruptcies, tax evasion or embezzlement convictions. 

How will Brazil gaming licence applicants prove their financial health?

In addition to paying the BRL30m licence fee, successful applicants must provide evidence of a financial reserve of at least BRL5m. The Ministry asks for a projected cash flow for the next two financial years signed by a finance director or equivalent to show how the business expects to grow in the market. 

Those that launch will pay a 12% gross revenue tax and a monthly inspection fee on a sliding scale from equivalent to $10,000 to $390,000. 

What are the technical specifications for Brazil gaming licence applicants?

Technical certification of operators’ betting systems are required, as outlined in Ordinance 722, issued earlier this month.

This ordinance set out provisions for datacentres hosted offshore. The Ministry aims to ensure the SPA has easy access to data so centres located in a country with a legal cooperation agreement with Brazil, covering civil and criminal matters, are acceptable. 

The testing centre requirement is included in this ordinance, though this may result in another bottleneck for the regulatory process. While the likes of Gaming Laboratories International (GLI) are certified for testing, the sheer volume of applicants could slow down the process. A call for expressions of interest in January prompted 134 responses from local and international operators.

What comes next in Brazil’s gambling licensing process?

According to the four-step process outlined by the Ministry of Finance in April, the SPA is due to announce technical and security requirements by the end of June, alongside processes for monitoring industry advertising. 

Final rules on how industry contributions will be distributed to socially responsible causes will follow by the end of July. This is likely to involve funds being paid into a central account then distributed to a range of different government agencies and charities.