Brazil government preparing heavy crackdown on illegal betting payments
Brazil’s government is implementing hefty measures to prevent illegal operators from processing payments ahead of the legal betting market’s launch on 1 January 2025.
The government’s ministry of finance is setting up a team of eight civil servants who will specifically work on preventing illegal sites from taking and receiving payments, according to Celia.
The team will process complaints from the sector and seek to punish unlicensed payment providers and illegal sites.
Blocking Pix payments will be successful
One measure the government has publicly announced is blocking payments involving illegal operators made via Pix, an instant payment service controlled by the Central Bank of Brazil which the majority of the betting market uses.
Regulators in other markets like Germany and across Europe have struggled to block payments to and from black market players due to various legal reasons.
But Celia believes banning illegal transactions via Pix will be a successful measure in Brazil as it is operated by the Central Bank and ultimately controlled by the government.
“If any commercial bank isn’t aware they have a company or client that is using illegal sites, as soon as they receive a warning from the Central Bank they will shut down their bank account immediately,” Celia said.
“If they don’t, they’ll be subject to fines. There’s no point for any commercial bank in Brazil to allow those accounts to process Pix once they are notified.”
Pay4Fun is authorised by the Central Bank to provide payments services to various entertainment sectors, including betting and gaming.
The Central Bank will be a key figure in the legal betting market in Brazil as payment providers will require its authorisation to operate.
“The Central Bank has the power and systems to stop any company that’s [not licensed], because they have direct communication with all the [commercial] banks and with us [as licensed payment providers],” Celia said.
Illegal sites not left with many options
With Pix no longer an option, Celia says unlicensed operators will have very few payment options left as cash and cryptocurrency will face huge political challenges.
“Cash is limited, a lot of people in Brazil are not using it anymore. And how do you get cash for an online operation? You need local people, brokers, affiliates, to receive and send money to operators. This is very complicated and it’s almost impossible to send money out of Brazil using illegal channels.”
Licensed operators will not be allowed to accept crypto payments, as per Normative Ordinance No 615.
Celia is confident the Central Bank will be able to identify crypto payments being taken by the black market. “Crypto in Brazil is only used as an asset for investments, not as a payment method,” he said.
“To buy crypto here you need an account for a crypto exchange, meaning you have to provide personal data and the Central Bank is on top of that.”
Celia concluded: “We’ll have to wait [and see], but for unlicensed sites, it will be difficult to operate here.”