Was the SPA’s suspension of Pixbet’s licence disproportionate?
On 11 April, the Secretariat of Prizes and Bets (SPA) suspended the online gambling licences of Pixbet Technological Solutions, Caixa Lotteries SA, 7MBR Ltda and Tqj-Par Participacoes Societarias SA, through the enforcement of Normative Ordinance No 787.
The companies were suspended after the SPA deemed they were in breach of Article 3 of Normative Ordinance No 2,104, which relates to the presentation of technical certifications.
The regulator had accused these operators of not filing the necessary certifications that enabled them to operate in the legal betting market.
At the time Pixbet said it was surprised by the decision, and very shortly after the licence was revoked, a subsequent federal court decision reinstated it.
Federal court judge Anderson Santos da Silva overturned the effects of the ordinance on the evening of 11 April, following a “writ of mandamus” filed by the company.
The company claimed to have submitted three of the four necessary certification documents in February, while the remaining document, the integration certificate, was submitted the day prior.
Kujawski, partner at Brazilian firm Mattos Filho, says he believes the SPA’s decision was too harsh. He fears it could show a “certain lack of dialogue and understanding” from the SPA, with overworked certification entities. Today there are only six recognised gambling certifiers in Brazil.
“In our view, the suspension of the authorisation was a disproportionate response to the infraction committed,” Kujawski tells iGB. “A suspension of authorisation should only occur in extremely serious cases of repeated violations of Brazilian law.
“Before suspension, other sanctions should be applied, such as warnings or even fines. Suspension of authorisation should only be a last resort.”
SPA flexes muscles for the first time
This suspension of four licences marked the first time the SPA has placed serious sanctions on operators, to the extent of the punitive measures available to the regulator laid out in Normative Ordinance No 1,233, published in July.
As per the ordinance on regulatory enforcement, the SPA has the power to terminate licences for the most serious cases of failing to adhere to the regulations.
The SPA can also issue fines of between 0.1% and 20% of proceeds over the year prior to the sanctioning proceedings beginning, although the penalty can never exceed BRL2 billion ($353,678).
Kujawski says the SPA needs to “assert its authority” on the market to avoid other consumer protection agencies feeling they need to fill a vacuum of power.
However, he also warns the regulator cannot go too far the other way, although he has faith the SPA will ultimately calibrate its sanctions to be more reasonable than the case of Pixbet.
“This cannot translate into an agency that applies sanctions in a disproportionate manner or adopts an inquisitorial stance against the sector it regulates,” Kujawski continues.
“A balance must be struck between an active agency and a belligerent one. I am convinced that the SPA will find this right path.”
Suspension causes reputational damage to Pixbet
Pixbet said its initial licence suspension was both “illegal and disproportionate”, claiming it caused the operator “reputational and economic damages”, in relation to its BRL470 million master-sponsorship of Brazilian top-flight football club Flamengo.
Kujawski agrees the incident caused damage to Pixbet’s reputation, both within the market and with its business partners.
“I understand that the damage here was controlled,” Kujawski adds. “But it could have been worse.
“That is why I reiterate my opinion that the lack of a mere technical certificate should not lead to the suspension of an operating licence.”
Notably, 7MBR Ltda also had its licence reinstated shortly after it was revoked, although Caixa Lotteries and Tqj-Par Participacoes Societarias remain suspended.
However, both of these operators have said they are planning to launch their licensed betting offerings later in 2025, and therefore had not yet secured all their documentation.
When asked why companies would go to the trouble of gaining authorisation when they aren’t yet planning to go live with their product, Kujawski says the reason is the slow authorisation process.
“One of the most complicated [phases of authorisation] has been the technical certificates for platforms and games, due to the workload of the certifying entities,” Kujawski says.
“There are several operators who have obtained the licence and are still organising their systems and games to begin operating.”