The Brazilian gambling industry is about to become regulated. IDnow investigates how the grey market currently works, and some of the dangers of using unregulated gambling platforms.

Brazil effectively banned gambling in 1946; a more-or-less all-encompassing restriction that remained largely in place until 2018, when sports betting was legalized. However, as virtually no regulation was ever implemented, Brazilian players and international gambling platforms have been operating in a somewhat grey area ever since. This is all due to change once Brazilian online gambling regulation is formally approved in the coming weeks. 

The limbo appears to work, at least on the face of it. And at least for international operators. Surprisingly, despite the lack of clear regulation, Brazil still manages to generate over 20% of all global online gambling traffic. 

It is for this reason that the Brazilian authorities have introduced new regulations to help the Brazilian gambling market capture what is viewed as lost revenue (a projected $1.5 billion in 2023) and bring it back within the fold of the Brazilian economy. 

In fact, the projected numbers are likely to be even larger when regulation finally passes, as there are vast swathes of the Brazilian would-be gambling community that are not currently gambling, despite wanting to.

To gamble or not to gamble? That is the Brazilian question.

In 2021, a survey on Brazilian attitudes toward gambling discovered that 39% of Brazilian participants said they didn’t gamble because they felt uncertain of the safety. 

Just over half of all potential players said they would feel more confident playing online if they had more information about the companies. This is understandable as many gambling operators are not very clear about who their owners are, or even the location of their headquarters. 

In the same survey, 51% of participants said they would like to see more player protection mechanisms put in place. Read more opinions from the Brazilian betting community in our blog, ‘How does the Brazilian betting community really feel about upcoming regulations.’ 

Despite operating in the grey, international gambling operators have achieved considerable visibility through advertising on television and the internet, and through sponsorship of Brazilian football clubs. 

However, the wave of publicity and ensuing popularity has raised concerns about the impact of gambling addiction, the growth of scams, and the threat of money laundering.

Wait, so is online gambling legal or illegal in Brazil?

The most obvious question that many have when they see adverts for online gambling platforms but find out online gambling is essentially illegal, is well, how does that work? The answer lies in Law 13.756, which allows operators to offer their services in Brazil if their headquarters are outside of Brazil and there are no physical points of sale. In practice, this law enables bookmakers to use websites, on the condition they are hosted internationally. 

As these websites operate according to the rules of the countries in which they are based, such as Curaçao, the UK or Malta, they are not required to obey Brazilian laws, such as the Consumer Defence Code. This is all set to change when Brazilian regulations are formally passed and implemented. 

This has meant that from 2018 until whenever the regulations finally come into force, international bookmakers have operated with a sort of impunity and without needing to implement fair gaming rules or player protection measures.

What do Brazilian players think about using unregulated gambling platforms?

The Brazilian gaming community is waking up to the realities of dealing with unregulated gambling operators. Common complaints made on social media and forums include users making deposits but being unable to withdraw them, and even stories of players who have had their accounts blocked following a good streak in sports betting or on online casinos. However, there is a growing awareness among the Brazilian betting community that these kinds of scams are not representative of the entire gambling industry, but rather just unreliable websites.  

An upside to the online proliferation of so many negative stories has led to increasing numbers of Brazilian gamblers actively seeking information about the risk of less reliable, unregulated online gambling sites.

Arguments for and against KYC processes in Brazil.

While the vast majority of the Brazilian betting community seem to accept the value of undergoing a KYC process, there are some who have expressed privacy concerns over some operators’ requirements for players to take and send photographs of themselves holding identity documents. Many also fear that when dealing with an international operator, if there was a problem associated with sending documents, for example a data breach, then they would not be able to rely on national legal protection measures. 
 
A common complaint among international gambling operators is on the difficulty of performing the Brazilian KYC process due to the wide variety and disparity of identity documents in Brazil. For example, each state in Brazil offers slightly different ID cards, which have dates and document numbers in different places, for example. Difficulties surrounding the KYC process has affected some players’ ability to transact and make withdrawals.  

This makes the integration with the Cadastro de Pessoas Fiscias (CPF), a tax number that every Brazilian is issued with, all the more important for identity verification and KYC. 

Brazilian industry insiders say that the implementation of KYC measures to obtain a licence (Read more about ‘Unpacking the complexities of the Brazilian gambling license structure’ here) means more than just following a legal requirement, it will also help operators prevent fraud.

Brazil is almost ready. Are you?

Are you ready to enter the new era of online gambling in Brazil? 

IDnow is unique in its ability to combine geo-specific capabilities like Brazil’s CPF integration, with AML compliant, multi-dimensional identity proofing and fraud prevention solutions – enabling trusted, seamless customer experiences anytime, anywhere. All from one platform, all in real time. 

Read more about our Brazil-ready identity verification services.

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Jody Houton
Senior Content Manager at IDnow
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Interested in entering one of the largest and most lucrative gambling markets in the world? You’ll first need a UK gambling license. Here’s everything you need to know about the application process, compliance requirements, UK gambling regulations, and much more.

The UK Gambling Commission (UKGC) operates as the UK’s gambling regulator, and is an independent regulatory body established under the UK Gambling Act of 2005. To operate legally in the UK, all gambling platforms are required to hold a license issued by the UKGC. 

The UKGC is also responsible for implementing changes to national gambling regulations, such as the recent proposals contained in the UK’s gambling white paper. Proposals target various aspects of the gambling industry, such as VIP customers, slot limits, and financial risk checks (formerly known as affordability checks).

Understanding UK gambling regulations.

The UKGC takes failure to comply with licensing requirements and social responsibility codes very seriously. Operators, therefore, must have robust systems and controls in place to prevent money laundering as well as a whole host of other nefarious crimes. They must also safeguard customers, take measures to prevent underage gambling, ensure fair play, and encourage responsible gambling to guarantee gambling compliance.

There are essentially three main types of operating licenses: 

• Remote: This license allows licensees to provide casino games and gambling products to customers through an online site, TV, mobile phone, or any other type of online service.
• Non-remote: A non-remote gambling license allows the licensee to facilitate betting activities at betting shops, tracks, and/or courses.
• Ancillary: Ancillary licenses are for operators offering email and telephone betting. 

Operators may need one or a combination of these licenses.

Licensing is mandatory, even if an operator’s online gambling platform is located in another region of the world. Essentially, if the services are being offered in the UK, operators must hold a license. (If you are interested in learning about the need for an online gaming license in general, click on the underlined copy).

Eligibility criteria for a UK gambling license.

The Commission evaluates applicants based on the following criteria: 

• The identity of the applicant and people associated with them. For example, if the applicant’s gambling platform is part of a bigger corporation, then the owner of that corporation also needs to be evaluated.
• The applicant’s honesty, integrity, and trustworthiness
• Financial statements that display the business is financially capable of operating successfully after obtaining a license
• The applicant’s expertise, experience, qualifications, history, and those of the people relevant to the application
• The applicant’s criminal record and those relevant to the application. 

The Commission also looks at the applicants’ policies to ensure that: 

• They incorporate and understand the legislation
• They follow the established licensing objectives
• They hold evidence that their arrangements will adhere to social responsibility requirements

Application process for a UK gambling license.

Applicants apply for an operating license from the UKGC via the “Apply for an operating license” service. It takes around 16 weeks for the Commission to process a license application, considering all the required information is submitted at the point of application. Applying for a UKGC license costs £370, which must be paid via credit or debit card.  

Operators are required to provide an extensive array of documents, some of which depend on the type of business applying for the license. For instance, a sole trader may only be required to submit identity documents, whereas a limited company would be required to submit the following:

• Ownership structure diagram
• Articles of association
• Management structures
• Certificate of incorporation
• Memorandum of association 

Overseas entities must submit a credit report and, if they have licenses elsewhere, copies of licenses issued by the other jurisdictions. 

For a remote licence, an operator must provide the following: 

• Documents regarding remote policies and procedures
• Operational model map
• Gambling software supply method and details
• System diagram displaying the end-to-end process 

Some requirements are considered core documentation and are mandatory in all cases. Such requirements include the following: 

• General policies and procedures–these must adhere to the standards outlined in the LCCP (Licence Conditions and Codes of Practice)
• Rules of play
• Customer terms and conditions
• Bank statements for the past six months for all accounts
• Business plan
• Proof of funding
• Profit and loss projections for the next three years 

Those responsible for managing the business must also submit a PML (Personal Management Licence) or an Annex A personal declaration form based on the circumstances.

Key considerations for license applicants.

Those applying for a license from the UKGC must have a comprehensive business plan for their application to be approved. A sound business plan shows that the operator understands their objectives and the steps required to achieve them.  

Operators must also focus on responsible gambling and protection practices. This includes offering tools like deposit limits, self-exclusion, and helpful resources for customers who may struggle with or be on the verge of developing a gambling addiction. Moreover, the operator’s platform must also be secure, employing technologies such as SSL encryption to secure their customers’ personal and financial information. 

Implementing robust anti-money laundering and fraud protection strategies, such as KYC and AML solutions, is also essential. Operators can help identify and mitigate gambling fraud and crime by conducting due diligence and transaction monitoring. Keeping updated with industry regulations and best practices is also among the key considerations for license applicants.

Gambling regulations 101: EU and the UK.

Learn how gaming operators can keep pace with the ever-growing multi-jurisdictional landscape in Europe and beyond.

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Compliance and reporting obligations.

All UKGC license holders must adhere to regulatory obligations that must be observed at all times. Such obligations include upholding integrity in all aspects of their operations, maintaining accurate records, reporting crucial information promptly, and ensuring they offer fair, safe, and transparent services to customers while taking active measures to prevent problem gambling.  

Failure to comply with such obligations can lead to dire consequences, including heavy fines, license revocation, and strict legal action.

Licensing fees and taxation.

For licensing purposes, operators are divided into a total of nine categories according to their GGY (Gross Gambling Yield). For example, a gambling operator with a GGY under £550k will be required to pay an application fee of £4,224 and an annual fee of £4,199. On the other hand, operators with a GGY worth £1 billion must pay an application fee of £91,686 and a yearly fee worth £793,729.  

As per the Point of Consumption Tax (POCT) introduced in 2014, the Commission requires all licensees to adhere to tax requirements to operate legally. This includes taxes on all profits from gambling activities, regardless of where the operator is based, and abiding by regulations regarding the collection and reporting of taxes. The POCT has profoundly impacted the UK’s gambling industry, urging operators to adapt and comply with the evolving tax requirements to remain compliant.

License renewal and revocation.

The procedure for license renewal is like applying for an initial application. You need to submit a renewal application within six months before the license expires but no later than two months prior to its expiration. The Commission may refuse to renew a permit on the following grounds:

• If the renewal is inconsistent with the licensing requirements. In this instance, the authority may consult the chief officer of the police. The authority will, therefore, be wary of any concerns regarding the use of the premises during the life of the license.
• If an authorized local government officer has been denied access to the premises without a reasonable excuse. 

The Commission may also revoke a license holder’s permit under the following circumstances: 

• The license holder is unable to carry out licensed activities consistent with the licensing requirements.
• The Commission is dissatisfied with the licensee’s financial standing.
• The Commission is dissatisfied with the licensee’s competence.
• The Commission believes that one or more license terms have been breached 

The Commission usually informs the license holder if it reaches a decision about their permit. The licensee is allowed to appeal against a decision if: 

• They receive a fine or warning.
• Their license application has been turned down.
• Their license has been revoked or suspended.
• There are changes in their license terms

Marketing and advertising guidelines.

Licensed operators must be wary of the advertising standards and restrictions established by the Commission. Such standards exist to protect minors and the vulnerable from being unfairly targeted by gambling ads and ensure that all advertising is fair and transparent.  

Regarding responsible marketing practices, operators must be mindful of the guidelines and undertake advertising in a socially responsible manner, including the stipulations on the use of certain messaging and imagery. This is to say that all licensees’ marketing communications must not mislead customers. Operators must adhere to the UK Advertising codes published by CAP (the Committees of Advertising Practice) and governed by the ASA (Advertising Standards Authority). 

International expansion and cross-border licensing.

Many operators explore other markets to increase their customer base and diversify their revenue streams. However, various legal stipulations are linked with cross-border licensing, including ones based on licensing, taxation, and regulation.   

As previously noted, operators based abroad must provide a credit report. If they carry a license from other jurisdictions, they must provide a copy of the licenses issued by other jurisdictions.

UK gambling license FAQs.

Game on.

Like other industries, gambling has seen significant digital transformation in recent years. Adhering to recently updated and upcoming gambling laws and regulations is essential to launching a gambling platform in the UK.  

Effective procedures such as KYC and AML solutions can also help operators guarantee compliance with international regulatory requirements.  

Our highly configurable platform for identity proofing in the gaming market allows operators to keep abreast of constantly changing regulations, and new fraud schemes and scams, while ensuring a safe, secure and seamless gaming experience. With our latest round of platform enhancements, we now offer UK-specific data checks, and financial risk checks, which provide operators with insights into a player’s affordability indicators to comply with the latest updates to the UK Gambling Act.

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