Brazil bans fixed-odds betting, orders sites to shut down in 10 days

Brazil issued a provisional measure banning fixed-odds betting on September 25, ordering operators to take their betting websites and apps offline after a 10-day transition and setting a timetable for returning customers’ money.

Provisional Measure 1,394, signed by President Luiz Inácio Lula da Silva and published in an extra edition of the official gazette, covers fixed-odds bets on real sporting events and virtual online-game events. It expressly excludes other legally authorized lottery modalities.

The measure addresses fixed-odds betting operations, while a separate April resolution addressed event-linked derivatives, including sports and political contracts offered in Brazil.

A 10-day shutdown and a 30-day license deadline

The provisional measure took effect on publication, but sets separate deadlines for winding down operations. Operators must disable access to betting websites and internet applications, including through app stores, 10 days after publication. Existing concessions, permissions and authorizations under Brazil’s fixed-odds betting law expire after 30 days.

New authorizations are prohibited from the publication date. The measure also covers fixed-odds betting authorizations issued by states and the Federal District, and its prohibition reaches foreign operators offering the covered bets to people in Brazil.

New funds may no longer enter operators’ transaction accounts from publication, with a specific exception for documented proceeds from financial assets in which bettors’ money was already invested. Those proceeds, including earnings, must be used exclusively to fulfill the obligations set out in the transition provision.

How the refund process is supposed to work

Open bets whose results have not been determined by the 10-day deadline become void, with the full stake to be refunded without deductions. Customers retain the right to prizes from bets resolved by that deadline.

Within two days after disabling access, operators must make the money needed for refunds available and liquid, and provide their banks or payment institutions with an individualized list of customers, amounts owed and originating accounts. The funds must remain separate from the operators’ own assets and cannot be used for another purpose.

Banks and payment institutions then have seven days from receiving that information to return the money to an active account belonging to the customer. The original funding account is preferred, but another account in the same customer’s name is permitted. Amounts that cannot be returned through that process must go to a designated Caixa Econômica Federal account, identified by customer, for later restitution.

Separate from April’s prediction-market restrictions

Brazil’s National Monetary Council issued Resolution 5,298 on April 24, with an effective date of May 4. That rule prohibited offering and trading derivatives tied to sporting events and virtual online-game events.

It also restricted contracts tied to political, electoral, social, cultural, entertainment or other events that the securities regulator deems not to represent an economic or financial reference. The resolution defined qualifying financial references, including interest rates, exchange rates and commodity prices, and extended the restrictions to offers in Brazil of derivatives traded abroad.

The two texts regulate different products: the April resolution addresses derivatives linked to specified events, while September’s provisional measure prohibits fixed-odds betting operations and lays out their shutdown and customer-refund obligations.