One of the key aspects of Brazil’s regulated betting market is the protection of bettors. Many of the companies operating in the sector will be international, which may lead to concerns among users about the risks of being affected by potential issues and being unable to hold operators accountable when they are located thousands of miles away. Fortunately, the regulatory framework developed by the Secretariat of Prizes and Betting of the Ministry of Finance (SPA/MF) addresses various issues that enhance consumer safety.
Among these is the separation of operators’ accounts, a topic outlined in SPA/MF Normative Ordinance No. 615. Betting platforms will be required to maintain two accounts: a transactional account and a proprietary account. The transactional account will hold the funds deposited by users and will be used for bettors’ withdrawals. The proprietary account should only be used for operational expenses and liquidity management. Importantly, both accounts must be held at financial institutions authorized by the Central Bank of Brazil.
Why Is This Separation Important?
Liquidity is a critical factor for any betting operator. When offering betting options, an operator may experience periods of financial loss if bettors achieve positive outcomes in their wagers. Liquidity management, which is thoroughly detailed in a dedicated chapter of the Ordinance, ensures the company always has sufficient funds to pay users, even in hypothetical scenarios where all users decide to withdraw their winnings simultaneously.
This is why separating transactional and proprietary accounts is crucial. Funds deposited by consumers must not be mingled with those used to cover the company’s operational expenses, such as employee salaries. This ensures that the funds remain available for potential withdrawals. Additionally, the Ordinance specifies that operators must implement measures to “manage their exposure to liquidity risk,” as outlined in Article 8, which lists the following policies:
“I – establishing, in an objective manner, a methodology for calculating exposure limits;
II – providing processes to measure, monitor, and mitigate liquidity risk exposure across different time horizons, including intraday; and
III – including a contingency plan detailing additional funding sources, responsibilities, and procedures for managing liquidity stress situations.”
One potential additional funding source is the company’s proprietary account. In liquidity stress situations, as defined by the law, the proprietary account may be used to pay users. However, the reverse—transferring funds from the transactional account to the proprietary account—is prohibited. Additionally, each betting platform is required to maintain a financial reserve of R$ 5 million to ensure payouts to users in extreme cases. Since these accounts must be with institutions authorized by the Central Bank, the government can take action regarding these funds if guidelines are violated—a process that would be far more complex with accounts held abroad.
How Does This Impact You?
The regulations for Brazil’s regulated sports betting market will take effect on January 1, 2025. From that date forward, licensed operators must comply with these account separation rules, keeping client funds secure and ensuring greater safety for users.
For those with existing balances on betting platforms, transitioning to meet the new rules may provide an additional layer of protection for your funds. One recommended approach is to withdraw your funds from the platform before the end of the year and, if desired, redeposit them in 2025, once the new regulations are in place. This ensures your funds will be safely held in the separated transactional account, under the oversight of the Central Bank.
The process is straightforward and can be made even easier with LATAM Bank, a digital wallet specialized in gaming, offering several benefits.
