Brazil’s Secretariat of Prizes and Betting (SPA) has formally notified 33 financial and payment institutions suspected of facilitating transactions for unauthorized gambling platforms, marking one of the most sweeping enforcement actions since the country began regulating the sector earlier this year.
According to the SPA, the institutions have 10 days to respond to the notifications, which center on whether they failed to prevent or report payments linked to illegal betting operations.
If authorities determine that any acted in bad faith or failed to implement measures to block these transactions, they could be subject to administrative proceedings and fines of up to R$2 billion (US$355 million).
The ministry has not released the names of the financial entities under investigation. In response to the announcement, ABFintech, a group representing a segment of the sector, reaffirmed its position that payment institutions should only process transactions for platforms that are authorized and regulated under Brazilian law.
The organization stated that fintech firms in the market have committed to servicing only those operators compliant with the country’s new regulatory framework. The Brazilian Federation of Banks (Febraban) also weighed in, voicing concern about the implications of gambling, including its potential to contribute to higher levels of personal debt.
The enforcement actions follow a March ordinance issued by the SPA, which requires payment institutions to monitor for and report any suspicious betting-related financial activity.
If a platform appears to be operating without authorization, institutions must alert the SPA within 24 hours. Reports must include detailed information such as the betting company’s legal registration number (CNPJ), the date the financial relationship began, the account or Pix key used, and any relevant transaction details.
Institutions are prohibited from maintaining accounts for unauthorized betting companies or processing deposits and payouts on their behalf. The rule has already led to a significant purge of illegal operators from the systems of several payment providers. Pay4Fun, one of the fintechs active in Brazil’s betting space, has reportedly severed ties with over 600 sites.
According to CEO Leonardo Baptista, the company uses a “know your merchant” (KYM) process to verify the legitimacy of each betting platform before entering into a relationship. “With this process, we check with the SPA whether the company holds a license, and whether it is listed among the authorized companies to operate in the country,” Baptista said.
The country’s crackdown on unlicensed operators began in January following the rollout of a formal regulatory framework. Fernando Vieira, president of the Brazilian Institute for Responsible Gaming (IBJR), said the legal structure is effective, but that the fight against illegal operators is ongoing. The IBJR estimates that approximately half of the market still operates outside the legal framework.
The IBJR has filed about 150 complaints with the SPA, including both illegal operators and financial transactions associated with them. These reports are submitted biweekly to support the government’s enforcement efforts.
