The sports betting sector is constantly evolving and is projected to grow by 10% by 2028, surpassing the 140 billion dollar mark worldwide. In 2021, around 400 betting sites operating in Brazil moved approximately 7 billion reais, and this activity has drawn attention due to the infrastructure of these companies being located outside the country.

Bookmakers usually have their headquarters in countries where their operation is allowed, such as the United Kingdom, New Zealand, among others. On the other hand, online betting sites, which operate completely over the internet, are authorized under Law No. 13,756/2018, which categorized sports betting as fixed-quota lotteries.

See what the legislation says about betting in Brazil

Although it is not prohibited for Brazilian citizens to use online betting sites, it is important to mention that these houses follow the laws of the country where they are headquartered and have compliance processes for identity validation, at the risk of local sanctions. The legislation still leaves doubts about the regulation of documents and identity verification measures, and it is not clear how these houses should deal with Brazilian bettors, which generates a perception of illegality that could harm the market.

Given this scenario, there are risks for both bettors and bookmakers. In Brazil, it was predicted that sports betting would be regulated by 2022, however, the process is stopped awaiting a decision from the new management. Among the obligations of bookmakers will be:

  • Obtaining a license, the value of which, according to a decree released by the Ministry of Economy, is around BRL 22 million;
  • Open a branch in the country with sufficient structure and staff to support activities in the country;
  • Collection of various taxes, such as Corporate Income Tax (IRPJ), Social Contribution on Net Income (CSLL), Social Integration Program (PIS) and Contribution for Social Security Financing (Cofins);
  • Validation of the Individual Taxpayer Registration (CPF), the main national identification document, to prevent fraud and restrict gambling for people under 18 years of age.

Caciporé Valente, CEO of Netrin, commented on the importance of companies in the sector to strictly follow these norms: “It is important that companies are aware of the rules of tax legislation in Brazil and also the ways of identifying users, to prevent risks of intruders and robots. Because in Brazil, the CPF is the main and most important document for confirming the identity of a user”.

It is important to remember that, in addition to the regulations imposed by the countries of origin of the bookmakers, companies must also follow the Brazilian legislation on the Prevention of Money Laundering and Financing of Terrorism (PLD-FT). Law 9613, of March 3, 1998, as amended by Law 12,683, of July 9, 2012, regulates the crimes of laundering or concealment of assets, rights and values, and establishes measures to prevent the use of the financial system for these illicit.

This norm also creates the Financial Activities Control Council (COAF), responsible for preventing and combating these crimes. These laws were improved through Circular 3,978, of January 23, 2020. Payment method operators in Brazil are required to create a risk classification and monitoring system for suspicious operations of Money Laundering or Terrorism Financing, providing reports periodic reports to Coaf about these operations.

Invalid CPF: a big problem for bookmakers

According to a study carried out by Netrin specialists, it was found that about 10% of the records of natural persons (CPFs) consulted had irregularities in a base of 1 million records of natural persons (CPFs) consulted. These irregularities may include registrations of minors, irregular status with the Federal Revenue and deceased persons.

The specific case is of a company that operates in Brazil and is responsible for managing payments and deposits on sports betting sites, in addition to managing compliance practices for KYC (Know Your Customer) to ensure the security of deposits and withdrawals.

Dielson Haffner, Head of Commercial and Customer Success, Netrin, said: “Our technologies query, in real time, thousands of CPFs and CNPJs daily on their platforms, ensuring that their customers prevent identity fraud. The CPF query API can also be used in KYC, to validate the status of the registration at the Federal Revenue, as well as the presence of the name on international restrictive lists, in the prevention of money laundering (AML)”.

A possible solution to the problem

The implementation of an intelligent CPF query API would allow a bookmaker to block registrations with invalid CPFs and guarantee the veracity of the bettor’s information at the time of registration, verifying that the CPF entered corresponds to the name and date of birth.

This mechanism focuses mainly on KYC (Know Your Customer) practices, where information is crossed to identify suspected illegal transactions.

Netrin, a startup that offers solutions for risk and fraud prevention for more than 100 clients in different sectors, offers a page with information about the possibilities of querying the CPF and anti-fraud technologies for online sites, e-commerces and betting sites.