SBC News Voice of the Sports Betting Industry
The Brazilian betting market is set to be massive – this is something all industry observers have had no trouble agreeing on, although determining when it will launch is a different matter.
Whilst much of the hype in anticipation of the world’s seventh most populous country has largely – and understandably – focused on the market’s commercial value, its KYC potential has been fairly undiscussed.
In the latest SBC Webinar, Brazilian possibilities were not lost on Roger Redfearn-Tyrzyk, Director of Global Gaming for IDnow, who appeared alongside Martin Lycka (SVP for American Regulatory Affairs and Responsible Gambling, Entain) and Fellipe Fraga (Chief Business Officer, Estrelabet).
“Brazil has the potential to become the number one sports betting market in the world. If you look at the people, they are so passionate about sports, not just football but also basketball for example.”
Finding common ground with Estrelabet’s CBO, Redfearn-Tyrzyk agreed with his fellow speaker that betting has a strong cultural basis in Brazil, particularly due to the country’s population having a passion for sports.
Additionally, an air of optimism was shared across the panellists, looking ahead to upcoming regulation of the betting market under newly elected President Lula, apparently expected when he returns from a visit to China.
“We have learned that we need to have good companies with us, and we are looking forward to regulation,” Fraga explained.
“Brazil needs money, and without regulation we do not have taxes in the correct areas. We have already had some meetings between the Ministry of Economics and the industry, to discuss the readiness. The last news is that after the President returns from China he will sign off on the regulation.
“We do not know how long the licences will be, or how much they will cost, but are just preparing for everything to come.”
Lycka, meanwhile, said that he expects Lula to examine and ‘ideally sign’ the regulatory package to launch sports betting after returning from his diplomatic trip.
As it stands, sports betting is already rolling out in Brazil, with every state having the right to regulate due to wagering being considered a form of lottery – but federal regulation is yet to come into force.
Some states have begun to move ahead, however, such as the state of Minas – the state lottery developing a sports betting offering with support from NeoGames.
But what impact will federal regulation have on the market from a KYC perspective? In Lycka’s view, an existing Brazilian taxation practice makes the situation ideal for operators.
“Similarly to Estrelabet, you have to take in all the applicable cultural, technological and administrative idiosyncrasies,” he said. “Brazil for many years has had the CPF system in place, which makes things more straightforward.”
“It is a very straightforward way of matching the registration data with that of the state database.”
The CPF Lycka referred to is a form of tax registration that also functions as a form of ID, which Entain’s representative argued will lay down ‘strong foundations’ for global businesses to verify customers to a high standard.
Playing a central role in this, however, will be firms such as the aforementioned IDnow, whose Director of Global Gaming was able to provide compliance solution’s suppliers’ perspective on Brazilian developments.
Redfearn-Tyrzyk continued: “In terms of KYC it really differs, as every company has their own definition of it and their own KPIs, and you have to provide a software that archives them. That is very flexible.
“We also have access to the official government database, where we can check the CPF number, check that the name is the same, that the person is still alive and also check the age.
“There are many different factors on how we can detect fraud, protect the players and the operators, and ensure there is a viable business going on.”
Commenting on the positives of the CPF framework, Redfearn-Tyrzyk described the system as being highly beneficial, even going as far to state that some European countries such as Germany ‘wish they had it’.
From an operator’s direct experience, Fraga stated that the CPF system’s main benefit is that it gives people one single bank account and one single ID, assisting with social responsibility and anti-money laundering (AML) practices.
“For now CPF is the best way to safely onboard customers,” he concluded, adding that the CPF number can also be used to send money through the PIX payments network.
Summarising the development of KYC processes in Brazil, Redfearn-Tyrzyk outlined that IDnow’s focus has been on ‘using best practice’ by presenting different use cases to its prospective and existing customers in the country.
“We present them with the best practices, and then they choose as to what is their risk appetite and risk assessment,” he remarked.
“It’s always about providing different perspectives on a topic that is quite broad, but at this moment in time we are not 100% sure, but we can already provide solutions that I am sure will fulfil the regulations that will come in place.
“It is the responsibility of the operators but also the suppliers to make sure this is in a safe environment and done in a responsible way.”
