Brazil Targets Influencers and Fintechs in New Crackdown on Illegal Betting Operators

The Brazilian Federal Government has come up with a set of new measures aimed at suppressing the country’s illegal betting market. The policy will target the financial and promotional channels through which the unlicensed betting operators will interact with their clients.

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Under the new law, influencers, marketers, and the companies that promote unlicensed betting platforms could become liable for taxes connected with the operation of the operators. Also, the government will be able to block finances associated with the illegal betting firms, and the funds confiscated will be used for financing the public safety programs.

The measures mark yet another attempt by the government to improve the situation in the country’s regulated betting market while fighting the unlicensed offshore betting companies trying to reach the local players.

Influencers Might Be Liable for Unpaid Taxes

The most significant change targets social media personalities and marketing agencies promoting unlicensed betting firms. The government intends to deprive people of any financial benefits they might get through advertising operators who are not licensed in the country.

According to the new rules, the individuals and companies promoting illegal betting operators will be made liable for the taxes that the business does not pay in Brazil. Those people who earn through advertising the unlicensed betting firms will have to take care of the taxes the company should pay.

Robinson Barreirinhas, Secretary of the Federal Revenue Service, elaborated on the government’s position: “If an influencer goes on social media and promotes an illegal betting operator, in addition to all administrative sanctions imposed by the Secretariat of Prizes and Betting, the Federal Revenue Service will collect income tax and PIS/COFINS taxes. That is fair.”

Also, he continued: “If an influencer is making money from an illegal betting company, then they should pay the income tax owed by that illegal betting operator that is located abroad.”

Shared Tax Liability for Banks and Fintechs

Besides introducing the new obligations for the influencers and marketing agencies, the government came up with some new regulations for the banks, fintechs, and other financial institutions providing the payment services.

The financial institutions will be jointly liable for the unpaid taxes if they continue processing transactions for the unauthorized betting operators despite having received the formal notification from the Secretariat of Prizes and Betting (SPA).

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The idea of the regulation is to destroy the backbone of the illegal gambling operation, the movement of the funds. Through imposing restrictions on the payment channels, the government aims to make it extremely hard for the unlicensed betting operators to deal with the Brazilian players.

Clarifying the government’s approach, Robinson Barreirinhas stated: “If a fintech processes funds for an illegal betting operator, we will collect the taxes that were not paid by that operator from the fintech itself.”

Further, he explained: “We will collect income tax, PIS/COFINS, and the contribution allocated to the Ministry of Health. That is what joint tax liability for financial and payment institutions means.”

Financial Restriction to Stop the Illegal Operators

The Brazilian authorities are confident that attacking the payment channel of the operators can become the most effective way to fight against the unlicensed gambling firms.

According to Barreirinhas, the illegal betting companies are heavily dependent on financial intermediaries. Without having access to the payment channels, such operators cannot work at all.

“The regulation makes fintechs responsible if they insist on facilitating the criminal movement of funds or continue processing transactions for illegal betting operators”, he said. Then he added: “Illegal betting operators would not exist without these financial transactions.”

As Brazil expands its regulated betting market, the new government measures show the focus on the enforcement, financial control, and liability of all players involved in the illegal gambling business.

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Source: iGaming Brasil