Article of Thiago Xavier e Renato Campos Andrade
With the regulation of sports betting in Brazil, licensed companies may consider selling their operations. However, the transfer of licenses is not automatic and requires attention to specific procedures and restrictions imposed by Brazilian legislation, particularly by the Ministry of Finance through the Secretariat of Prizes and Betting (SPA), the body responsible for supervising and approving any changes in the corporate structure of licensed companies.
As established in Paragraph 2 of Article 6 of SPA/MF Ordinance No. 827, dated May 21, 2024, any change in the corporate structure or control of the company must be communicated to the SPA for evaluation and approval, which may take up to 150 (one hundred and fifty) days. It is important to highlight that, under the same paragraph, companies intending to carry out such operations may submit a prior consultation to the SPA to ensure that the authorization is not revoked.
As with corporate transactions, the established rules must also be observed in the case of buying and selling “slots.” In the context of sports betting, the term “slots” refers to the positions or opportunities to operate within the regulated market. Given the limited number of available licenses, the purchase and sale of these positions become relevant.
In any of these cases, international investors must observe certain rules, as detailed below:
Restrictions for International Investors
- National Capital Participation: Brazilian legislation requires that sports betting companies have at least 20% Brazilian capital participation. In other words, foreign investors must establish a partnership with local partners to meet this requirement.
- Establishment of a Local Subsidiary: Foreign operators interested in acquiring Brazilian betting companies must establish a subsidiary in Brazil.
- Financial Requirements: The minimum share capital of the companies must be R$ 30,000,000.00, in addition to a financial reserve of R$ 5,000,000.00, aimed at ensuring the integrity of operations.
Important Final Considerations
- License Transferability: Operating licenses are granted by the Ministry of Finance through the SPA and may be subject to restrictions regarding their transfer. It is essential that any transaction be accompanied by qualified legal counsel.
- Regulatory Evaluation: Any transaction involving the sale of a license or “slot” must be submitted for SPA approval, which will assess the transaction’s compliance with current regulations.
- Due Diligence: Both buyers and sellers must conduct comprehensive due diligence to ensure that all legal, financial, and operational obligations are met.
It is essential that international investors seek specialized legal counsel to navigate the regulatory complexities of the Brazilian sports betting market, ensuring that all legal obligations are fulfilled during the acquisition process.
