The sports betting industry has enjoyed considerable growth in recent years, with the latest and largest country to join the international gold rush being Brazil, which launched a nationwide regulated market on 1 January 2025.
A lot has been made of the efforts Brazil’s legislators and regulators had to put in to secure this market launch and transition Brazil away from an unregulated grey sector to a fully relegated one. A lot has also been said of the efforts newly licensed betting firms have done to transition, and draw customers away from illegal companies.
The participation of Brazil’s extensive fintech sector has received less attention, but it is, as with any other major gambling market, a key player in the sector. For a start, fintechs have brought experience to the table, as highlighted by attendees at the Payment Expert Summit, part of the SBC Summit Rio betting industry trade show, last week.
“Before the betting regulation, these were the companies that fully embraced the betting market,” said Fernanda Meirelles, Media and Gaming Partner at São Paulo law firm FAS Advogados.
“They were essential to the growth of this market that is so prosperous, with the ability for means of payment and getting your award via Pix.”
As stated above, prior to the launch of a regulated sector on New Years Day a grey market had existed for some time. Brazil’s fintech firms were, in some cases, key partners to this sector, helping facilitate payments and connections to banking.
This is not an entirely positive point to highlight, as many grey market actors – though not all – did not uphold the standards of customer protection, KYC and due diligence that regulated market actors do.
However, in Meirelles’ view, fintechs were key to bringing the attention of the grey market to the government, to some extent. The extensive revenue through taxation that a regulated market would bring, coupled with the need to ensure player protection and integrity standards, led to President Lula da Silva introducing legislation in late 2023, culminating in this year’s launch.
“These were the companies that brought new innovations that allowed the markets to grow and challenged the government to regulate this market,” Meirelles said of Brazilian fintechs.
“After the regulation, these companies will continue to exercise an essential role.”
Fraud a fintech focus in Brazil betting
Having brought attention to the grey market and contributing to its ultimate regulation, in the view of Payment Expert Summit speakers, fintechs now have a crucial role to play in the Brazil betting sector’s development.
Payments and financial services are, as in any regulated sector, vital partners to Brazil’s bookies. Firms provide the payments link between a customer and the company, and in Brazil a critical link is the way fintechs can connect an operator to Pix, the Central Bank of Brazil’s instant payment system – and the only payment method permitted to sportsbooks.
Fintechs’ experience of Brazilian betting pre-regulation betting space will prove highly useful to the new white market outside the world of payments. AML, fraud prevention and KYC are important functions for operators to protect their businesses and customers, and to adhere to the requirements of the new ‘Bets’ regulatory regime.
“Historically, fintechs were the people carrying this market on its shoulders until the regulation,” said Arthur Silva, Founder and CEO of Alfa Bet and Technical Director of the Brazilian Institute of Responsible Gaming (IBJR).
“You have a fintech solution and will ask you how you are dealing with fraud and money laundering, and find a place for APIs,” he added. “Fintechs help people find solutions faster, and mainstream banks are competitive in these areas but today in Brazil we have ‘exceptional’ coverage with fintechs.”
Brazilian betting firms state that they are already feeling the benefits of regulation, coupled with the positive effects of working with the country’s fintech sector, with fraud rates in particular dropping significantly.
Meirelles stated at the Rio conference that fraud has ‘dropped greatly’ and that the market is continuing to assert control and clamp down on fraudulent activity. Regulatory ordinances around payments, legality and identification have complemented fintechs’ contribution.
The future of innovation
Primarily located around Brazil’s economic and business capital of São Paulo, Brazilian firms have emerged as the leaders of Latin American fintech – Nubank, EBANX, Creditas, PagSeguro, and Pronto Paga being just a few examples.
“One of the reasons, the main reasons, that a fintech will close a deal with an operator is to map all the pain points from the fraud standpoint to the user experience,” said Pronto Paga’s Brazil Country Manager, Claudio Corrêa.
Looking ahead, Corrêa believes that Brazil’s new market will continue to build on the ‘necessary revolution’ of Pix with the addition of new tech like biometrics, and hopes that more payment methods will be included – many attendees at the Summit were convinced that crypto payments for betting are inevitable – and that there will also be more regulation.
It is clear that Brazilian betting firms are well aware of the critical role fintechs will play in the development of their industry, and are also aware of the lessons that can be learned from the finance industry – one which is not too dissimilar from gambling in some ways in how it is operated and regulated.
A question posed to the panel though, and one which stakeholders should keep in mind, concerned potential issues firms may face when dealing with fintechs and how these can be overcome.
“The first big thing is the criteria a fintech or financial institution uses to pick their clients,” said Alfa Bet’s Silva. “It’s not because big banks or fintechs are better, they have two different worlds, but I’d rather be a big client in a small institution than a small client in a big institution.”
When it comes to technological innovation, it is doubtless that fintechs will usually be first and operators second, given the nature of the business, and operators must maintain strong relationships with the sector to fully reap the benefits.
As Silva puts it, something a key admirable quality of fintechs is ‘how creative they are’. He summarised neatly: “That is where innovation comes from.”
