Legal Expert Critiques Brazilian Regulator’s Decision on Pixbet’s License Suspension
Brazilian attorney Fabio Ferreira Kujawski has expressed serious reservations regarding the recent action taken by the Secretariat of Prizes and Bets (SPA) to suspend the licenses of Pixbet and other operators, labeling it "disproportionate" and indicative of a fundamental misunderstanding of the gambling sector.
On April 11, the SPA enacted Normative Ordinance No. 787, leading to the suspension of online gambling licenses for Pixbet Technological Solutions, Caixa Lotteries SA, 7MBR Ltda, and Tqj-Par Participacoes Societarias SA. This suspension resulted from accusations that they failed to submit requisite technical certifications outlined in Normative Ordinance No. 2,104.
The SPA claimed these operators did not comply with the necessary documentation to legally participate in Brazil’s betting market. However, shortly after the suspension, Pixbet was able to regain its license through a federal court ruling. Judge Anderson Santos da Silva ruled favorably for Pixbet after the company argued that it had submitted most of the required documentation, including crucial certifications shortly before the licensing decision.
Kujawski, who is a partner at Mattos Filho, contends that the SPA’s swift move towards stringent penalties reflects a troubling lack of communication and awareness of the current state of certification bodies, which are severely understaffed. With only six approved certifiers in Brazil, he argues for the necessity of more measured responses from the SPA.
He commented, “The decision to suspend licenses for such infractions appears excessively harsh. Suspension should be reserved for egregious violations, and prior sanctions like warnings or fines could be implemented instead."
Regulatory Authority and Its Implications
This suspension was notable as it marked a significant enforcement action by the SPA, which only recently gained the authority to impose such penalties under Normative Ordinance No. 1,233. The ordinance grants the SPA broad powers to terminate licenses in severe regulatory breaches and to levy fines up to 20% of annual revenues, capped at BRL 2 billion (approximately $353,678).
While Kujawski acknowledges the importance of the SPA establishing its presence in the market, he cautions against overly punitive measures that could induce fear rather than compliance among operators. He maintains that the regulator should cultivate a balanced approach that fosters a cooperative relationship rather than adopting an adversarial stance.
“There’s a fine line to tread between being assertive and excessively punitive,” Kujawski elaborated. “I am optimistic that the SPA will refine its approach to sanctions, ensuring they are proportional and fair.”
Impact on Company Reputation
The initial suspension was described by Pixbet as both "illegal and disproportionate," resulting in significant reputational and financial repercussions, particularly concerning its BRL 470 million sponsorship deal with the prestigious Flamengo football club. Kujawski concurs, suggesting that while the damage was somewhat contained, it still posed a serious risk to Pixbet’s market standing.
“I believe the situation could have escalated further," he remarked, reiterating that minor technical infractions should not result in suspension.
Interestingly, fellow operator 7MBR Ltda also had its license reinstated shortly after revocation, while Caixa Lotteries and Tqj-Par remain under suspension. Both latter entities have indicated plans to enter the betting market later in 2025, acknowledging their ongoing efforts to secure necessary documentation amidst a sluggish licensing process.
Kujawski explains, “The challenging aspect for many operators lies in obtaining the technical certifications required for their platforms and games, exacerbated by the current certification agencies being overwhelmed with work.”
In light of these developments, it is clear that while regulatory authority is essential, the enforcement approach must be balanced to nurture a healthy and compliant gambling environment in Brazil.