Martin Lycka: Entain: 100% compliance needed for Brazil’s igaming payments landscape

Martin Lycka: Entain: 100% Compliance Needed for Brazil’s iGaming Payments Landscape

‘Word on the street’ is that the Brazilian gambling market is set to be dominated by two of the country’s most popular payment platforms.

This is according to Martin Lycka, SVP of Regulatory Affairs and Responsible Gaming of Entain, who spoke to Payment Expert ahead of his appearance at SBC Summit Rio on 5-7 March.

Discussing Entain’s preparation to enter the Brazilian payments ecosystem under the newly signed betting regulations, Lycka expressed confidence in the company’s ability to adjust to Brazil’s payments ecosystem.

He said: “In my experience of Pix as a domestic payment method, not only have many operators including Entain onboarded this feature for the Brazilian market, as usual it will come down to the specificities of implementation.

“As things stand at the moment this is not available yet, but I am not overly worried about the fact that Pix might end up being the main payment method pursued in the future Brazilian gambling market.”

Pix, the payment method Lycka refers to, is not an unfamiliar platform to those with even the most basic knowledge of the Brazilian economy. For igaming operators, the system will be of paramount importance as the betting sector grows.

Operated by the Central Bank of Brazil, Pix is the country’s nationwide payments system, and as such, will be one of the two most likely platforms operators have at their disposal once full regulation is achieved.

As Lycka noted, the ‘word on the street’ following President Lula da Silva’s signing of the Gambling Regulation Bill, is that the two most likely payment options operators and their customers will have to choose from are Pix and debit cards.

Like other gaming industry observers, Lycka noted that whilst Pix may be a new payment experience for many of the Europe-founded firms, which are for the most part used to traditional banking methods, it comes with distinct benefits.

Firstly, customer familiarity with the platform is high due to its well-established, widespread use, whilst its operation by the Central Bank – which like any central bank takes checks and balances rather seriously – provides a good degree of security.

“A lot or pretty much everybody in Brazil uses Pix, and so the level of familiarity with that payment method is sky high, which by implication does help with the prevention of fraud and money laundering,” Entain’s SVP continued.

“Plus, there is the additional level of comfort which arises out of the fact that the payment method has been vetted and authorised by the Brazilian central bank.”

The legislation for Brazil’s online betting market may have passed, but the regulatory framework is still under development. Progress is being made at a reasonable pace, however, the Ministry of Finance continues to establish the ‘Secretariat of Prizes and Betting’ to oversee the market.

Although the regulations around payments, AML and customer protection are not yet fully clear, operators have been working to ensure full compliance with whatever form these requirements may take.

Entain, along with a number of other local and international operators, has been active in this. This preparation has included the foundation of the Brazilian Institute of Responsible Gambling (IBJR).

Through the IBJR, Lycka explained howEntain and other operators have been cooperating closely with policymakers, including members of the Brazilian Congress, completing ‘phenomenal work’ in this area.

He explained: “The institute and its constituent members have worked very closely with the regulator throughout the process and have done, in my view, phenomenal work in the Congress as well, when we were navigating all the vagaries and intricacies of the legislative process.

“We certainly plan on carrying on the good work throughout the process of regulation leading up to the launch of the Brazilian market which presumes that, just like the shattering majority of jurisdictions where this industry has launched its product, will continue going strong.”

President Lula may have signed the bill into law, but like any democratically elected leader, his tenure will not last forever. The Workers Party President will face re-election in two years time, but as Lycka noted, the market will be ‘set in stone’ come 2026.

Regardless of any governmental changes in Brazil, Lycka is confident that betting stakeholders will remain active in shaping future regulation and ensuring compliance around various important areas of the betting experience, including payments.

“I see a need for organisations to remain heavily involved in the process going forward,” he said. “As part of it, all members have bought into the sustainability of the market, and part of that is rolling out world level consumer protection, anti-fraud, AML, KYC etc.”

Brazil is set to become one of the world’s largest betting markets – in time perhaps even the largest – with yearly turnover expected to be in the range of BRI 4bn to BRI 7bn depending on different estimations.

However, for multinationals such as Entain, it is not the only major market where operators have been undergoing regulatory change. In the UK, often touted as one of the best examples of gaming regulation, an overhaul has been in the works for some time now.

One of the defining debates in the country has been around the implementation of affordability checks. As Brazil develops its regulations, this question will no doubt be at the forefront of policymakers and regulators’ minds once the market matures.

As it stands, responsible gaming and problem gambling concerns have already been ‘baked into’ Brazil’s betting regulation, Lycka noted. He explained: “My understanding is that some of those principles will or may be incorporated into the regulator’s thinking.

“At the same time, I would strongly suggest that it would be very premature considering that Brazil hasn’t launched its regulated market just yet. It might be premature to go down the route of a whole UK-like solution. Every market is different but at least in my book. The other significant criterion that needs to be reflected in this regard is maturity of the given market.

“I would strongly advocate in favour of bringing operators in – and when I say operators I mean those that of course will have shown readiness and willingness to comply with all the applicable requirements, while being prepared to work together with the regulator on further improvements on the regulatory setup if required further further down the track.”

As Brazil prepares for launch, over 134 companies – and the figure is likely much higher – have already expressed interest in the market. Whether they be leading multinationals like Entain or local SMEs, in Lycka’s view all have one ‘no brainer’ to address.

This is the basic need for 100% compliance with all requirements as a ‘fundamental starting point’ and aligning business operations and values with any specific caveats of Brazilian gaming regulation.

For international giants like Entain, when it comes to addressing any of the potential challenges of Brazilian payments, AML, fraud-prevention and KYC, instilling lessons from other jurisdictions will prove invaluable.

Martin Lycka, along with many other Brazilian sports and betting stakeholders, will be speaking at the SBC Summit Rio from March 5-7, 2024. Purchase your ticket here to gain access to all three days of the event, including the exhibition, the conference, and exclusive networking parties.

You can keep up-to-date with the latest news, speakers & exhibitor additions and conference content by subscribing to the bi-weekly SBC Summit Rio LinkedIn newsletter.

Source: Payment Expert

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