Item 09: Ordinance SPA/MF NO. 1,233
02/08/2024
Regulates the sanctioning regime in the context of the commercial exploitation of the fixed-odds betting lottery modality.
Ordinance SPA/MF No. 1,233, dated July 31, 2024, regulated the sanctioning regime for the commercial exploitation of fixed-odds bets. The diversity of topics covered in this Ordinance can be presented as follows:
- Violations: The Ordinance defines the administrative violations that betting operators must avoid. The main violations include: (i) Exploiting the modality without authorization from the Secretary of Prizes and Bets; (ii) Conducting prohibited or unauthorized operations, or in disagreement with the granted authorization; (iii) Obstructing supervision, denying or hindering access to data and information systems; (iv) Not providing or providing incorrect documents, data, or required information; (v) Advertising or promoting unauthorized operators; (vi) Executing, encouraging, or contributing to fraudulent practices affecting sports integrity, transparency, and equality among competitors.
- Penalties: Violations are subject to penalties applied in isolation or cumulatively. The main penalties include: (i) Warning, considering the infringer’s first offense; (ii) Fine, which can vary from 0.1% to 20% of the gross revenue, never less than the advantage gained and not exceeding BRL 2 billion; (iii) Partial or total suspension of activities for up to 180 days; (iv) Revocation of authorizations; (v) Prohibition of obtaining new authorizations for up to ten years; (vi) Prohibition of performing certain activities or operations for up to ten years; (vii) Prohibition of participating in public bids for not less than five years; (viii) Disqualification of directors for up to twenty years.
- Sanctioning Process: The sanctioning process will be conducted by the Subsecretariat of Monitoring and Supervision of the Secretary of Prizes and Bets. After analysis, the process will be forwarded to the Subsecretariat of Sanctioning Action for a decision. Notifications and subpoenas will preferably be made electronically, except in specific situations. The deadline for submitting a defense is thirty days after the notification.
- Defense: The defense must be presented by the interested party or their appointed representative within thirty days after the notification. A defense presented by a representative without a power of attorney will be considered valid, provided the power of attorney is presented within five subsequent days. If this period elapses without regularization, the defense will be removed from the records.
- Evidence: The interested party is responsible for providing documents to support their claims and indicating other evidence they intend to produce. The Subsecretariat of Monitoring and Supervision will dismiss illegal, irrelevant, unnecessary, or delaying evidence. Illegal evidence cannot be included in the process and will be removed from the records.
- Decision and Appeal: After the evidentiary phase, the process will be forwarded to the Subsecretariat of Sanctioning Action for a decision. The administrative decision will determine the application of penalties or the shelving of the process. An appeal can be made within ten days, directed to the Subsecretariat of Sanctioning Action, which, if it does not reconsider the decision within thirty days, will forward the appeal to the Secretary of Prizes and Bets for a final decision.
- Penalty Dosimetry: When applying penalties, factors to be considered include: (i.) Severity and duration of the infraction; (ii.) First-time offense and good faith of the offender; (iii.) Degree of injury or risk of injury to the national economy, sports, consumers, or third parties; (iv.) Advantage gained by the offender; (v.) Economic capacity of the offender; (vi.) Value of the operation; (vii.) Recurrence; (viii.) Mitigating circumstances may reduce penalties by up to 50%, while aggravating circumstances may increase them.
- Precautionary Measures: Precautionary measures can be applied before or during the processing of the administrative sanctioning process, when the requirements of plausibility and danger of delay are present. The measures include: (i.) Temporary deactivation of instruments, equipment, systems, or components; (ii.) Suspension of prize payments; (iii.) Collection of issued tickets; (iv.) Other necessary measures to protect the legally protected good.
- Continuity of Infringement and Recurrence: Continuous infringement is considered when the agent, through more than one action or omission, commits two or more infractions of the same kind, under conditions that make them continuous. Recurrence occurs when the offender commits a new infraction of the same nature within three years following the previous administrative conviction decision.
- Statute of Limitations: The statute of limitations is five years, from the date of the act or the cessation of the conduct. The statute of limitations deadline can be interrupted by unequivocal acts of investigating the fact or attempting a conciliatory solution. The administrative procedure paralyzed for more than three years will be shelved, without prejudice to the investigation of functional responsibility.
- Efficiency and Execution of Decisions: Decisions imposing the penalty of a fine will be notified for collection within thirty days. The enforcement of penalties that do not obtain a suspensive effect will be immediate. Non-payment of fines will result in the inscription of the debt in the Union’s Active Debt.
- Commitment Term: The Secretariat may choose not to initiate or suspend processes through the signing of a commitment term. The interested party commits to cease the illicit practice, correct irregularities, indemnify damages, and fulfill other agreed conditions, including the payment of a pecuniary contribution to the National Treasury Single Account. The submission of a commitment term proposal suspends the prescription period, and the administrative process will be archived at the end of the term, provided all obligations are met.
The Corporate Law and M&A, Banking & Fintechs, Compliance, Public Law & Regulatory, and Consumer & Product Liability teams at Souto Correa are available to provide more information and clarifications on the matter.