Edward Bedrosian, Chief Regulatory & Compliance Officer at Xpoint, explains why Brazil will follow the US by making geolocation checks the cornerstone of compliance for its imminent online gambling marketplace.
Though Brazil takes a federal approach to regulating online gambling, the government and authorities require geolocation services to fulfill key logistical criteria on taxation, IT security, and market integrity. As such, stakeholders are warned that geolocation will be a key compliance discipline.
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The emergence of geolocation checks
Verifying that players are located within authorized jurisdictions is not only a necessity for compliance and ensuring that taxes are assigned to the correct region but also for the integrity of iGaming and Wagering platforms.
With responsible gaming taking center stage in regulatory discussions, geolocation service providers have become indispensable tools for operators.
Being a newer market in a more technologically advanced era, the US is a trailblazer in geoverification standards. Fragmented by its state-by-state approach, US states were a catalyst for the creation of a more efficient, reliable and effective geolocation verification service.
In the US’s prescriptive regulatory approach, states delineate precise mandates ranging from the frequency of location checks to the prohibition of virtual private networks (VPNs) and often require flagging potential fraud by detecting users engaging in rapid shifts between locations, commonly referred to as “location jumping.”
Moreover, some US states also set out prohibited zones often for tribal land, therefore strong geoverification standards are not surprising.
With New Jersey regulating online casinos and poker in 2013 followed by sports betting in 2018, its geolocation standards became the template for states doing the same. Given its dense population, utilizing New Jersey’s sophisticated regulatory standards, which ensure the physical presence of every customer, served as a logical prototype to be replicated in subsequent states.
As new states legalised online wagering, many adopted similar geolocation standards with minor variations., Geoverification technology can be easily adapted to meet the specific requirements of each state.
Evident in the US market is that reliable geoverification is key to regulatory compliance and also assists operators in fighting fraud.”
Brazil follows suit
When Brazil finally unveiled its long-awaited legislation on May 21st, it reflected a thoughtful approach with a strong emphasis on promoting safer gambling and in a similar vein to its neighboring Argentina, Brazil has also adopted a state-by-state approach.
Unlike European markets, which struggle to implement new guidelines in already established systems, Brazil’s later entry into regulation offers a significant advantage: a deep understanding of the importance of player protection. By learning from the developments in the more mature European markets and advancements in the US, Brazilian regulators have crafted a regulatory framework that fosters favorable market conditions while prioritizing player safety.
Recently, the new Brazilian gambling regulator, the Secretary of Prizes and Betting (SAP) for the Ministry of Finance issued a new ordinance which 2024 established the technical and security requirements for operators ahead of the upcoming launch of sports betting in Brazil.
Knowledge Transfer… lessons learnt from the US
The greater perspective of Latin American regulators offers more oversight of player data. However, as with all new markets, there are challenges with navigating the cultural intricacies of the region. As with the US, evident in Brazilian legislation are the nuances associated with geolocation.
A new country may also determine that it wants to prohibit gambling at cultural, religious or educational locations. Experienced vendors who have done this in the past would have the ability to implement these types of prohibitions.
Among the requirements are very familiar geolocation standards, similar to those seen in the United States – required interval checks of every 30 minutes, while a user is active, prohibiting the use of VPNs and identifying and prohibiting location jumping.
To keep player safety at the heart, Brazilian regulations require operators to have their players use multifactor authentication technology once a week or after suspicious activities. In addition to helping identify and prevent fraud among users as well as stringent reverification standards, experienced vendors bring the advantage of operating in a multitude of different countries.
Geolocation will be a market discipline…
The emergence of geolocation checks in the US has set a precedent for regulatory standards worldwide, with Brazil mirroring the sophistication seen in the US.
As Latin American regulators expand their oversight, collaboration with experienced vendors will be key in implementing effective safeguards and navigating cultural nuances. Through these efforts, both the US and Brazil are leading the industry in setting standards that prioritize compliance and fighting fraud.
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Edward Bedrosian, Chief Regulatory & Compliance Officer at Xpoint
