Leonardo Baptista on Brazilian Regulation, Payments & Explosive Growth

Martin Lycka (00:01.774)
Ladies and gentlemen, do welcome to the next episode of my safe bed show. SBC Unfortunate Levels still have a word with them. They're not letting me do these in Portuguese, but it's an absolute pleasure, honor and privilege to welcome Leonardo Bacista CEO of Pay4Fun on the show. Welcome.

Leonardo Baptista (00:23.106)
Thank you very much, Martin. Thank you for the invite.

Martin Lycka (00:31.96)
If I may, I will delve right into it. It would appear to be, there's a theme to this, because I won't be hopping between Portuguese and English, but I will use a Portuguese word. It would appear to be a manchira, i.e. a lie, that you actually had had life before pay for fun, because everybody associates you for a very good reason, or settled them with pay for fun. So in that...

Spirit, would you mind telling us more about your role at Vision Media and Vee back in the day?

Leonardo Baptista (01:08.648)
old days. But yes, I did have a life before Pay4Fun. Before launching the company, I was in the vision media, as you say, and basically I was COO at Batmotion. Batmotion was a...

Martin Lycka (01:10.556)
you

You

Leonardo Baptista (01:28.064)
was one of the first sites to operate in the Brazilian market. So I was the COO there. And basically I started my life in gaming and gambling in Bingo in 2004 in Brazil. So when Bingo is allowed in Brazil too many years ago, more than 20 years ago. And after that,

I started as COO at Bat Motion. In fact my life in vision was in the Montevideo so...

I live in Montevideo for 10 years basically, so Montevideo and São Paulo are completely different cities. Montevideo is charming, peaceful, completely different from São Paulo. São Paulo is a chaos, but I love it. By the way, you know that very well. So...

Martin Lycka (02:31.918)
you

Leonardo Baptista (02:34.566)
And regarding the industry, 10 or five years ago, the landscaping in Latam are completely different than nowadays. And I left Vision and started Pay for Fun. So the scenario was completely distant than today.

Martin Lycka (03:00.188)
Well, I would argue that Sao Paulo is very charming. It's full of charming people, including yourself, and I may be biased. My wife as well, she grew up there, but I shall digress. It's chaos as well, but it's very enjoyable chaos. And I love coming back there, not only for family-related reasons, but you know, let's move on to the momentous day back in July 2017.

Leonardo Baptista (03:06.673)
thank you very much. I tried.

Leonardo Baptista (03:14.838)
Yes. Yes. I completely agree with you. I completely agree with you.

Martin Lycka (03:30.146)
if I'm not mistaken, when Pay4Fun came to life and was launched. Of course these days, as I've already said, at least in my book, it's an absolute staple of the Brazilian and, fingers crossed, depends on you, but potentially global gambling.

Leonardo Baptista (03:33.079)
Yes, perfect.

Leonardo Baptista (03:43.926)
Yeah.

Yeah.

Martin Lycka (03:47.054)
market and you do have beautiful offices down in Sao Paulo. had the pleasure of visiting them this Christmas and we had a long chat and some coffees as you would tend to have in Sao Paulo. But on a serious note, can you tell me more about what the initial trigger in your mind, I mean, was for launching effectively your own payment services provided to the industry with which you'd already been for some

Leonardo Baptista (03:52.354)
Thank you.

Martin Lycka (04:16.316)
13 years by then. So what gave you that idea?

Leonardo Baptista (04:22.134)
In fact, as I mentioned before, the operation of betmotion.com was really hard in Brazil. Do the deposits and withdrawals to the customers, and especially to take the money out from Brazil. And the operation was offshore, so...

It was a completely nightmare to take the money out from Brazil and very expensive. So basically this bring me the idea to start the operation at Pay for Fun. Also, Pay for Fun officially launched in July 2017.

and back then the gaming payments industry in Brazil was very fragmented, no? So players faced difficulties making deposits and withdrawals, operators struggled with local compliance, so it's hard. It was hard to have an operation in Brazil. So in simple terms, we're trying to develop a payment method focused in Brazil

completely regulated by Brazilian Central Bank and we got it, no? We were the first.

payment method in Brazil to have the authorization and regulated by Brazilian Central Bank. And it was very important for us. And we are operating with the big guys in the industry, know, battery 65, Betano, Poker Star since then. So basically, we focused in Brazil, Brazilian payment system and

Leonardo Baptista (06:13.08)
do the things on the right way on an API tailor made to the operators to operate here in Brazil.

Martin Lycka (06:23.324)
And it's needless to say, and we will come on to talk about the Brazilian regulation. It's like, in my experience, it's one big family down in Brazil, the industry. It's great to get together and have that proverbial coffee I've just alluded to. Exactly. That was going to be my next question. Are you getting tired of the same faces, including mine, or is it still as much fun as it used to be?

Leonardo Baptista (06:28.237)
Yeah.

Leonardo Baptista (06:32.188)
Hahaha!

Leonardo Baptista (06:38.656)
always the same faces, no?

Leonardo Baptista (06:48.066)
No, never. Never. Especially yours, never my friend. But we see the same faces, always the same faces in the shows and the events, but in general ways, we are seeing that the market's growing fast and new faces are appearing and it is very nice. It is very nice what is happening with Brazil right now.

Martin Lycka (07:18.822)
Totally. Over the moon to hear that you haven't gotten tired of my face. That was the answer I was fishing for. But on a more serious note, of course, this is a responsible gambling to some extent. Lifestyle podcast. It's not meant to be a sales pitch, but...

What are the other features of your business that make you stand apart from your competitors, be it global or be it homegrown Brazilian competitors? So what is it you guys do differently to put things into context? Because I suppose we can all picture what a payment services provider does, but then I suppose

They're all slightly different. what is your, I hate that expression. I've been overusing it though. What is your secret sauce here?

Leonardo Baptista (08:12.686)
Well, Martin, I think the main point for Pay4Fun is we know the market. We know the Brazilian market very well. So it's completely distant when you...

choose any other PIX provider from Brazil and this PIX provider or this payment provider normally works with e-commerce or is a bank, an investment bank.

In the case of Pay4Fun, no. We start as operator 30 years ago. in fact, I know the market, the Brazilian market very well. My partners, Ari, Celia, you know Ari very well. So, Ari have more than 30 years in the market. I have more than 20 years. So, for us, it is important to try to talk with the operators, try to talk with the market.

at the same language. No, we know the market very well. We know that Brazilian markets is very complicated market is not only pigs, no. It's happening nowadays that they are trying to reduce the markets only to pigs. And this is not true. No, Brazilian markets is very complicated market. We have a lot of singularities in the Brazilian market. And I think that

the source for Pay for Fund is exactly the, we know the markets, we are regulated by Brazilian Central Bank, so we have a very good communication with the regulator, the financial regulator of the market, and we are a tech company, so we are always developing and always trying to bring the...

Martin Lycka (09:46.085)
You

Leonardo Baptista (10:12.77)
best technology for our operators. So our API brings a lot of tools, lot of distinctions for the operator that increase the conversion to the operator. I think that is the source for Pay4Fun.

Martin Lycka (10:36.188)
Absolutely. Thanks for kicking that ball over to me. As you guys say, will pegau gansu. Because you talked a lot, we talked a lot about Brazil and the magic word of pegs and whatnot. So hopefully that's a nice segue into talking about the Brazilian regulation itself. Because throughout the industry, you know, your homeland is still on everybody's lips. Because now the market...

Leonardo Baptista (10:45.228)
Yeah.

Martin Lycka (11:02.362)
has launched as you pointed out yourself but let's talk a bit about what I would call the arduous journey towards regulation. Back then under President Temer, at end of 18...

the Congress authorized the Brazilian government to regulate and then it still took over five years because ultimately it was President Lula. Clearly these days I've been watching CNN Brazil a little too much, a big PIX fan, but I shall digress. President Lula gave assent to the online gambling law. So that whole period, you know, in the run up to regulation going via legislation. Now, what did that feel like?

Leonardo Baptista (11:25.506)
Yeah.

Martin Lycka (11:47.408)
from your own perspective. Of course, a ton of work and lots of ups and downs, but tell me more about your own experience with that whole process,

Leonardo Baptista (11:57.262)
Well, in general ways, Martin, Brazil's path to regulation has been a roller coaster, no? But basically, from Temer's initial authorization to Lula's final approval, it took...

five years, but we know the history very well. So we are doing and we are talking about regulation in Brazil since I beginning in the industry. I heard about the regulation in Brazil for more than 20 years and finally happens. Finally happens.

So now we finally have a legal framework. It was very good. It's clear that the law is well-intended, focused on integrity, responsible gaming, financial security. I think that the Brazilian and the entire Brazilian payment system is completely focused on financial security.

However, is always tricky. We know that. From a payment perspective, there are still open questions about compliance requirements, transaction monitoring. For me, an important point, by the way, the mandatory registration from the bank accounts for the customer, for me, is a mess. Don't have a reason behind that.

In the end, the good news, the industry is working together with the regulator to try to create the best scenario to Brazil. So, we are working on that, I think. And we can see if you compare with another huge market such as...

Leonardo Baptista (13:50.534)
US such as UK they change every year so we are right in the market right now

Martin Lycka (14:00.828)
I'm sure one day, especially the US because that's what it should be doing, will be learning lessons about the Brazilian gambling market, in particular from the payments perspective.

Leonardo Baptista (14:12.066)
Yeah. Yeah.

Martin Lycka (14:15.354)
And if I may, two more points. Yeah, let's hope that our friend, Regis Dudenna will end up watching this podcast because first time I met him, he told me that he was a fan. So it's your way to convey these messages to him. Although I'm sure you've done it in official meetings. So you don't need this platform. And the final point before I move on to the next question, I'm sure you will also be delighted to hear that.

Leonardo Baptista (14:27.957)
nice.

Martin Lycka (14:44.346)
Brazil, yes, it's taken some time to regulate, but you still have beaten Germany to it. And I believe that really matters because the Germans have taken 20 plus, if not 25 years, so that's your revenge for the 7-1 defeat back in the day. But let's not talk about that.

Leonardo Baptista (15:03.478)
Hahaha!

Martin Lycka (15:04.696)
The market launch. We keep touching on that, so let's talk about it please. The Brazilian regulated market did launch on the 1st of January 2025. I actually happened to have been in Brazil and I was on my phone checking out the websites, in particular SportingBets website to make sure that it would come on and be live and the miracle happened.

Leonardo Baptista (15:27.043)
Yeah.

Martin Lycka (15:30.428)
Yet again on a serious note because now we're for the record filming on the 17th of March so we're some two and a half months meaning 10 weeks in. What are your first impressions of the regulated market? Any particular areas of concern or improvements that would need to be made? Well you touched up on some of the payment side of things so your first impressions how is it all going?

Leonardo Baptista (15:58.456)
Well, with the market officially live since January, the first impressions are positive. But... Huge but here. Challenging, no? Because... We know...

We are seeing a strong demand for licensing. We have few operators in line to take the license, but also some uncertainty as operators adapt to the new requirements. So one key concern for me is the number of licensed operators. Will they survive? That is a big question for me, because we are seeing

a lot of friction for the licensed operators against a parallel market that is complicated to talk the minimum, no? But overall, this is a game-changing moment for Brazil and we expect continuing growth and...

have a very nice market, very nice legal market. I believe a lot in the Brazilian market, by the way. I hope, I know that we have the power to create the big regulated market in the world, in Brazil, if we want to.

Martin Lycka (17:37.152)
Absolutely, especially if you instill and will come on to talk about that all the football related passion into it and the market on a slightly more serious note is absolutely huge of course federal regulation 220 million people is the population count Brazil of course not everyone is

Leonardo Baptista (17:53.1)
Yeah.

Martin Lycka (17:56.974)
allowed and eligible to bed that starts at the age of 18 but still a lot of lot of people who tend to be with all your respect but as the audience knows I happen to be married to one of you and I've got two half-eus at home on top of that they tend to live their lives on the phone so that's another asset that I'm sure could be taken advantage of in the nicest possible way well if I may stay on the

Leonardo Baptista (18:21.897)
Sure.

Martin Lycka (18:26.888)
theme of the black market, because I take it that just like me, you believe that right now, there are possibly even way too many operators in the regulated market that might, which might lead to market concentration. But the black market, it sadly tends to be the case in connection with any regulated market that at least

for some initial time, both the industry and the regulators, the other government agencies, some would tend to struggle to root out the illegal competition that is still, if you pardoned upon, rooted in the customers' hearts and minds, provided that they get their money back if they ask for it. So if we were to look at the particular Brazilian experience,

You've already made the point that it is a problem. So looking at the practical perspective, how could the likes of Pay for Fund, other payments providers, I suppose, together with the Brazilian Central Bank, how can you help us all drive the black market operators out of the country?

Leonardo Baptista (19:45.186)
Well, Martin, regulation is a huge step forward, But as with any newly regulated market, illegal operators won't just disappear overnight. No, we know that. Some brands will try to bypass licensing to avoid taxes and compliance costs. And...

The UX perspective, you know? So how do we fight this?

pay for funds and payment providers along with Bassim, the Brazilian Central Bank play a crucial role here. Enforcing restricted KYC transaction monitoring and blocking payments to unauthorized operators, can squeeze the black market.

We have the power, with the money and we always say the same, follow the money. So we need to follow the money. We need to struggle the unauthorized operators. Success in this area will be measured by how many players shift from illegal to legal operators. If we reach...

80, 90 percent China legislation, that's a win for sure for us. I believe on this, I believe especially with the PICS, especially with the payment system that we have in Brazil, I believe in a strong regulated market for Brazil.

Martin Lycka (21:35.932)
And yet again you are beating the Germans to it but I shall digress absolutely. You all the specificities of the Brazilian payment system. You're the expert here not me but from what I've certainly in themselves toward helping root out the

illegal fly-by-night operators. Well, you've kindly accepted an invitation to what Effectively, sort of going beyond that, but that's on me, but Effectively is meant to be a responsible gambling podcast. So if we may go there. And I will yet again ask you about your view this time about what is the current state of the responsible gambling play in Brazil shortly after?

regulation and where do you believe it will all be going?

Leonardo Baptista (22:30.114)
Well, Martin, Brazil is still in the early stages of responsible gaming initiatives. The regulator tried to do the best.

While some operators take it seriously, there room for improvement in terms of player protection tools, self-exclusion programs, and especially educational campaigns. I believe hard that we need to work as payment methods operators, regulated operators, in the educational campaigns.

At Pay4Fun perspective, we actively promote responsible gaming by integrating deposit limits, self-exclusion options and financial monitoring tools. We need to. But it's a...

Collective efforts, the entire industry, including operators, regulators and other payment providers, must work together to make responsible gaming a priority. For sure, we need this to the regulated market.

Martin Lycka (23:46.62)
which will definitely be going hand in hand. By the way, as I might have told you before, I absolutely love the name of your company, Pay4Fun. The clue's in the name, but it's fun as well. And as good as it gets. And you've made a similar play with one of your or your key charity project that is called Pay4Smile.

Leonardo Baptista (23:58.41)
entertainment, no? That is the idea.

Leonardo Baptista (24:13.016)
pay for the smile.

Martin Lycka (24:13.144)
In this case it would be a kids smile because you've been one of those down in Brazil leading the combat against child cancer and we're two fathers here so I would even hate to contemplate that this would ever happen.

Leonardo Baptista (24:23.811)
Yeah.

Martin Lycka (24:33.372)
to my girls and I will not at the same time very sadly there are children out there who are suffering from a variety of this terrible, terrible disease. So would you care to tell me a little bit more about this very timely and badly needed initiative that you launched back in 21?

Leonardo Baptista (24:56.738)
Yeah, Before the Smile is a project we launched in 2021 in partnership with GRAAC. GRAAC is a leading organization in the fight against childhood cancer. No?

The idea was simple. We want to give back to society through a cause that truly makes a difference. Beyond financial contributions, we also raise...

encourage our partners to support the initiative. We open Pay for Smile for the players and the companies

to sponsor the idea behind GRAAC, behind the fight against childhood cancer. So that is the idea. We always try to do something that we deeply believe in, and we are proud to help make a positive impact in the society so far. it's a very nice project, and we have a very good relationship

with GRAAC. So it's amazing to visit their offices and see the impact of the project in the child's, for sure.

Martin Lycka (26:31.856)
We all truly appreciate all your efforts and if you allow me I hope there will be as many smiles as possible throughout the years to come. Onto football we go. I'm losing that term loosely because we both...

Leonardo Baptista (26:40.258)
Yeah, yeah.

Leonardo Baptista (26:44.785)
come on. Really? Do you want to talk about this today? Are you sure?

Martin Lycka (26:52.968)
Surprise surprise! Let's talk about football. I'm prepared to talk about that, for the record what my friend is alluding to here, that Palmeiras, my beloved Brazilian football team, happened to have lost the first of the two final games against... Grrr... Corinthians!

Leonardo Baptista (27:09.762)
Ha ha ha.

Martin Lycka (27:10.638)
in the final of the Campionato Polista, but we'll come back. I wouldn't worry about that. We actually both happen to be good old New England Patriots, but yeah, we're sort of misaligned when it comes to football allegiances. I only, I need to fix that. I only tend to invite, because I had months so here, only tend to invite South Polo fans to this podcast. So that...

Leonardo Baptista (27:33.58)
Yeah, it is true. Mancuri is a São Paulo fan, Huge.

Martin Lycka (27:36.88)
that will need to be addressed. But let's talk about both the American football and then we'll move on to proper.

football. So we both happened to have attended and it was out of this world in my book, the very first NFL game in Brazil in Sao Paulo last autumn. So do you have any explanation for the boom, the true boom that American football has experienced in your country? Because the popularity is simply going through the roof.

Leonardo Baptista (28:07.15)
Yes, it is true. In the end, as NFL in Brazil, the growth has been insane. No? We are seeing in the last years the growth has been insane. The São Paulo NFL game was amazing and the sports keep gaining traction every, every month.

I believe that it is happening thanks to the social media, fantasy leagues and the audience, the younger audience looking for new entertainment options besides the soccer, the Brazilian soccer, no? Now, talking about Brazilian football, Brazilian football is going through an interesting transition, especially with

have involvement of betting companies. We are seeing this since 2019, 2020. Sponsorships are

skyrocketing and regulation will only make this relationship stronger. However, the challenge will be ensuring transparency, fair play and, again, compliance, responsible gaming as the industry involves at Brazilian football and any other sport.

Martin Lycka (29:45.186)
talking to the NFL the other day and I'm now on a mission to convince them to bring the Patriots down to the 25th for for for game and for all we know a few years from now they could even be an NFL team based in Brazil Sao Paulo should have scared with something along those lines

Leonardo Baptista (29:52.367)
come on. Let's make it happen for next year, for sure.

Leonardo Baptista (30:05.816)
Can you?

Can you imagine a Patriots game here in São Paulo, What amazing!

Martin Lycka (30:14.202)
Well, I'm picturing it already and we will both be in the stadium if that happens. And indeed.

the sponsorship money that's been pumped for want of better expression into Brazilian football by this industry is out of this world. Let's just look at the deal our friends at Superbad have lately done with your team. So I'm crossing my fingers for you that the tickets to go and see your beloved São Paulo are for free. They'll be on Superbad.

Leonardo Baptista (30:36.428)
Yeah. Yeah.

Leonardo Baptista (30:42.21)
Fingers crossed.

Martin Lycka (30:45.148)
Anyway, we're hitting the home straight of this podcast, so I will if I may, it's always a tricky question, especially timing-wise, but I will give you a question a task. 60 seconds to please convey your key messages to our audience before we wrap up.

Leonardo Baptista (31:04.332)
Well, Martin, thank you very much for the invitation. Thank you. Thank you, SBC for the opportunity. well, I believe, as I mentioned before, I believe so much in the regulated markets in Brazil. The gaming in Brazil and gambling in Brazil is huge. And I believe so much in this market. I believe we are...

just beginning this market in Brazil we are betting in the retail right now in Brazil the casinos, the physical casinos will open in Brazil for the end of this year or beginning of next one so I think that is the message know, trying to do the best

regulated market in the world. We have the power to do that. We have the tools. We have the Brazilian payment system behind us to make this happen. So I think that is the last message to you to try to be and do the Brazilian the biggest regulated market in the world.

Martin Lycka (32:28.028)
Fingers crossed that will happen. Thank you very much, Leonardo. Muito obrigado. Ladies and gentlemen, this was Leonardo Bacista, CEO of Pay for Fun, one of my favorite Brazilians of all time. A very, very good man. My name is Martin Lechka. This is the latest episode of my Save Bad show. Let's end it slightly differently today. Vam pra cima, porco. Vam pra cima, São Paulo. Vam pra cima, Brasil.

Leonardo Baptista (32:32.322)
Thank you for the invitation again.

Leonardo Baptista (32:41.858)
Thank you, friend.

Leonardo Baptista (32:54.19)
Hahaha!

Martin Lycka (32:56.792)
See you next time!

Leonardo Baptista (32:59.438)
See you.