The law requires that companies operating in this sector have provisional or definitive licenses issued by the competent regulatory body (Secretariat of Prizes and Betting).
However, it was found that some companies are operating illegally, disregarding the requirements established by the regulations. Such practices compromise the competitiveness of the market, undermine the confidence of bettors and constitute violations of current legislation.
“The illegal market, in addition to defrauding the public coffers, puts bettors at risk, who suffer from all types of disrespect,” says Bernardo Freire, legal consultant for the National Association of Games and Lotteries (ANJL) and partner at the company Betlaw.
Although there is no official figure, professionals in the betting market estimate that the illegal market currently represents almost 40% of the betting industry. It is a high number, for example, when compared to one of the most structured betting markets in the world, the United Kingdom, which has the highest rate of authorized companies, but with 13% still in the illegal market.
To illustrate this in numbers, a study by GGL (Gemeinsame Glücksspielbehörde der Länder), the authority that regulates online gaming in Germany, found that gross profits from the illegal market accounted for up to 4% of the total, with an estimated value of between 400 and 600 million euros. A study by the University of Leipzig, led by economist Gunther Schnabl, indicated that around 49% of online bets in Germany are made by unlicensed operators.
For bookmakers legalized by the government, it is essential that illegal betting sites cease operating in the country. “Blocking illegal sites in Brazil is an essential milestone for the evolution of the sector. This initiative ensures the integrity of the market, protects players and highlights serious and regulated companies as true pillars of the industry,” says Talita Lacerda, executive director of operations at Ana Gaming.
José Francisco Manssur, partner at CSMV Advogados, played a fundamental role in the entire process. He joined the Ministry of Finance in January 2023 as a special advisor to the Executive Secretariat, and was in charge of drafting the rules for the fixed-odds betting sector in Brazil. According to him, the State needs to be very strict in its oversight, and to do so, it has four tools to create obstacles for clandestine websites.
"Prohibit advertising of any kind in the media, on social media and on the shirts of sports entities for clandestine websites, prohibit and monitor payment methods so that they never carry out transactions for clandestine websites, whether to receive bets or to pay prizes, which would practically force these bettors to open accounts outside Brazil," he says.
“Game providers will be prohibited from supplying banned website platforms, and finally, Anatel will work with existing technology to take down clandestine websites and VPNs. With these four tools working at the same time, we have a chance of reaching a number close to that of the United Kingdom,” Manssur reinforces.
Regarding what he said, that one of the measures would be to make payment methods prevent operations for clandestine websites, whether to receive bets or to pay prizes, which would practically force these bettors to open accounts outside Brazil. Some institutions have already taken these steps, such as Paag, a techfin that facilitates financial transactions and has launched products to help bets comply with the new regulations.
“Payment facilitation institutions play an important role in preventing clandestine websites from operating in Brazil. At Paag, for example, we only work in partnership with regulated betting houses that follow good practices," says João Fraga, CEO of Paag.
“Not processing payments from unregulated houses is a responsibility that must be shared by all payment processors in the sector. Without financial means, these clandestine operations lose the ability to operate, protecting players, serious companies and the entire ecosystem,” he adds.
“Regulation was a long-awaited milestone, and allowing this progress to be compromised by illegal practices would be an unacceptable setback. Paag remains committed to operating only with clients who are fully compliant, actively contributing to a safer and more reliable market,” Fraga concludes.
Source: Exame
