Illegal operators continue to plague Brazil’s online gambling industry, despite the country’s numerous efforts to regulate the popular pastime. Many key figures in the sector have questioned the government's willingness to crack down on these unlicensed platforms. This is especially concerning given that licensed companies contribute over BRL 2.3 billion in fees, funds that are, in part, intended to support regulatory efforts and oversight of the industry.
Moreover, Brazil’s telecom regulator, Anatel, which has shut down over 15,000 illegal betting sites, is now facing a budget shortfall after a key agreement with UNESCO expired. Without quick action to restore its enforcement capacity, Brazil’s legal market risks being undermined by the same illegal operators it aims to eliminate.
As a result, illegal operators continue to thrive, sidestepping oversight while exploiting Brazilian players with little to no consequence. This enforcement paralysis leaves regulators powerless and the public vulnerable, just as Brazil attempts to bring some order to a rapidly growing digital betting market.
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It appears that tackling the growing epidemic of illegal gambling has taken a back seat for the Brazilian government, which has instead zeroed in on the pastime as a cash cow. The recent provisional increase in the gross gaming revenue (GGR) tax from 12% to 18%, a sharp 50% hike, is indicative of this approach, prioritizing short-term fiscal gains while overlooking the deeper regulatory reforms needed to ensure a safe and fair market.
This revenue-first strategy has raised concerns among industry stakeholders. Eduardo Ludmer, Head of Legal at BetMGM, argues that the government views the sector as politically expendable and is focused on maximizing tax income rather than addressing the underlying issues that allow illegal platforms to flourish.
Moreover, the Brazilian Institute of Responsible Gaming (IBJR) has warned that placing additional financial pressure on compliant operators could backfire. They caution that the share of the betting market controlled by unlicensed operators could grow from 50% to 60%, as higher tax costs may drive more players away from regulated platforms
Brazil has intensified its efforts to tackle the black-market gambling problem by targeting the financial infrastructure that supports it, specifically through payment blocking. At the core of this strategy is Pix, Brazil’s widely used instant payment system, managed by the Central Bank. Under the new framework, financial institutions are required to halt payment processing for illegal betting platforms once notified by the Central Bank. Failure to comply may result in regulatory penalties, creating a strong incentive for banks to cut financial ties with flagged operators.
In addition, Brazil recently signed a cooperation agreement with the Digital Council of Brazil to enhance oversight of the country’s online betting environment, particularly across social media platforms. The agreement brings together the Secretariat of Prizes and Betting (SPA), under the Ministry of Finance, and the Digital Council, a coalition of major tech companies including Google, Meta, TikTok, Kwai, and Amazon. Together, they will work to identify, report, and remove content related to unlicensed or illegal gambling activity.
If Brazil has any hope of curbing its growing illegal gambling problem, it must set financial motivations aside and focus on building a safe and secure gambling landscape. With Anatel already stretched thin, the country risks allowing the market to be dominated by unlicensed operators, undermining the viability of the legal sector.
Brazil needs to ramp up its enforcement efforts and prioritize eliminating illegal operators rather than penalizing compliant ones through higher taxes for short-term financial gain. According to the IBJR, meaningful progress will depend on targeted crackdowns, clearly defined regulatory standards, and a coordinated strategy to ensure that enforcement keeps pace with market growth.
Only then can Brazil create a safer, more balanced ecosystem that protects consumers, allows licensed operators to compete on fair terms, and delivers stable, long-term tax revenue for the government.
