From light to shadows: the paradox of banning betting.
Just over a year ago, Brazil began a difficult movement: bringing into the light a market that, for a long time, operated largely in the shadows.
The work of regulating betting did not simply consist of authorizing companies. Through regulation, it became possible to identify operators and bettors, produce data, establish protection mechanisms, monitor conduct and, progressively, channel consumers into an environment where the State could see and intervene.
The spotlight revealed problems: Gambling addiction, vulnerability of gamblers, child involvement, income impairment, aggressive advertising, and other externalities gained a visibility they did not previously possess to the same extent.
And then came the tension. For those who study public administration, this is nothing surprising. The bets bring together typical characteristics of so-called wicked problems : complex problems, traversed by human behavior, technology, economic interests, public health, individual freedom, and multiple externalities, in which there is no linear relationship between problem, solution, and outcome.
Wicked problems are not solved with simple or definitive solutions. Each intervention modifies the system on which it is intended to act. Solving one dimension can create a new problem in another. And often, the intervention reveals problems that already existed, but which could not yet be clearly seen. This is a key to understanding the current state of betting regulation in Brazil.
On September 25th, the Presidency of the Republic issued Provisional Measure No. 1.394, prohibiting the operation, offering, intermediation, and advertising of fixed-odds betting throughout the national territory. The measure covers sports betting and online games, also applies to the States and the Federal District, and mandates the termination of existing authorizations within 30 days.
The presidential decision represents a break with the regulatory process that had been under construction. And the main problem with this break lies precisely in how the tension was interpreted. The tension experienced, especially from discussions about gambling addiction, minors, and economic vulnerability, does not represent a failure of the process. Quite the opposite. A complex problem changes as action is taken upon it.
This means that implementing a public policy does not solve the problem that gave rise to it. On the contrary: it produces behaviors, alters incentives, reveals unanticipated consequences, and generates new information. It is from this information that the policy can learn and adapt. This was exactly the stage the regulated betting market was at.
The Prizes and Betting Secretariat's own 2026–2027 Regulatory Agenda had been structured around the evaluation of accumulated experience, the improvement of oversight, the review of procedures, and the strengthening of responsible gaming policies. Among the initiatives under development were the monitoring of risk profiles, the prevention of gambling-related harms, the review of authorization rules, and the improvement of oversight.
In other words, the problems that began to appear were not paralyzing the regulatory process. They were fueling its improvement, and this distinction is essential. In complex problems, tension also produces information, externalities appear, and unexpected behaviors become perceptible, and the State begins to better understand what it is trying to regulate. Regulation had entered precisely this phase: intervening, observing, learning, and adapting. And the presidential decision interrupted this cycle.
What needs to be clear is that regulation did not create what it began to see. And gambling addiction is perhaps the best example of this reversal of perspective. Gambling addiction did not originate with Law No. 14.790/2023. Online betting also did not begin to exist when the market began to be effectively regulated. What changed was the state's ability to see these externalities and act upon them.
In the authorized market, operators have been required to identify and register themselves. Data relating to bettors and transactions are stored, and standardized information about bettors, bets, and portfolios is transmitted to the Administration through the Betting Management System — Sigap, designed precisely to allow regulation, monitoring, and oversight.
This produces an apparent paradox: the more the State knows about the market, the more it can see its problems, but seeing them doesn't mean creating them. The greater visibility of gambling addiction doesn't mean that regulation created it. It means that a phenomenon that was previously much more opaque has begun to produce traces, information, and evidence.
And there is a huge difference between creating a problem and beginning to see it. When a phenomenon becomes visible, it can be studied. When it produces data, it can be measured. When it is understood, it allows for the design of more appropriate prevention, health, and protection policies and the evaluation of whether these policies are working. In this sense, regulation also means producing knowledge about the regulated object.
Interestingly, the Provisional Measure itself recognizes the value of this knowledge: during the transition, it maintains the obligation to preserve data and stipulates that operators continue to transmit information to Sigap.
There is another essential concept for understanding the paradox of decision-making: channeling.
When there is demand for a particular activity, regulation seeks to progressively guide users towards the regulated path. This is not because the regulated activity ceases to produce risks, but because it is in this environment that the State can establish limits, demand controls, and intervene.
In the case of betting, channeling means ensuring that those who decide to bet do so within the regulated perimeter, making it possible to identify the bettor, prevent access by minors, establish responsible gambling mechanisms, monitor risky behaviors, track financial transactions, produce data, supervise operators, and apply sanctions.
The regulatory challenge, therefore, was not just to combat the illegal market. It was to make the legal environment effective enough to progressively attract demand into the regulated market. The Presidency's decision reverses this logic.
By eliminating the regulated route, the Provisional Measure does not, by itself, eliminate the demand for betting. Data from Bet-legal.org [1] already indicates the emergence of around 900 illegal sites after the publication of the Provisional Measure. An exponential growth relative to the regulated scenario. This movement was already evident: the demand persists and will no longer have an authorized market to which it can be channeled.
The Provisional Measure itself demonstrates that the Presidency recognizes the persistence of this problem. While prohibiting betting, it creates mechanisms for blocking websites, suppressing illegal financial operations, and establishing an Interinstitutional Committee specifically dedicated to monitoring and suppressing illegal exploitation and advertising.
Therefore, prohibition does not eliminate the wicked problem . It only "reorganizes" it, and the way it is done can make it harder to identify. Vulnerability does not disappear. Gambling addiction does not disappear. The risk to minors does not disappear. What disappears is part of the regulatory capacity built to reach these people.
It is the reverse movement of channeling: from the regulated to the clandestine; from the monitored to the opaque; from the light to the shadows.
And just when we were experiencing this important moment of adaptation, the disruption occurred. The implemented model wasn't ready, and that doesn't mean it should remain untouched. There's a fundamental difference between adaptation and disruption. Adapting means using what the system has revealed to correct its trajectory. It's necessary to test solutions, monitor results, and incorporate learning into the next decision.
Disruption interrupts this process before this learning can complete its cycle.
In a short time, Brazil structured a market, established entry conditions, received concession fees, authorized operators, implemented monitoring systems, created responsible gaming obligations, and began producing information about an activity that it previously knew very little about.
When the externalities became more visible and tension increased, the Presidency chose not to deepen this adaptive process, but to extinguish the regulated market. The magnitude of this rupture raises questions that go beyond the betting sector and public management studies. The effects of this decision show how Brazil treats legal certainty, institutional trust, and regulatory predictability.
Public policies need to change when the evidence recommends change. Complex problems require complex solutions. Recognizing market problems does not, in itself, automatically determine a single solution, a breakthrough.
In complex systems, there is rarely a single choice that solves all problems. Quite the opposite. Sometimes new problems are created. And there's nothing wrong with that. When people are part of the problem, the consequences of any decision are dynamic and unpredictable, and decisions should adapt, not interrupt the process.
The challenge is not choosing between health or the market, protection or freedom, repression or regulation. It lies precisely in managing and balancing the "ands".
Protection and freedom. Market and control. Economic activity and public health. Repression of illegality and maintenance of a regulated environment capable of producing information and protection. It is within this tension that the answer to a complex problem is built.
Eliminating it doesn't necessarily mean solving the problem. Complex problems don't disappear because a simple solution is chosen. They react, shift, and take on new forms.
The regulated Brazilian market was far from having solved the problems associated with gambling. But something fundamental had begun: transforming behavior into information, information into learning, and learning into public policy. Tension was part of this process.
The ban does not eliminate the demand for gambling. It eliminates the regulated pathway through which that demand had been progressively channeled. And, outside of that pathway, the same challenges remain: gambling addiction, protection of minors, vulnerable consumers. Only now in an environment where the State has fewer tools to identify, monitor, understand, and intervene.
Regulation had begun to bring to light a phenomenon that had long remained in the shadows. The light revealed externalities, behaviors, and vulnerabilities that demanded new responses. It was time to learn from them, test solutions, and adapt regulation.
The Presidency chose to halt this process. And that is the paradox of prohibition: in attempting to eliminate what the light has revealed, the decision is returning the problem to the shadows.
(*) Danielle Zanoli Gonçalves is a lawyer with senior experience in regulation and regulatory maturity. Currently, she is the Lottery Regulation Manager at ARSP-ES. She holds an MBA in Public Management and specializations in Public Law, State Law, and Public Advocacy. She is a member of the Regulatory Law and Infrastructure Committee of the OAB-ES (Brazilian Bar Association, Espírito Santo chapter).
[1] https://bet-legal.org/series
