Why the illegal betting market remains a challenge for Brazil.

A study commissioned by the Brazilian Institute for Responsible Gaming (IBJR) from the consulting firm LCA indicates that the illegal sports betting market in Brazil has shrunk to an estimated share between 38% and 44% of the total, with a baseline scenario around 40%. In the previous survey, conducted at the beginning of regulation, the same indicator ranged between 41% and 51%, with a baseline scenario of 46%. The five percentage point reduction in the baseline scenario was presented in a debate promoted by JOTA on Monday (August 31st), at Casa JOTA, in Brasília, with the participation of representatives from the sector, Congress, and the federal government.

The event, sponsored by IBJR, featured two panels: the first providing a diagnosis of the black market, and the second focused on concrete actions to combat it. According to participants, the decrease in illegal participation is a sign that regulation has worked, but the level still places Brazil among the worst in international comparisons.

The size of the illegal market

LCA's research was based on a survey conducted by Locomotiva in May 2026 with approximately 2.300 respondents. The methodology classified as "eligible for the illegal market" those bettors who met at least two of four criteria: use of a credit card for deposit, payment with cryptocurrencies, absence of facial recognition, or access via a domain with the extension ".noi".

Based on this criterion, half of the sample was deemed eligible. From there, LCA constructed three scenarios, weighting the volume that each bettor allocates to irregular platforms, and arrived at a range between 38% and 44%. "We have an estimate of the decrease and greater precision," stated Leonardo Lima, Manager of Competition and Public Policies at LCA, highlighting that the range between the scenarios itself has narrowed compared to the previous study.

However, comparisons with other countries reveal how much progress is still needed. European countries with available research show illegal market participation below 10%, with cases ranging from 3% to 6%. Brazil, even with the recorded decrease, remains close to the worst positions in this group.

Lima identified three factors contributing to the reduction: the increased awareness of consumers after more than a year of a regulated market, the implementation of enforcement measures, and the adjustment of operators to the new regulatory environment. However, the competitive imbalance between the legal and illegal markets persists for structural reasons. Clandestine platforms do not pay the R$30 million licensing fee, do not have to comply with the General Data Protection Law, do not maintain control mechanisms, and are able to offer higher odds, unrestricted bonuses, and accept cryptocurrencies and credit cards. "Their cost is precisely building and launching a website," Lima summarized. The research also revealed that more than 70% of bettors who frequent illegal platforms stated that they would migrate to the regulated market if they knew they were operating illegally, pointing to an information problem, not just a preference issue.

The next step: financial asphyxiation.

Carlos Lima, president of IBJR, assessed that the regulation fulfilled its central objective of channeling consumers to the legal market, but indicated that the next stage requires a different focus. "What will need to happen now is a real financial strangulation of these actors," he stated, arguing that actions should focus on those who enable illegal operations, and not just on the platforms visible to the consumer.

Carlos Xavier de Rezende, Undersecretary for Monitoring and Oversight at the Ministry of Finance, confirmed that this transition is already underway. The federal government has blocked more than 68.000 irregular betting websites, but acknowledges that this isolated measure has a limited effect; operations migrate to new domains rapidly. Analysis of financial flows revealed an unexpected concentration: the resources of tens of thousands of websites pass through approximately 500 to 600 legal entities, which in turn maintain accounts in about 50 payment institutions.

“Starting this month, we will begin issuing the first notifications to block the accounts of illegal agents, whose identities we already know,” announced Rezende, adding that financial institutions that insist on processing transactions for illegal operators will be held accountable. The undersecretary invoked the legal concept of “willful blindness” to characterize the behavior of intermediaries who ignore clear signs of illegality. A decree regulating the fight against the illegal market through a financial lens was expected to be published either this week or next.

Advertising and digital platforms at the center of the debate.

Marina Pita, deputy secretary of the Digital Policies Secretariat of Secom, pointed to digital advertising as the most underestimated vector for the expansion of the illegal betting market. Illegal betting sites reach consumers through the same channels as regulated ones, promoted by influencers with millions of followers and boosted ads on open platforms. "Nobody discovers websites on the web," she said, arguing that the problem lies in the mechanisms that direct traffic, not in the domains themselves.

The secretariat has already published an ordinance requiring digital platforms to obtain a registration number from the Securities and Exchange Commission (SPA) to authorize advertisements or boosting of any game. A presidential decree is being drafted to expand these obligations, and a second ordinance, aimed at digital advertising more broadly, was in its final stages of drafting. This measure would include the requirement for influencers and content providers to declare their material relationship with the brands they promote, a standard already adopted by the Federal Trade Commission in the United States a decade ago.

Rezende added, drawing attention to a phenomenon he has observed for over a year: a large part of the advertising for illegal betting does not come from major influencers, but from ordinary users who openly promote the platforms, sometimes explicitly highlighting that the site "doesn't pay taxes" as a selling point. Combating this phenomenon, according to him, requires simultaneous action on multiple fronts: consumer education, holding digital platforms accountable, blocking websites, and now, financial strangulation.

The risk of over-taxation

Federal Deputy Júlio Lopes (PP-RJ), a participant in the first panel, linked the discussion about illegal betting to the broader scenario of organized crime in Brazil. Beyond diagnosing the sector, the congressman advocated for the creation of an anti-mafia agency in the country, a proposal that would be presented the following day within the scope of the Legal Brazil Commission in the Chamber of Deputies. The argument is that the structures that enable the illegal betting market are the same ones that support cigarette smuggling, the illegal sale of medicines, and other transnational organized crime networks.

Regarding the selective tax foreseen by the tax reform for the betting sector, Lopes was direct: “These selective taxes and these tax increases are rewards for illegality, they are rewards and invitations for the advancement of crime in Brazil.” Carlos Lima reinforced this position, warning that any measure that expands the competitive advantage of the illegal sector should be reconsidered. “Any prohibition applied today to the betting sector in Brazil will serve as an incentive for the growth of the illegal market,” he stated.

Leonardo Lima, from LCA, concluded the first panel with an argument aligned with international experience: the countries with the greatest channeling of the legal market are precisely those that avoid stifling the regulated segment with excessive restrictions, acting directly to discourage the existence of illegal activity, not to make legal activity less attractive.

The debate is taking place at a time when the sector is facing increasing public and legislative pressure, with bills for a total ban currently being processed in Congress. The monetary value of the illegal betting market in Brazil, a figure requested by Congressman Lopes during the panel, was not yet available; LCA reported that it is consolidating SPA's data and that the number will be released in the coming days.