Regulation has reduced the illegal betting market, but advertising still challenges the sector.

The illegal sports betting market has lost ground in Brazil over the past year and a half, but it still represents between 38% and 44% of bets in the country – a share higher than that observed in European countries with more mature regulatory systems, where the clandestine market represents less than 10%. This was the central message of the event “Combating the Illegal Betting Market”, promoted by Estúdio JOTA on Monday (August 31st) in Brasília, with sponsorship from the Brazilian Institute for Responsible Gaming (IBJR).

The starting point for the debate was a study by LCA Consultoria Econômica, based on data from the Locomotiva Institute and commissioned by IBJR, which measured the participation of illegal operators in the Brazilian betting market. Based on a panel of approximately 2.300 respondents conducted in May of this year, the consultancy estimated that the clandestine market is smaller than that identified in the first round of the survey, when the estimate ranged between 41% and 51%, with a baseline scenario of 46%.

Even with the decline, the country is still among the worst in the world in plumbing.

The research estimated that the illegal market currently accounts for between 38% and 44% of the total amount wagered in the country, with a baseline scenario of 41%. When discussing the survey, Leonardo Lima, Manager of Competition and Public Policy at LCA Consultoria Econômica, explained that the methodology classifies as illegal those operators who operate without authorization in Brazil, whether they are regulated in other countries, unregulated anywhere, or licensed in one state and operating outside of it. According to him, the reduction reflects a simultaneous maturation on three fronts: the consumer, who has been living with the regulated market for over a year and a half; the companies, which have adjusted to the rules; and the enforcement itself, which has gained strength over the period.

Despite the improvement, Leonardo noted that Brazil remains far behind more established international markets, where the illegal market share typically ranges between 3% and 10%. He also highlighted a finding from the survey that helps explain the resilience of clandestine platforms: over 70% of bettors interviewed stated they would stop using a betting site if they knew it was illegal, indicating that a significant part of the problem is linked to a lack of consumer information. "That's why they manage to compete," he summarized, explaining that illegal operators circumvent licensing costs, requirements such as the General Data Protection Law (LGPD) – Law 13.709/2018 – and oversight mechanisms to offer bonuses, payment methods, and more attractive odds.

Carlos Lima, president of IBJR, classified the drop as proof that the regulatory policy had the desired effect. "Regulation in Brazil worked, it was successful," he stated, emphasizing that the challenge now is to go beyond blocking websites and directly target those who finance clandestine operations. He further argued that any new restriction imposed on the regulated sector tends to produce the opposite effect to that intended. "Any prohibition applied to the sector today will serve as an incentive for the illegal market," he said.

Digital platforms should also participate in the fight.

Carlos Lima also drew attention to the fact that authorized and clandestine operators reach consumers through the same digital environments. "It's unacceptable to imagine today's app stores where a consumer can enter and download a clandestine, illegal betting site," he stated.

According to him, the effort to combat this needs to reach the agents who disseminate or facilitate access to clandestine platforms. "In other words, digital platforms are not being involved in this discussion."

The president of IBJR also highlighted the difference between the two environments from the perspective of protecting the gambler. "I think the key message is that there is no responsible gambling in the illegal market."

Focus shifts from blocking websites to financial strangulation.

The second panel of the meeting focused on the tools already in use by the public authorities. Carlos Xavier de Resende, from the Ministry of Finance, updated the number of illegal betting sites blocked since the beginning of the inspections, which now exceeds 68. However, according to the undersecretary, this isolated action has a limited effect. "Blocking the site isn't like trying to mop up ice, it's like cutting the grass," he compared, arguing that the strategy should target the financial flow that sustains these operations.

According to him, the money moved by illegal websites passes through a relatively concentrated number of intermediaries, between 500 and 600 legal entities, which maintain accounts in about 50 payment institutions. A decree focusing on this should be published in the coming weeks, according to Resende, to regulate the Anti-Fact Law, allowing the blocking of accounts of agents identified as illegal and paving the way to hold financial institutions accountable that, in his assessment, act with "deliberate blindness" in the face of suspicious transactions. "The Brazilian State will not shirk its responsibility to hold the real beneficiary accountable," he stated.

The undersecretary also stressed that the action will not be limited to the final beneficiaries of the funds. "The Brazilian state will not shy away from seeking accountability from the actual beneficiary, but also from those intermediaries who allow this to happen," he stated.

Game providers are now under regulatory scrutiny.

Resende stated that accountability should also extend to technology and game providers that support clandestine operations. "We call them B2B, which are the service providers that offer the gaming platforms. They have an enormous responsibility."

According to him, the Prizes and Betting Secretariat (SPA) is studying specific regulations for this part of the chain. "We at the Prizes and Betting Secretariat are also studying regulations to establish responsibility, obviously based on the law, but to bring responsibility to the service provider that offers the game."

Digital advertising and platform responsibility are now on the radar.

Marina Pita, from [organization name], situated the fight against the illegal market within a broader front of digital environment integrity, which treats a large part of the practices associated with clandestine betting as fraud and scams. She detailed that the government is working on a decree and regulations that should expand the responsibility of platforms regarding advertisements and content boosting, based on a decision by the Supreme Federal Court (STF) on the civil liability of intermediaries on the internet.

Among the measures being prepared, Pita cited the requirement that platforms request a registration number from the SPA (Brazilian Advertising Self-Regulation Service) to authorize any advertising in the sector, in addition to transparency rules for influencers, who would publicly declare their commercial relationship with advertised brands, similar to what already exists in the United States and the European Union. For her, the central challenge is cultural, not just regulatory. "We don't have a culture of regulating communications in general," she pointed out, indicating that Brazilian advertising self-regulation, even recently improved, is insufficient given the size of the current problem.

The secretary also cited a lawsuit filed by the Attorney General's Office (AGU) against Meta, motivated by the misuse of social programs such as Bolsa Família and Brasil Sorridente in phishing scams, as an example of how the response to the illegal betting market is part of a broader problem of digital fraud. "We are in a situation that is an epidemic," she summarized.

Marina also highlighted that the fight depends on identifying the channels that lead consumers to clandestine operators. "We need to understand that there are vehicles that are facilitating contact, that are spreading the word. And if we don't confront this problem, I think we're going to be very unsuccessful."

Commenting on the update to advertising self-regulation, she stated: “I think it’s a victory that the sector has managed to approve a new, updated annex; I think that’s very important, but I understand that society demands tougher measures, both from the sector and from the government.”

When asked about the immediate priority, the two panelists in the second segment converged on complementary answers. Marina Pita pointed to the regulation of advertising and telecommunications as the most urgent path, as it directly addresses the "pervasiveness" of illegal gambling in the digital environment. Xavier de Resende, in turn, reinforced that the results depend on time and institutional coordination. "We're not pulling this out of thin air. It's not a magic trick," he stated.

The challenges of taxing the sector.

In the first panel, Congressman Júlio Lopes (PP-RJ) situated the fight against illegal gambling within a broader context of criminal organizations operating in different sectors of the economy, from the pharmaceutical trade to the tire market. He announced that he would release a partial report from the Legal Brazil Commission, proposing the creation of a federal agency dedicated to confronting these criminal structures. "Crime, in this context, tends to grow significantly," he stated, advocating for greater cooperation with international organizations such as Interpol.

The congressman also argued that the fight against these organizations must keep pace with their ability to adapt. "So, what I think is very important is that we practice this exercise of informing ourselves, training ourselves, and educating ourselves on how to better combat this with technology, digitalization, and knowledge."

The parliamentarian also criticized the possibility of the betting sector being subject to the Selective Tax, a tax foreseen in the tax reform for products and segments with an impact on public health. According to him, an increase in the tax burden on the regulated sector tends to produce the opposite effect to that intended. "These tax increases are rewards for illegality," he said, arguing that any measure that reduces the competitiveness of the legal market tends to push consumers towards clandestine operators, who already do not pay taxes.