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As Brazil launched its licensed online gambling market back on January 1, 2025, the cost of entry was quite high. According to a report by VEJA Negócios, for obtaining a license, one would need to pay R$30 million for the right to operate, pay another R$5 million for the mandatory guarantee fund, and this would be alongside meeting the criterion of having a net worth of no less than R$30 million. Apart from this, initiating operations, which would not cost less than R$40 million, was also mandatory.
These numbers, incidentally, are in addition to the costs related to marketing. The level of sponsorships alone was staggering, considering that Flamengo’s jersey sponsorship deal costs R$268 million per annum, while the sponsorship for Corinthians is R$103 million per annum only. It was obviously a risk worth taking. By the mid-point of 2025, 97 licensed companies were operating 167 brands in a market that produced more than R$35 billion in gross gaming revenue in the first half of the year alone.
However, the dangerous situation that emerged clearly was that Brazilian gamers could still freely access thousands of illicit online casinos that did not pay any taxes, licensing fees, or compliance costs.
A Rapid Shift in Market Share
“The regulation was very well designed, and legal betting platforms dominated the market very quickly”, said André Gelfi, president of the Brazilian Institute for Responsible Gaming (IBJR). “But illegal operators adapted at the same speed and are growing without an effective crackdown.”
In the first quarter of 2025, the regulated market took a total of 55% of online bets due to the aggressive marketing campaign employed. By the second quarter of the same year, this percentage had fallen to 45%, and the whole industry was deeply concerned. Illegal operators had learned how to exploit every consumer protection rule, turning competition into an asymmetric battle around the so-called “three Ps”: price, product, and promotion.
A gamblers’ paradise, with no taxes or regulatory hurdles, the illegal sites offer odds that licensed operators do not, bonuses that are illicit in the regulated market, and instant access. They flout the guidelines regarding verification of age, bank accounts, facial recognition, and other measures to ensure that existing gamblers are protected and to prevent the laundering of funds.
Consumer Risks and Enforcement Challenges
It’s alarming to see the magnitude of the problem. Illegal gambling platforms also fill the digital atmosphere of Brazil with an average of 22,000 daily promotional contents to allure the young people under the age of 35 using mid-tier influencers in addition to the use of the WhatsApp and Telegram apps.
Without any protective measures in place, juveniles would be free to gamble, and compulsive gamblers, who would be prevented from gambling by self-exclusion software on licensed gambling sites, would not be obstructed in any way. Some illicit gambling sites just vanish when their gamblers win substantial amounts of money, leaving the funds unclaimed. A study by Instituto Locomotiva revealed that 61% of Brazilians have placed at least one bet on an illicit gambling site, while 72% of them cannot distinguish licensed from illicit sites.
Currently, authorities have identified 2,316 illegal operators versus only 167 licensed ones, a ratio of nearly 14 to 1. “All the accusations made against betting platforms, tax evasion, deception, and exploitation of gambling addiction, only happen in the illegal market,” said Guilherme Figueiredo, commercial director at Betano. “But the bad reputation ends up affecting the entire industry.”
Looking Abroad for Solutions
Efforts in Brazil are still minimal. According to a report, the Secretariat of Prizes and Bets (SPA) employs fewer than 50 people. Only five are tasked with tracking all websites on the internet. Blocking access to websites has already proved ineffective since new websites are immediately made available. Efforts are now being made toward payments. Attempts are being made to deprive financial sources of unauthorized operators.
Internationally, the same challenges are faced, but there are successes as well. The Philippines was able to significantly lower the incidence of illegal gambling by implementing a well-coordinated approach against the websites, communication channels, payment options, and suppliers. With the help of superior intelligence technology, the illegal market’s share from 93% to 46% was brought down from 2023 to 2025.
Brazil is starting to take this route. In collaboration with U.S.-based company EtherCity, the ANJL has assisted in the development of software that helps detect illegal betting sites and payment methods through simulated Pix deposits. This software should be fully functional by early 2026.
As the report concludes, the race against illegal gambling is also the race against time. Each month of procrastination equates to lost billions of dollars to the legal economy and millions of Brazilian citizens vulnerable to fraud. Until then, the only winner in this turf war is the criminal.
Source: BNL Data
