Brazil’s Online Betting Booming But There May Be Trouble Ahead

Although 51 percent of the online sports betting market in Brazil is still operated by underground platforms, the legal iGaming and online fixed-odds betting sector has performed very well in the first six months of regulation, according to Brazilian government data.

In a report published last week, the Prize and Betting Secretariat of the Ministry of Finance (SPA) reported that 17.7 million Brazilians placed bets on the websites and apps of the 182 betting sites authorized by the Secretariat and legally operated by 78 companies.

These companies’ Gross Gaming Revenue (GGR) amounted to R$17.4 billion in the first half of the year (£2.36bn/US$3.2bn). 

The average spend-per-active-bettor was approximately R$164 a month (£22.16/US$30).

According to the Treasury Department, tax collection on gambling companies’ income totalled R$3.8 billion (£515m/US$698m) in the first half of the year.

This figure includes income tax, federal taxes such as the IRPJ, the CSLL, the PIS/COFINS, and social security contributions, in addition to the 12 percent social security benefits provided for by law, which amounted to R$2.14 billion (£290m/US$393m).

In addition, the SPA collected approximately R$2.2 billion (£298m/US$404m) authorization fees paid by authorized operating agents and approximately R$50 million (£6.79m/US$9.17m) in inspection fees also paid by companies in the sector in the first half of the year.

Crack Down

In response to complaints from industry associations that authorities aren’t doing enough to crack down on and eliminate illegal platforms, most of which operate from abroad, the ministry reported that 15,463 websites have been removed by the National Telecommunications Agency (Anatel) since October 2024.

While the licensed gambling sector appears to be consolidating, there are uncertainties on the horizon regarding the government’s intentions to raise taxes and establish stricter advertising regulations.

Legalized in 2018 but without adequate regulation until 2022, the gambling market in Brazil grew unchecked for three years under the previous Brazilian government, making it difficult to eliminate the underground market where tax-free operators lure gamblers with better conditions at lower costs.

The future fiscal framework remains the most concerning issue. 

In June, the government issued an interim measure increasing the GGR tax on licensed operators from 12 to 18 percent, effective October 1. The measure took effect immediately upon publication, but must still be ratified by Congress to become permanent.

Fix The Mess

Operator associations have warned that increasing the tax to 18 percent favours illegal operators, cautioning that licensed companies are still adapting to Brazil’s changing regulatory framework since its implementation in January.

“The lack of oversight that existed between 2019 and 2022 is largely responsible for the problems we’re experiencing today. Now it’s our turn to clean up. We have to fix this mess,” Dudena said.

Illegal Websites

In addition to blocking illegal websites, two other fronts to combat the illegal market are the supervision of financial system institutions, which cannot carry out transactions for unauthorized gambling companies, and the fight against advertising by illegal gambling operators, including cooperation with major search and social media platforms such as Google, Meta, TikTok, Kwai, and Amazon.

In the financial system, an agreement with the Central Bank established that the task of supervising, overseeing, and sanctioning financial institutions and payment entities falls to the Secretariat, which is responsible for ordering institutions operating in the illegal market to close their clients’ accounts and notifying the SPA when suspicious accounts are discovered.

According to Dudena: “The Brazilian state has regained control of this sector.”

Whether this is actually the case remains to be seen.