Online gaming in Brazil: An evolving landscape

January 1 saw the launch of the Brazilian fixed-odds sports betting (FOSB) and iGaming regulated market at federal level, with just under 70 licensed operators (14 of which received definitive licenses as a result of the documentation submitted being in order). On March 26, the Prizes and Betting Secretariat of the Ministry of Finance (SPA), which acts as the federal regulator, announced that the number of licensed operators had grown to 80, with eight companies operating nationwide by determination of court orders. Until such date, 370 applications for a federal license had been filed. This means not only that the SPA has a large backlog of applications to handle but also that the Brazilian licensing model has been very successful, especially if one considers the license fee costing BRL 30m ($5m) and a financial reserve of BRL 5m ($833,000) also being required.

The beginning of 2025 also saw a blow to the gaming licenses issued by Loterj, the regulator of the State of Rio de Janeiro. On January 2, Supreme Court Justice André Mendonça granted the Federal Government injunctive relief determining that Loterj license holders refrain from accepting bets from outside the territory of the State of Rio de Janeiro and implement geo-blocking tools. Despite many attempts by Loterj to overturn the ruling, in the second half of February, the Supreme Court Plenary confirmed the injunctive relief that had been granted. The merits of this lawsuit are still be to reviewed by the Highest Court in Brazil, leaving Loterj with some hope, since the two Justices ruled that the effects of the injunctive relief should be modulated. This means license holders who obtained their licenses prior to January 2 could potentially still have a chance of accepting bets from outside state borders. Still, this could be a long battle.

While the SPA is trying to come to terms with state regulators, Secretary Regis Dudena convened a meeting with the regulator in Brasília for April 4, for the purposes of creating a National Betting System. That date also saw the launch of the SPA’s Regulatory Agenda for 2025/2026, which received contributions from the market in general. Brazilian municipalities that issued local gaming licenses have also been targeted by the SPA, which underlines that the Federal Constitution would not provide the necessary authority for them to do so. Municipalities argue that the Supreme Court decision of 2020, which broke the Federal Union’s monopoly on the exploitation of lotteries in Brazil, would provide such authority, especially since FOSB and iGaming were legalized in Brazil as forms of lottery.

One such municipality to do so, Bodó, in the Northeastern State of Rio Grande do Norte, with less than 3,000 inhabitants, has been issuing gaming licenses (inspired by Loterj, with nationwide coverage) to dozens of interested operators for a license fee of only BRL5,000! In a recent lawsuit filed with the Supreme Court discussing such municipal authority, Justice Nunes Marques decided, for the time being, not to suspend operations under such municipal licenses.

Aside from the above-mentioned regulatory issues, the SPA’s Regulatory Agenda for 2025/2026 also signals that B2B providers, which currently do not require a license to operate in Brazil, may also have to submit to a licensing exercise towards the end of the year. In connection therewith and prompted also by licensed B2C operators urging their foreign suppliers to set up shop in Brazil (to reduce the tax burden), a new wave of foreign investment into Brazil, in the form of such B2B providers incorporating local subsidiaries, has been ascertained.

In relation to the above, licensed B2C operators are starting to experience the ordeal of defending themselves against consumer claims, which can proliferate in courts nationwide (particularly in Small Claims Courts – known in Portuguese by the acronym JEC). If such lawsuits result from damages suffered by bettors from defects in the games played on the operator’s website, operators will want to pin such liability on their B2B provider – and it will be easier to do so if the B2B provider has a door to knock on in Brazil.

Despite the above-mentioned setbacks operators can experience when doing business in Brazil, there is still tremendous interest in the Brazilian gaming market. This can be seen not only in the number of licenses issued and the backlog of license applications, but also the interest of foreign players in engaging in M&A transactions with local operators. Important players that decided either not to apply for a license initially or withdrew from the market last year may be looking closer to the Brazilian market once more and planning their comeback under acquisition mode. There will certainly be many local targets available, both for partial and full acquisition, especially since many license holders will now want to multiply their return on the investment, while obtaining a license or seeking strategic partnerships.

I anticipate that we will see more M&A transactions materializing during the second half of 2025 because operators are still adapting to the new regulatory environment and will probably need some months to prepare for any potential M&A transactions. In any event, 2025 would be an ideal year in which to conduct such transactions, especially since one layer of cost and complexity will not apply this year: merger review control. While Brazil now adopts a pre-closing merger review methodology (where the parties to the transaction need to secure approval by the Brazilian antitrust authority, if they have recorded Brazilian group gross turnovers in the financial year prior to that in which a transaction occurred of at least BRL75m, on the one hand, and BRL750m, on the other), such exercise will not be required this year because the regulated market was only born on January 1.

As the regulated Brazilian market progresses in the years to come (hopefully with enhanced legal and regulatory certainty), we should also start to the witness consolidation of licensed operators seeking enhanced efficiencies and market share – in what is bound to be a very large and competitive market.

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