Brazilian regulator warns of growing challenge from illegal sports betting

It was warned that illegal platforms generate BR35 bn, calling for stronger oversight.

The Brazilian Permanent Subcommittee on Sports Betting Regulation emphasized the need to focus on revenue losses caused by the illegal market.

During a public hearing in Congress, participants, including the Brazilian Institute for Responsible Gambling (IBJR), lawmakers, industry representatives and authorities, agreed that the country’s main challenge is not the regulated market but the rapid growth of illegal platforms. 

According to them, these unregulated operations generate around BR35bn ($6.4bn) per year, evade taxes, operate without integrity safeguards and provide no consumer protection.

Besides, the session addressed concerns about the Federal Government’s oversight of unregulated sports betting operators in the country.

Deputy Caio Vianna, President of the Subcommittee, said: “The Brazilian Government today is acting illegally. The law clearly establishes that the oversight fee must be collected with a specific purpose: to combat the illegal market and other irregularities. Yet it is not being used for that. It goes into a general account. 

“Anyone who studies the market understands this is not an oversight fee, it is a tax for the government to use however it pleases, not for the purpose it was created for. That is a serious matter.”

Representatives of regulated operators criticized the Federal Government’s plan to raise taxes on licensed companies. According to the documents presented at the Congress, these firms already pay BR2.3bn in concession fees and face a 21.9% tax burden, in addition to social and corporate contributions. 

A provisional measure, currently under review in Congress, seeks to increase the tax on gross gaming revenue from 12% to 18%, which the IBJR warns could weaken the legal market and create more opportunities for illegal operators.

Good to know: A study by the IBJR estimates that illegal gambling costs Brazil BR10.8bn each year

Fernando Vieira, Executive President of IBJR, explained: “While the regulated sector employs people, pays taxes, and protects bettors, the illegal market is free to grow. It makes no sense to penalize those who follow the law while not allocating collected resources to tackle illegality. 

Vieira emphasized that Brazil is at a pivotal moment: according to him, shifting five percentage points of the illegal market into the regulated sector could generate an additional BR1bn in annual tax revenue.

He argued that the focus should be on strengthening enforcement rather than increasing taxes, as these measures are key to reducing illegal activity. 

Alex Rivera

Writer

My goal is to explain how gaming, esports, and betting intersect in ways that readers can actually understand, without stripping away the entertainment that makes the space compelling.

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