How Brazil’s illegal market is undermining the future of regulated betting

While the Brazilian government celebrates the growing tax revenues from sports betting, two recent reports by BNLData shed light on a problem that threatens the future of the industry: a large portion of betting revenue continues to be siphoned off by the illegal market. More than a mere oversight, this scenario directly undermines the sustainability of licensed operators and weakens the credibility of the regulatory framework the country is striving to build.

According to data released by BNLData, betting revenue in Brazil exceeded R$7 billion in 2025. However, an estimated R$11 billion may have been diverted to unregulated platforms — operators that act outside Brazilian legislation, with no commitment to security, transparency, or social responsibility.

The problem becomes even more concerning when we consider that approximately 50% of all bets placed in Brazil still go through illegal websites, many of them based overseas. These operators pay no taxes, follow no technical protocols, and provide no minimum guarantees to protect players.

The report “The True Betting Revenue and the Incentive to the Illegal Market” exposes a clear paradox: rather than encouraging formalisation, Brazil’s regulatory and tax framework may be penalising those who operate legally. Increases in the tax burden — including the IOF (Financial Transaction Tax) on international payments and levies on the gross revenue of licensed betting companies — have raised operational costs for regulated operators, while the illegal ones continue unchecked.

Certification: The Line Between Legal and Illicit

At BiS SiGMA South America 2025, industry experts emphasised that technical certification is the clearest line between legal and illicit gambling operations. More than a rubber stamp, certification involves rigorous audits, integrity testing, cybersecurity protocols, and anti-money laundering procedures — all of which are absent from unregulated sites.

“Players need to understand that certified platforms and games are far safer for them. It’s a requirement, not a choice.”
 — Marzia Turrini, President of iGaming and Cybersecurity at BMM Test Labs

Beyond security, transparency is a core pillar of regulated gaming. Leonardo Borges Leão, mathematician at the KTO Group, highlighted the importance of consumers seeking certified games from trusted providers:

“Look for a certifier that focuses on fairness, and that provides data such as RTP, volatility, and hit frequency. If this information is not available, the game is probably not certified, and the company behind it is likely unlicensed.”

Leão goes further: allowing these operations to persist, he warns, is essentially “promoting irregularity.” He adds:

“Certification makes it clear to players that they are in an entertainment environment — not in an investment scheme or a promise of extra income — and that they will be able to withdraw their money based on data audited by a mathematician.”

Lack of certification, therefore, is not just an operational flaw — it is a direct indicator of illegality. What’s more worrying is that many consumers are not even aware of the risks.

Brazil’s misaligned Public Policy

This reality reveals a serious misalignment between taxation and enforcement. On one hand, the government is increasing pressure on licenced operators. On the other, it lacks the structure and resources to tackle unlicensed ones. The recent suspension of Anatel’s operations against illegal gambling websites due to budget constraints is both symbolic and alarming.

During the event, experts suggested several measures to address this regulatory imbalance and protect the legal market. Among the proposals discussed were:

– Making technical certification a visible and mandatory requirement
 – Strengthening cooperation between Anatel, the Ministry of Finance and financial institutions
 – Launching broader public awareness campaigns on the risks of illegal gambling
 – Linking any increases in tax burden to more effective enforcement strategies

The Bottom Line? Regulation Is About More Than Revenue

The Brazilian betting industry is not opposed to regulation — it demands one that works. What it needs is balance: it is unreasonable to penalise those who follow the rules while tolerating the activities of those who operate outside them.

Without coordinated action on enforcement, certification, and tax policy, the likely outcome is a shrinking legal market and the continued expansion of informal, unregulated operations. And those who lose out are not just operators — but society as a whole.