Brazil gaming body demands tougher measures against illegal gambling

Rajashree Seal December 17, 2024

SiGMA news

As Brazil prepares to launch its regulated online gambling market on January 1, 2025, concerns are mounting over the impact of illegal gambling on the industry’s future. The president of the Brazilian gaming and lottery industry association (ANJL), Plínio Lemos Jorge, has warned that unchecked illegal gambling could harm the newly licensed operators and discourage investors.

Over 2,000 illegal gambling sites are said to be operating in Brazil, despite efforts by the telecom regulator Anatel to block them. Lemos Jorge highlighted that these unlicensed operators create unfair competition by using harmful practices, not paying taxes, and ignoring rules to protect players.

“This risk exists that if the illegal market is not effectively tackled, if investors assess that the market scenario is not favourable to the expected returns, those who are already here may well leave the country,” Lemos Jorge told UOL Apostas. He also highlighted the need for stricter regulatory measures, particularly against unlicensed sites and their payment systems.

Brazil’s steps towards regulation

The Secretaria de Prêmios e Apostas (SPA), the country’s new gambling regulator, has approved 71 online gambling licences ahead of the market’s launch. These licences, granted to operators meeting strict requirements such as anti-money laundering protocols and IT security standards, come with a five-year term and a fee of R$30 million ($6.2 million).

So far, 16 operators have paid the fee, contributing R$480 million ($98.7 million) to the Ministry of Finance. SPA president Regis Dudena stressed that compliance with the new regulations will be mandatory for all operators, including those already active on the grey market.

“Starting January 1, all companies operating in Brazil will need to be Brazilian entities established under Brazilian law. We’ll know their shareholders, ultimate beneficiaries and executives, ensuring complete oversight of both legal entities and individuals,” Dudena said.

Tackling illegal gambling

Efforts to address illegal gambling in Brazil have faced obstacles. Anatel president Carlos Manuel Baigorri likened attempts to block illegal websites to “trying to mop up ice.” While the agency has signed a cooperation agreement with the SPA, Baigorri has called for greater legal authority to act swiftly against illegal sites.

Lemos Jorge echoed this call, stressing on the need for legislative changes. “It will be necessary to give Anatel greater autonomy to block sites. This autonomy should come through a specific law. With greater autonomy, the blocking process would be much faster. As soon as an illegal site is detected and Anatel becomes aware of it, the blocking would be carried out, preventing the site from having a long life and causing losses to bettors,” he said.

Another solution could involve targeting payment systems like Pix. Lemos Jorge stressed the importance of cutting off illegal operators’ access to financial platforms. “It is of utmost importance to combat the payment methods that allow the illegal sites to operate. They must also be part of this fight, since, according to the legislation, any financial institution that agrees to operate transfers to illegal platforms not authorised to operate in Brazil by the federal government will be breaking the law,” he said.

What lies ahead

While Brazil’s regulated market represents a major step forward, further developments are expected. The Senate is discussing new taxes on specific gambling sectors, while a proposal to legalise land-based casinos has been postponed for additional evaluation.

The success of the regulated market will depend heavily on the government’s ability to curtail illegal operations. Without robust measures, the thriving illegal market could undermine investor confidence and jeopardise the long-term sustainability of Brazil’s online gambling industry.

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