Rising tax pressures threaten Brazil’s legal betting industry as illegal operators gain ground, IBJR warns

2025-10-16

Reading time 1:59 min

The Brazilian Institute for Responsible Gaming (IBJR) has cautioned that continued efforts to increase taxes on licensed betting platforms, including proposals that could double existing rates, risk undermining Brazil’s recently regulated gambling market. The institute argues that such policies would weaken legal operators, drive consumers toward unlicensed sites, and ultimately jeopardize both public revenue and consumer protection.

A recent study by LCA Consultores in partnership with the Locomotiva Institute found that between 41% and 51% of bets placed in Brazil still occur on unauthorized platforms, generating roughly R$ 40 billion ($7.37 billion) annually and depriving the state of an estimated R$ 10.8 billion ($1.99 billion) in potential tax revenue. The report noted that formalizing just 5% more of the market could add approximately R$ 1 billion ($0.18 billion) to public coffers each year.

According to IBJR, the legalization of betting represented an important milestone, as it introduced regulations ensuring integrity, financial traceability, and safeguards against debt and problem gambling, elements absent in the illegal market. However, the institute warned that weakening the legal framework would embolden operators outside the law, allowing criminal groups to expand their activities.

The IBJR stressed that tackling the illegal market should be a national priority, warning that weakening the regulated framework would only advantage unlicensed operators and complicate efforts to dismantle the criminal networks that thrive in the absence of oversight.

The organization stated that the most effective path toward increasing tax revenue and protecting consumers lies in reinforcing the legal market through regulatory stability, compliance, and a competitive business climate.

Parallel research by international consultancy Yield Sec highlights the scale of the challenge facing regulators. The firm similarly reported that legal operators now control 49% of Brazil’s online betting market, while illegal platforms hold a 51% share.

All top-tier Brazilian football clubs currently have betting sponsors, with nearly 90% displaying operator logos on their main jerseys. Analysts warn, however, that the rapid expansion of unlicensed platforms could destabilize this sponsorship ecosystem and compromise sports integrity, since illegal operators are not subject to oversight or reporting standards.

In the first half of 2025, 167 betting companies were formally licensed in Brazil, compared to more than 2,300 unregulated platforms. Yield Sec described the legalization process as “strong but fragile,” cautioning that without stronger enforcement, as much as 75% of the market could revert to illegality by 2026.

Authorities have recently stepped up enforcement efforts. The Ministry of Finance’s Secretary of Prizes and Bets and the national telecom regulator, Anatel, have been collaborating to identify and block unauthorized betting sites and payment channels. “If you don’t eliminate crime, they’ll find a way to occupy your market,” an analyst said.

Yield Sec’s report further warned that if the illegal share surpasses 60%, Brazil could see a wave of sponsorship cancellations across its football leagues, with up to half of current partnerships at risk should the figure climb to 75%.