On 1 January 2025, Brazil officially launched a licensed online lottery market, but the entry threshold was daunting. According to VEJA Negócios, the enterprise is required to pay R$30 million (approximately US$5.36 million) for the operating licence, an additional R$5 million for the establishment of a compulsory guarantee fund and a net asset requirement of not less than R$30 million. In addition, the minimum cost of starting operations is R$40 million, not including marketing costs. The annual contract for the Framengo Club is R$268 million, and for the Corinthian Club, R$103 million. This is clearly a high-risk and high-return investment, with data showing that by mid-2025, 97 licensed companies operated 167 brands, with total proceeds of the first half of the year exceeding R$35 billion.
However, the crisis is also looming, as Brazilians are free to access thousands of untaxed, unlicensed and non-compliant online websites. André Gelfi, President of the Brazilian Institute for Responsible Lottery (IBJR), stated: “The regulatory framework is well designed and the licensed platform rapidly dominates the market. However, illegal operators adapt to the rules at the same speed and continue to expand in the absence of effective strikes.” In the first quarter of 2025, the licensed market received 55 per cent of the online share of the investment through crazy marketing; by the second quarter, the share had dropped sharply to 45 per cent and the whole industry was in deep anxiety. Gaps in consumer protection rules for illegal operators create asymmetric competition in “price, product, extension”. These underground casinos serve as a haven for gamblers: tax-free, non-supervisory, compensation rates that are beyond the reach of licensed platforms, market-prohibited bonuses and immediate access services. They openly evade anti-money-laundering and player protection measures such as age verification, bank account audits and face recognition. Even more worrying is its permeability: illegal platforms deliver about 22,000 promotional items daily in the digital space of Brazil, leading to the accurate capture of persons under 35 years of age through the center waist net reds on platforms such as WhatsApp and Telegram. Minors can participate without hindrance, while licensed websites intercept users of the problem by self-excusing software, but without hindrance at illegal sites. Some of the black platforms disappear directly after the player has won a big bonus and roll away unpaid funds. According to data from the Brazilian Institute of Transport, 61 per cent of Brazilians had been betting on illegal sites and 72 per cent were unable to discern whether the platform was in compliance.
The data reveal a significant imbalance in the current regulatory power of Brazil, with the authorities identifying only 167 licensed operators, while the number of illegal platforms is as high as 2316, which is close to 14:1. “All charges against the gaming platform — tax evasion, fraud and the exploitation of gambling addiction — exist only on the black market, but the stigma is ultimately borne by the entire industry,” said Guiderme Figueiredo, Commercial Director of Betano. The response in Brazil remains weak, with fewer than 50 employees of the Award and Lottery Secretariat (SPA), of whom only 5 are responsible for a full network tour. The ban on the site has had little effect because the new site will be filled immediately. The focus of Brazilian regulation is shifting to cutting off the financial chain, in an attempt to stifle the payment channels of illegal operators. International experience has shown that concerted action can break the rules: the Philippines reduced its share of the illicit market from 93 per cent in 2023 to 46 per cent in 2025 by targeting websites, communication channels, payment systems and suppliers with smart technology. Brazil has begun to follow this example, and, at the initiative of the Brazilian Association of Legitimate Lottery Operators, local firms are working with the United States of America, Ether City, to develop testing software to identify illegal platforms and financial corridors through a mock Pix payment transaction, which is expected to be fully operational by early 2026.