Brazil’s Illegal Betting Market Posts Its First Measurable Decline, But the Challenge Ahead Is Vast

Key Points

• Illegal operators made up 38% to 44% of all online bets in H1 2026 compared to 41% to 51% in the June 2025 survey, according to a new study by LCA Consultores and Locomotiva Institute, commissioned by IBJR.
• More than 60,000 illegal betting sites were banned by the Brazilian Ministry of Finance through an automated process that started in October 2025, and a decree was issued in June 2026 requiring banks to freeze unauthorised operators’ accounts within 24 hours.
• Nevertheless, the country continues to have one of the largest percentages of illegal betting in the regulated jurisdictions, namely Ireland, Sweden, and the UK at 3%, 6%, and 8%, respectively.

The black market betting industry in Brazil has registered its first decline since the inception of regulation, according to a recent study published this week. But the results come with an equally disheartening fact: about four out of every ten online bets made in Brazil in the first six months of 2026 are still made via platforms that do not have proper authorisation.

Entitled “Sizing and Combating the Illegal Betting Market in Brazil,” the study was done by LCA Consultores based on data obtained from Locomotiva Institute and has been sponsored by the Brazilian Institute for Responsible Gaming (IBJR). The study puts the number of online bets made via illicit websites at 38-44% in H1 2026 compared to 41-51% a year ago.

The Number Behind the Number

What most coverage has missed is that the uncertainty band itself narrowed; from ten percentage points in June 2025 to six in this iteration. That matters because it signals improved measurement, not just movement. Regulators cannot effectively target what they cannot accurately size.

Eric Brasil, Director of Regulation and Public Policy at LCA Consultores, addressed both dimensions. “The results of the estimate of illegal operators’ participation in gambling consumption indicate not only a relative decrease in the size of the illegal market, but also less uncertainty about the magnitude of this market,” he said. “The estimate signals important progress resulting from regulation and measures to combat illegal platforms. At the same time, the results reinforce the importance of maintaining the evolution of this work, with the continuity of enforcement initiatives.”

The Locomotiva Institute surveyed 2,291 bettors across Brazil in May 2026. In the three months before the survey, 53% had placed bets on platforms that did not require facial recognition, a baseline compliance requirement for every licensed operator. Some 48% wagered on domains outside the .bet.br namespace, which is restricted by law to authorised companies only. A further 37% used credit cards for deposits and 23% used cryptocurrencies, both of which are prohibited under the regulated framework.

These figures reveal something the headline percentage does not: a large proportion of bettors using illegal platforms are either unable to identify them, or actively prefer the lower-friction experience they offer.

Why Do Illegal Platforms Retain Their Pull?

Licensed operators in Brazil carry costs that clandestine competitors simply do not. Under Law Complementar 224/2025, they pay a 12% GGR tax, rising to 13% in 2026 and 15% by 2028. Each platform also paid BRL30 million in concession fees and must fund facial recognition, KYC checks, advertising compliance and player protection systems. Illegal platforms absorb none of this, and pass the savings to bettors through better odds, broader payment options and less friction on sign-up.

A February 2026 legal analysis by Massonetto Sociedade de Advogados described the outcome as a “self-reinforcing circuit”: higher compliance costs push demand toward illegal platforms, which erodes the regulated tax base, which in turn creates fiscal pressure to raise obligations on licensed operators further. The cycle strengthens the very market that regulation is designed to displace.

The financial cost is concrete. Based on LCA Consultores’ estimates from June 2025, Brazil loses between BRL7.2 billion and BRL10.8 billion per year in uncollected taxes due to illegal betting activity. The IBJR’s Carlos Lima has consistently flagged this structural risk, warning that new obligations placed exclusively on licensed operators risk widening the competitive gap that illegal platforms exploit. “The challenge now is to continue this progress, strengthening the fight against clandestine operators and ensuring that regulatory evolution occurs with legal certainty and predictability, preventing new measures applicable exclusively to authorised operators from creating asymmetries that make the illegal market more attractive to consumers,” Lima said.

How Far Brazil Still Has to Go?

Renato Meirelles, president of the Locomotiva Institute, described the reduction as “slight” and noted that the illegal market remains at high levels. The international comparison, published alongside the study via Yogonet, illustrates just how far Brazil trails regulated peers. Ireland has the lowest illegal market share at 3%, followed by Sweden at 6% and the United Kingdom at 8%. Australia sits at 15% and Mexico at 20%. Brazil at 38% to 44% is second only to the Netherlands, which records a 51% rate, among the jurisdictions assessed.

These were the achievements made possible by many years of concerted efforts, including competitive licensing practices, systematic interruptions to payments, enforcement capabilities, and consumer education campaigns. None of these levers worked on their own but, when combined, they all did.

Enforcement Has Shifted Gear

Brazil is beginning to assemble a more aggressive toolkit. The Ministry of Finance automated its illegal site blocking process in October 2025, after running it manually since January of that year. By August 2026, more than 60,000 illegal betting websites had been blocked, according to Carlos Renato Resende, Undersecretary for Monitoring and Enforcement at the ministry’s Prizes and Betting Department.

But it is more important to emphasise the change that occurred in June 2026, when President Lula issued a decree empowering the Secretariat of Prizes and Gambling (SPA) with the right to freeze the funds belonging to the unlicensed entities. As stipulated in Decree 13.033, banks and financial organisations should freeze the accounts belonging to a certain operator who has been found to be operating illegally within 24 hours after receiving the order to block the account, suspend further transactions, and inform about it within 48 hours.

The Federal Police have moved alongside the financial authorities. In July 2026, Operation Slots resulted in the freezing of nearly BRL951 million in assets linked to unlicensed betting operators, with evidence that the network had used digital influencers to promote illegal platforms and routed proceeds through shell companies to obscure the money trail. Clandestine sites had also displayed fake SPA compliance stamps to mislead bettors.

Wesley Vaz, Secretary of External Governance Control at Brazil’s Federal Court of Accounts, underlined the cross-agency dimension in May 2026, when the TCU approved Ruling 1296/26 calling for joint action by the Ministry of Finance, Central Bank, Federal Revenue Service, National Telecommunications Agency, and Federal Police. “There is a need for the State to better block domain names, interrupt financial flows, and sanction illegal operators,” Vaz stated.

The Awareness Gap That Enforcement Alone Cannot Close

Perhaps the study’s most uncomfortable finding is that 77% of Brazilian bettors fully or partially agreed that illegal platforms do not comply with responsible gambling rules and therefore pose greater risks to users. Yet a significant share continue to use them regardless. Knowing the danger and changing behaviour are separate problems.

Meirelles put it plainly: “The positive data is that there is almost a consensus that this problem needs to be addressed. Even those who gamble on clandestine sites believe it is the country’s duty to combat them more forcefully.”

The licensed market generated BRL37 billion in GGR in 2025 and contributed BRL9.95 billion in taxes and legal allocations during its first year of regulated operation. Regulated operators invested approximately BRL7.5 billion in share capital and supported an estimated 15,500 direct and indirect jobs. Those numbers confirm the legal sector is real and growing. They do not confirm it is winning the channelisation battle, at least not yet.

Expert Analysis

The first measurable retreat in Brazil’s illegal betting market is a genuine milestone, earned through 18 months of regulatory effort, automated blocking, and now financial enforcement with real teeth. But a 38% to 44% illegal share in a market the size of Brazil still represents billions of reais leaving the regulated system every quarter. The gap between Brazil and Ireland or the UK is not primarily a matter of enforcement intensity; it is a matter of how attractive the regulated market is to bettors relative to the illegal alternative. Every additional cost imposed exclusively on licensed operators narrows that attractiveness gap. Brazil’s regulators appear to understand this trade-off. Whether that understanding translates into restraint on the legislative side, particularly given political pressure to restrict and tax the betting sector further, will determine how quickly the next study’s numbers improve.