Brazil's Gambling Experiment: One Year Later
January 1, 2025: Brazil flipped the switch. After 80 years of prohibition and seven years of regulatory delays, Latin America's largest economy officially opened its legal online gambling market. The promise? Billions in tax revenue, thousands of new jobs, and the death of an unregulated wild west.
Twelve months later, the results are in. And they're exactly what you'd expect from the world's most ambitious gambling rollout: impressive numbers wrapped in frustrating problems that nobody seems able to solve.
The Numbers That Matter
Let's start with what worked. Brazil's regulated market generated R$17.4 billion ($2.76 billion) in gross gaming revenue during the first six months of 2025 alone. At that pace, the country is on track to finish the year as the world's fifth-largest betting market, behind only the US, UK, Italy, and Russia.
The government collected R$3.8 billion ($700 million) in taxes from operators in H1 2025. Add R$2.2 billion in licensing fees and another R$50 million in supervisory fees, and the Treasury is smiling. Projections from Regulus Partners estimate full-year 2025 revenue at approximately $4.1 billion – a remarkable figure for a market's first regulated year.
On the player side, 17.7 million Brazilians placed bets on licensed platforms through June. The average bettor spent about R$164 ($30) per month – roughly the cost of two movie tickets plus popcorn. Whether that's concerning or benign depends on whom you ask.
78 Licenses and Counting
The licensing rollout was chaotic but ultimately successful. When the market launched at midnight on January 1, only 14 operators held permanent licenses. Another 52 had provisional authorizations while they finished technical certifications. By August 2025, 78 operators were fully licensed, operating 182 websites and apps.
Major international players made their bets on Brazil. Betano (Kaizen Gaming) was first to apply and currently leads market share according to H2 Gambling Capital. Bet365, Betfair (Flutter), Sportingbet (Entain), Superbet, and BetMGM all secured licenses. Analysts project Flutter could grow from 10% to 25% market share within five years.
But not everyone saw opportunity. Betway and Vera&John withdrew applications, citing profitability concerns. The R$30 million ($5 million) license fee and R$5 million emergency fund requirement priced out smaller operators. Those who stayed needed deep pockets and long-term vision.
The Black Market That Won't Die
Here's where the report card gets ugly. Despite blocking over 18,000 illegal gambling domains since October 2024, the black market remains stubbornly alive.
Anatel, Brazil's telecommunications regulator, has called enforcement "mopping ice." According to local reporting, roughly 80% of blocked sites remain accessible through mirror domains, redirects, or alternative URLs. The ANJL (National Gaming and Lottery Association) estimates over 2,000 illegal sites were still operating months into 2025.
Why do players choose unlicensed operators? Simple: no KYC friction, better odds, credit card acceptance, and – until recently – bonus restrictions didn't exist. Licensed operators must verify identity via CPF numbers, conduct facial recognition, and connect to government databases. Illegal sites just take your money and let you play.
Industry insiders estimate illegal operators turned over more than $70 million in just the first few months of 2025. Some analysts believe the unregulated market still controls 30-40% of total betting activity. That's billions of reais flowing outside the tax system.
The government's response has been multi-pronged: blocking domains (limited effectiveness), targeting payment processors (promising but slow), and fining influencers who promote illegal platforms (51 already penalized). Whether these measures can achieve meaningful channelization remains doubtful.
The KYC "Bloodbath"
January 2025 was brutal for licensed operators. Players who previously deposited instantly now faced mandatory facial recognition, CPF verification, and bank account linking. Traffic tanked. Conversion rates collapsed.
"Everybody's traffic went down," admitted Hugo Baungartner, CBO of Esportes Gaming Brasil. "We had big friction points in January."
The friction was intentional – Brazilian regulators wanted strong player protection from day one – but the competitive impact was severe. Players could choose: complete extensive verification on legal sites, or keep playing on offshore platforms with zero requirements.
Google Trends data showed a spike in searches for "betting platforms without verification" immediately after January 1. Players weren't confused about the rules. They were actively avoiding them.
By mid-2025, operators had improved onboarding flows, and player education helped normalize KYC expectations. But the early friction pushed an unknown number of players toward unregulated alternatives, and some never came back.
The Welfare Gambling Crisis
No single issue dominated Brazil's regulatory conversation more than Bolsa Família. In September 2024, the Central Bank dropped a bombshell: five million welfare recipients had transferred R$3 billion ($540 million) to betting platforms in August alone – roughly 20% of the program's entire monthly budget.
The government's response was extreme. By October 2025, recipients of Bolsa Família and BPC welfare programs – approximately 60 million people – were completely banned from legal gambling platforms. Not banned from betting with welfare funds. Banned entirely, regardless of income source.
The welfare gambling ban remains controversial. Industry groups argue it pushes vulnerable players toward unregulated operators. Civil rights advocates question whether economic status should determine legal rights. And the operational mechanics – cross-referencing 60 million CPF numbers against government databases at every login – created technical headaches for operators already struggling with KYC.
An ANJL-commissioned study found 45% of affected welfare recipients plan to migrate to black market operators. Whether that projection proves accurate will significantly impact Brazil's channelization goals.
Regulatory Growing Pains
Brazil's Secretariat of Prizes and Bets (SPA) accomplished remarkable things in 2025: launching a complex licensing system, building the Sigap monitoring platform, conducting inspections, and issuing sanctions. Of 66 inspection cases involving 93 operators, 35 resulted in sanctions in H1 2025.
But the agency operates with structural limitations. Anatel chief Carlos Baigorri publicly criticized the arrangement: "The governance model is still very close and not very institutionalized. You think the electricity and telecommunications sectors have an agency, civil servants, a collegiate body, regulatory impact processes, public consultation. The 'Bets' sector does not."
Decisions come from a secretariat within the Ministry of Finance that operates "by ordinance" rather than through established regulatory procedure. Whether this model can scale as the market matures remains questionable.
The federal-state licensing conflict added complexity. Some state lotteries – particularly Rio de Janeiro's Loterj – issued their own licenses and initially claimed operators could serve players nationally. Courts eventually forced state-licensed operators to geoblock non-residents, but the jurisdictional mess continues creating legal uncertainty.
What Players Actually Experience
For players on top-rated licensed platforms, Brazil's regulation brought meaningful improvements. Withdrawals must process within 120 minutes by law. Games run on certified RNGs. Operators submit to regular inspections. Advertising faces restrictions, especially regarding minors.
Responsible gambling tools are mandatory: deposit limits, time limits, self-exclusion options. A national self-exclusion database is under development. The Ministry of Health, working with Fiocruz, is training healthcare professionals to treat gambling disorders.
But regulation also means less variety, fewer bonuses, and more friction. Players accustomed to offshore casinos with instant registration, crypto deposits, and aggressive promotions find Brazilian licensed platforms comparatively boring. The trade-off between protection and entertainment is real.
The Year Ahead
Brazil's gambling trajectory for 2026 looks promising but uncertain. The SPA has outlined priorities: a National Betting System for centralized oversight, expanded self-exclusion tools, stricter advertising enforcement, and continued black market suppression.
Land-based casino legalization remains stalled in the Senate. Multiple constitutional challenges against the December 2023 gambling law await Supreme Court review. A parliamentary inquiry continues investigating gambling's social impacts.
Industry consolidation seems inevitable. Smaller operators lacking scale will struggle against well-capitalized international players with sophisticated marketing and technology. Betano, Bet365, and Flutter's brands appear positioned to dominate.
H2 Gambling Capital projects the regulated market could reach $10 billion in GGR by 2029. But that assumes successful channelization – and channelization requires solving the black market problem nobody seems able to crack.
Final Grade: B-
Brazil did something unprecedented: launching a comprehensive online gambling framework in the world's fifth-largest country with 210 million people. The market is real, tax revenue is flowing, and legitimate operators are serving millions of players.
But the execution exposed fundamental tensions. Strict KYC requirements that protect players also push them toward illegal alternatives. Blocking websites without disrupting payments merely inconveniences rather than eliminates black market operators. Banning 60 million welfare recipients creates enforcement obligations that strain regulatory capacity.
The question isn't whether Brazil's gambling market will grow – it will. The question is whether regulation can capture enough of that growth to justify the social trade-offs. After year one, the jury remains out.
