Illegal operators account for 60% of Brazil betting

André Gelfi, cofounder and CEO of the Brazilian Institute of Responsible Gaming (IBJR), has underscored a critical challenge in Brazil’s gambling landscape: the illegal market currently constitutes approximately 60% of the monthly gross gaming revenue (GGR).

On January 1, Brazil officially launched its regulated online betting market, ending years of regulatory delays that had contributed to the rise of illicit betting and gaming platforms. This long-anticipated step signifies a turning point in the country’s approach to gambling regulation.

However, the lingering presence of the black market poses significant concerns for licensed operators, who fear competition from unregulated businesses that circumvent the strict standards implemented by the Secretariat of Prizes and Bets (SPA).

Gelfi, who also serves as the managing partner for Betsson’s operations in Brazil, expresses concern over the pervasive black market. To address these challenges, he co-founded the IBJR, an organization dedicated to advocating for the gambling sector and voicing concerns to federal regulators.

In a recent interview with Poder360, Gelfi revealed that unlicensed operators are responsible for approximately BRL1 billion (£125.5 million/€160.8 million/$175 million) in monthly betting GGR, translating to nearly 60% of the country’s online gambling market. Utilizing pre-regulation data, he estimates annual revenue for the sector to reach BRL25 billion.

Gelfi articulates, “Our primary challenge moving forward is the formalization of our betting market. There is unmonitored, untaxed economic activity that complicates the development of a sustainable market.” Despite the significant presence of the black market, he remains optimistic that Brazil can position itself among the top regulated gambling markets globally with the implementation of stringent regulations.

“Even in the face of overwhelming informality, we recognize that our regulatory framework is modern and fosters a competitive marketplace,” Gelfi asserts.

Collaboration: The Key to Disrupting Illegal Operators

The IBJR claims to represent 75% of the Brazilian betting market, encompassing prominent industry players such as Bet365, Entain, and Flutter. The organization is committed to partnering with the SPA and various government bodies, including the Federal Revenue Service and the Central Bank of Brazil, to combat the illegal betting scene.

“As an institute, led by our executive director Fernando Vieira, our primary goal is to enhance awareness and collaborate with authorities and regulatory agencies to expedite this process of formalization,” Gelfi notes.

One strategy being implemented to tackle the black market is site blocking, through which Gelfi points out that 12,000 illegal websites have been taken offline. However, he raises concerns about the effectiveness of site blocking as it alone may not be sufficient to eliminate illegal operators.

Gelfi advocates for payment blocking as a more effective enforcement mechanism, highlighting a ban on the instant payment service Pix as a crucial step. “Monitoring financial transactions is vital in curbing the illegal market,” he emphasizes. “Pix plays a central role in our operations.”

“If financial institutions can effectively track who is utilizing Pix for illegal betting, we can significantly diminish this problem of informality,” Gelfi concludes.

In summary, while Brazil’s regulated market has a solid foundation, addressing the challenges posed by illegal gambling remains paramount. The engagement of industry stakeholders, collaboration with regulatory bodies, and a robust enforcement strategy will be essential in ensuring the long-term sustainability and integrity of the Brazilian gambling ecosystem.