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Brazil's illegal betting surge threatens legal gambling market dominance

Former Speaker Arthur Lira warns Brazil's crackdown on legal betting is backfiring—driving gamblers into the arms of untaxed, unregulated sites. Can the government reverse the tide?

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The image shows a paper with a drawing of a group of people and a dog, with the text "The Gamester...
The image shows a paper with a drawing of a group of people and a dog, with the text "The Gamester Bes-T or a New Way to Win Money" written above them. The people in the drawing appear to be playing a game, suggesting that the gamester is a new way to win money.

Brazil's gambling market faces growing challenges as illegal betting platforms now control over half the sector. Former Speaker of the House Arthur Lira has criticised the government's approach, warning that stricter taxes on legal operators push gamblers toward unregulated sites. His comments came during an event in São Paulo celebrating the events industry, where he was honoured for his role in securing the Perse programme. The shift toward illegal betting platforms accelerated after the National Congress rejected Provisional Measure 1,303 in August 2023. This proposal aimed to raise the profit tax rate for betting companies from 12% to 18%. Without stricter oversight, illegal operators like Bet365 and Betano expanded rapidly, increasing their market share from 20-30% in 2023 to over 50% by 2025.

Lira argues that gambling is an unavoidable part of Brazilian culture. He believes heavy taxation on licensed operators only drives bettors to unregulated platforms, where no taxes are paid. Current government proposals could push the tax rate as high as 24%, further widening the gap between legal and illegal operators. The former Speaker stresses that authorities should focus on cracking down on illegal betting sites. Many of these platforms evade taxes and use fintech companies to launder money. Without stronger enforcement, he warns, the imbalance in the market will only grow worse.

Lira's remarks highlight the need for better regulation and enforcement in Brazil's gambling sector. With illegal platforms now dominating the market, the government faces pressure to address tax evasion and money laundering risks. The outcome will determine whether licensed operators can compete fairly or continue losing ground to unregulated competitors.

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