Study Highlights Scale of Brazil’s Illegal Online Betting

A February 2026 study by Massonetto Sociedade de Advogados estimates that Brazil’s illegal online betting market produces between R$26 billion and R$40 billion annually. By comparison, the legal market generates roughly R$38 billion per year, suggesting that illicit activity may represent 41%–51% of the total online betting sector.

The research was authored by Luís Fernando Massonetto, professor of economic law at Universidade de São Paulo, alongside sociologist Bruno Braga Fiaschetti and philosopher Eduardo Moraes de Carvalho. The team drew on prior analyses, including studies from Instituto Locomotiva, LCA Consultores commissioned by Instituto Brasileiro de Jogo Responsável, and research by Yield Sec.

The report finds that Law 14.790 of 2023 has had limited success in shifting demand toward platforms licensed by the Ministry of Finance’s Secretariat of Prizes and Betting (SPA).

Regulatory Costs and Market Incentives

The study highlights that compliance costs play a key role in shaping market dynamics. Licensed operators face significant expenses, including licensing fees, a 12% Gross Gaming Revenue (GGR) tax (rising to 15% by 2028), anti-money laundering measures, facial recognition verification, deposit limits, advertising restrictions and limits based on bettor profiles.

The authors argue that when regulatory costs surpass the expected costs of illegal operations including the likelihood of enforcement operators and consumers are incentivized to participate in unregulated markets. While protective measures are necessary for consumer safety, they impose substantial burdens on legal operators.

Advantages of Illegal Platforms

Illegal operators are free from compliance obligations, allowing them to offer more favorable odds, aggressive promotions, faster registration processes and broader payment options.

According to the study: “The regulatory imbalance directly benefits sports bettors, who gain access to better odds, easier registration and more flexible payments, while illegal operators appear compliant without actually following regulations.”

Consumer Confusion and Revenue Impact

Survey data shows that 78% of 2,000 sports bettors struggled to differentiate between legal and illegal operators, rising to 84% among women. Instituto Locomotiva found that 61% of bettors placed at least one illegal wager in 2025, with the rate reaching 69% among those aged 18–29.

Tax revenue losses are significant. LCA estimates that uncollected taxes from illegal betting total between R$7.2 billion and R$10 billion annually. The study warns that addressing the illegal market could unlock substantial public revenue.

The authors describe a feedback loop: regulatory costs increase for legal operators, illegal operators capitalize on the gap, bettors are drawn to the irregular market, tax revenues decline and governments respond with higher demands on legal operators further widening the gap.

Historical Context

The report also explores Brazil’s long-standing relationship with gambling. The “jogo do bicho,” created in 1892 by João Batista Viana Drummond as a zoo marketing tool, laid early groundwork for betting culture.

Gambling was legalized in the 1930s under President Getúlio Vargas, with over 70 casinos providing employment for 60,000 people. Notable venues like Casino da Urca and the Copacabana Palace casino attracted international figures including Frank Sinatra and Albert Einstein.

However, in 1946, President Eurico Gaspar Dutra banned all gambling, citing moral concerns. While prohibition pushed gambling underground, the report notes that the core issue has historically centered on state control over a lucrative economic activity rather than morality or religion.

The study concludes that Brazil’s regulatory challenges and historical contradictions continue to shape the divide between legal and illegal betting, affecting consumers, operators and tax revenue alike.