How industry participants in Brazil are rising to the challenge
The Brazilian fixed-odds betting market in Brazil is booming. As of late 2024, the Ministry of Finance’s Prizes and Betting Secretariat (SPA) has granted nearly 70 authorisations for the operation of fixed -odds sports betting and/or online gaming. Over 100 companies are still undergoing the license application process, meaning there may be nearly 300 licensed companies entering Brazil over the course of 2025.
As each license operator is entitled to explore up to three brands, if all current applications are successful, Brazil will have 900 brands competing for a multibillion-dollar market. With all licensed operators providing services onshore, a new myriad of challenges is being faced by them, many of which had been serving the Brazilian market from abroad.
The regulatory holiday is officially over
Authorised operators now have a series of accountability obligations, especially related to reporting betting activities to the SPA and notifying the relevant authorities about suspected money laundering activities. Strict onboarding and “Know Your Customer” (KYC) requirements have also been implemented, including the obligation to collect biometric data for facial recognition purposes. During onboarding, operators must create firewalls to prevent that individuals unfit to bet (legally or voluntarily) from accessing the platform. Cross-referencing user data has proven challenging due to the lack of an official database of individuals that are prohibited to place a bet.
In the SPA-proposed regulatory agenda, which is still under debate, it is mentioned that the creation of such database as a top priority for this year. The SPA has been active from the outset of this new era, and has already started its monitoring and supervision of virtually all licensed operators by sending notices to collect and verify information about their practices, internal governance and contacts responsible for key areas of the business.
Given the value of the authorisation (BRL 30 million or approximately $5m), high tax burden and the regulatory oversight imposed on the sector, many websites have opted to remain illegal. In response, the SPA has intensified its monitoring and blocking of illegal betting websites. Between October 2024 and March 2025, the SPA blocked 12,500 domains of illegal betting sites in Brazil. To expedite this process, the SPA has entered into a cooperation agreement with the National Telecommunications Agency (Anatel), which is responsible for blocking these sites.
Additionally, the SPA has begun notifying financial institutions or payment providers suspected of facilitating transactions for unauthorised websites, which is likely to make the illegal market even more difficult to operate in.
While the potential of the iGaming market in Brazil is undisputed, possibly positioning it as one of the top three markets in the world, there are numerous challenges
From a public opinion perspective, the fixed-odds betting sector has been spotlighted for allegedly contributing to gambling addiction and the over-indebtedness of less-privileged segments of Brazilian society. Currently, three lawsuits are pending before the Supreme Court, filed by various associations and authorities, challenging the constitutionality of the Betting Act. These lawsuits primarily argue that the regulation fails to adequately protect the fundamental rights of bettors. We do not believe these lawsuits will significantly succeed, although additional rulings on advertising and other responsible gaming-related actions may be forthcoming.
Mergers and acquisitions are expected to become more common in the coming years. Given the number of operators, which may still increase, there is an expectation that the market will undergo a consolidation of brands and companies into larger groups. In this regard, the regulation establishes that the gaming licence may be reviewed whenever there is a merger, split, acquisition, conversion or transfer of control, either direct or indirect, within the authorised entity.
While pre-approval of M&A transactions by the SPA is not mandatory, operators must submit all necessary documentation to the SPA within 30 days of the corporate change to prove that the operator continues to comply with the rules and regulatory conditions. It will be crucial to demonstrate the technical qualifications of the new controllers and the integrity of the new officers and partners. In any event, the SPA may review an M&A transaction prior to closing. It is up to the parties to seek prior or post-closing approval depending on the risk appetite.
Licensed operators are now starting to face consumer protection scrutiny not only by the SPA but also from other consumer protection authorities in Brazil. Recently, Procon/SP, a State of Sao Paulo consumer protection agency, issued a fine against a licensed operator for $250,000 for some alleged violation of the Consumer Protection Code. And this only beginning.
At the Congress level, there are certain bills that aim at restricting or prohibiting advertising of operators in Brazil. So, overall, while the potential of the iGaming market in Brazil is undisputed, possibly positioning it as one of the top three markets in the world, there are numerous challenges the Brazilian sector will face in the future.
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