“I guess you would describe it as a rollercoaster,” says Andreas Bardun, founder and CEO of KTO Group, parent company of sports betting and casino operator KTO, when asked to summarise the first six months of Brazil’s regulated online gambling market. With regulators overwhelmed, customers confused, politicians dropping bombshells, operators in court, a faltering payments system and a booming black market, “rollercoaster” sounds about right.
However, a straw poll of the market leans towards optimism despite the challenges. While there are fears of an increased tax burden and marketing restrictions, as well as concern about the rise of the black market, those of an optimistic nature are happy to attribute these to teething problems.
One of the key challenges for the regulator – the Secretariat of Prizes and Bets (SPA) – has been the implementation of its betting data system (SIGAP), which processes operators’ daily reports on deposits, payouts and losses. Problems with SIGAP have delayed the SPA’s first official performance report, but numbers are starting to trickle in from elsewhere. According to news outlet Agência Brasil, the government reaped BRL3bn (£405m) in tax revenue from regulated operators for the first five months of the year.
May alone accounted for BRL800m. Analyst firm H2 Gambling Capital translated this to mean monthly GGR of BRL4.3bn and predicted a total of BRL66bn in GGR for 2025. While H2 Gambling Capital expects that figure to drop slightly in 2026 to BRL63bn (largely due to a ban on welfare recipients betting), it shares the market’s long-term optimism with a prediction that GGR will hit BRL94bn by the end of 2030.
Kaizen Gaming’s Betano remains the clear market leader. According to Google’s Sports Betting Market Pulse for March 2025, which measures the general public’s demand for particular brands, Betano grew its market share by almost 20% during Q1 to account for 27% of the market. Number two, bet365, slumped 32%, which left it just ahead of Esportes da Sorte, the biggest domestic Brazilian operator, with 11.8% share to the latter’s 11%. The fastest-growing operator in Q1 2025 was Superbet, which grew a phenomenal 547% to take 6.6% of the overall market, just 0.2 percentage points behind Flutter Entertainment’s recently acquired Betnacional.
Superbet Brazil CEO Alex Fonseca explains: “Our growth in Brazil is the result of a clear vision and deep local commitment. We are not just entering the market; we are building for the long haul. It means investing in local talent, forging meaningful partnerships like those with Fluminense and São Paulo FC, and adopting a cultural approach that puts responsibility and transparency at the centre of everything we do.”
“They’ve spent a lot on marketing,” a competitor observes. It should be noted that Superbet’s growth curve is largely due to the fact it only launched two years ago in Brazil and had done minimal marketing until recently. But to leap from almost zero market share to 6.6% and fifth place is some achievement.
Fonseca continues: “From day one, we have communicated with a clear message: Superbet is here to operate with integrity, support Brazilian sport and culture, and help shape a better industry. Our marketing, sponsorships and brand actions are designed to build trust, not just visibility. The growth we are seeing in search and brand recall reflects that trust is beginning to take root.”
The firm has spent heavily on marketing, from acquiring the naming rights to Brazil’s second division football league, Série B, to sponsoring iconic events, including the Rio Carnival.
New year, new problems
Superbet’s success confirms one thing: it was ready for business on day one while many were not. “We were well-prepared for the regulatory shift and invested early in building a seamless onboarding experience that meets KYC requirements without compromising user experience,” continues Fonseca. “While Face ID and other verification tools do present a new layer of complexity, it also helps to create a safer place for the players.”
While Superbet was clearly prepared, almost every other operator that EGR spoke to reported a challenging launch. While politicians might see the first day of the year as a suitable date for a new regime, for those involved it is a nightmare. Launching on New Year’s Day ruined a lot of people’s Christmases, as they worked to ensure that all the systems and processes for KYC, geolocation and so on were in place. And even with all that preparation, almost everyone – operators, suppliers, customers and the regulator – took a while to adapt.
Primarily, customers were unprepared for an onboarding process that took two or three minutes before regulation, yet five to eight minutes after New Year’s Day. Customers needed to fill out a long form, the technology behind which sometimes failed to validate identities. Lívia Troise, chief innovation officer at licensed operator Casa de Apostas, says: “It’s not just the operators, it’s the companies that are providing this kind of technology that were struggling as well because everybody needed to adapt. It was a new scenario for everybody.”
Part of the problem lies in the ID documents. While there is an e-document that can be used online, many citizens have a plastic laminated card that reflects the light when you take a picture of it. And if you don’t have a good camera phone, the photos don’t align and you end up with customer service teams having to do it manually. While some operators launched the new systems before 1 January, and others tried to warn there would be new KYC requirements, the majority of customers were unaware. They ended up trying several operators before realising they were all operating under new conditions. Some, of course, wound up with unlicensed operators.
The result was an immediate 10%-20% slump in revenue for most operators, estimates Hugo Baungartner, who recently joined Esportes da Sorte as chief business officer. However, as Bardun reports, most recovered by the end of the quarter – assisted by the start of the new Brazilian football season in March.
Bardun believes the KYC problem was more pronounced for people in the north of the country than in the more prosperous south, where inhabitants are more accustomed to such technological processes. He continues: “Everyone has their own interpretation of how to do KYC and when to do it. So, you can interpret the regulations a little bit. We have noticed that some people take a more liberal interpretation of it than we do.”
Fonseca looks on the bright side: “A key part of our success was prioritising the CX with technology. For this, we managed to enable fast and reliable Face ID validation, fully compliant with local regulations. We’ve maintained strong enrollment numbers and built greater trust with our players […] rather than creating a barrier, it has become an opportunity to reinforce our commitment to responsible and secure gaming. These measures have helped reduce fraud dramatically, and we see them as an asset for building a reliable, regulated industry.”
Dirty money
Fonseca’s mention of fraud brings to mind one of the market’s biggest controversies so far. Before a regulated real was deposited, the Central Bank of Brazil alerted the public and politicians to fraudsters hacking the country’s instant payment system, Pix, to place BRL3bn in wagers by welfare recipients without their knowledge. While this was largely with unlicensed sites, the knock-on effect for licensed operators is that those on welfare have been banned from gambling. Hence H2 Gambling Capital’s estimate of a BRL3bn fall in GGR next year.
Paul Leyland, partner at analyst firm Regulus Partners, picked up on this failing in a recent blog post, describing Pix as a “fraud-riddled payment tool”. The blog post added: “Without effective enforcement, a Pix-based black market at least as big as the regulated market will continue to stifle licensed growth, undermine tax collection and put vulnerable people in harms’ way – with the surging popularity of crypto solutions in Brazil simply adding fuel to the fire.”
Until the government’s recent tax bombshell, the growth of the black market was everybody’s biggest concern. According to the Brazilian Institute of Responsible Gaming (IBJR), the trade body representing about three-quarters of the market, 41%-51% of the Brazilian online betting market lies outside the licensed sector, which is on the low side of some estimates. The IBJR’s research suggests this translates to BRL26bn-BRL40bn in annual revenue.
While Leyland views Pix as partially responsible for this explosive growth of the black market, for Baungartner it is the key to breaking it. “The black market exists everywhere,” he sighs. “We don’t have any exclusivity on it. There is a black market in Spain, in the US, in Japan, in China. But we have a big advantage: I personally believe in the near future we will have less of a black market than the rest of the world because we have Pix.”
Firstly, he explains, almost everyone in Brazil uses Pix. Coconut vendors on the beach take Pix payments, as do beggars on the streets. “There is no credit card and no cash. Some VIPs use crypto but how many? Maybe 10,000 to 20,000? It’s not that much. So, illegal operators need to use Pix,” explains Baungartner.
“To use Pix, you need a licence from the Central Bank of Brazil. Other banks will resell these licences to smaller entities, but the key is you have transparency and can see who holds a licence.”
Baungartner accepts that illegal operators will attempt to disguise their identity by pretending to be an online store or similar. However, by using the service and testing whether it truly sells what it says it is selling, you can uncover the illegal operators. This will be a big task for the Central Bank and the SPA, the latter of which has started to address this issue. Yet with fewer than 25 staff at the SPA, it will take time.
There are other reasons, though, for the rampant growth of unlicensed operators since the launch of the regulated market. As mentioned, unlicensed operators can enroll customers without an off-putting KYC process. Secondly, every game needs to be licensed. Most game providers have not had time to certify all their titles, so have only certified the most popular ones. Unlicensed operators, of course, don’t need to worry about that and have all their games available – licensed or not.
Thirdly, they can still offer bonuses, while licensed operators cannot, as that’s part of the regulations. And lastly, customers of unlicensed sites are not taxed on their winnings. Next April, licensed operators will have to provide the regulator with a list of their winning customers, so that taxes can be collected on their winnings (above BRL2,824).
Some of these issues should be ironed out with time, though the unstable nature of the market is one reason why a whole host of big international brands have yet to join the party. International operators such as Betclic, Caliente, CIRSA, Codere and DraftKings are thought to be interested in the market but are likely waiting for the upheaval to settle down. When they do so, it will probably be via an acquisition. “I couldn’t imagine anyone coming in from scratch,” states KTO Group’s Bardun. “That would be almost impossible.”
The online casino boom hit Brazil after the introduction of Pix in 2020 and coincided with the helpful conditions of the pandemic decimating sports fixtures. A wave of operators piled in. Baungartner says: “Everybody has to be more intelligent and smarter now, to have very good deals with service providers, to be smart in the marketing, to identify your niche and to understand this and focus.”
Bardun says customer acquisition has become much harder since the introduction of the new KYC requirements, with customers preferring to stick with their known brands rather than hopping between operators and enduring the pain of another registration. It is interesting, he says, to note illegal operators are advertising the fact you can play with them and stop the government spying on you. In other words, you don’t need to reveal all your personal information to the government. Understandably, given the country’s history as a military dictatorship, a lot of Brazilians are highly suspicious of authorities in general.
And it is not just customers who have reason to be concerned about the attention of the authorities. With politicians set on introducing further marketing restrictions and increasing the tax rate from 12% to 18% of GGR, industry lobbyists have their work cut out convincing lawmakers not to penalise an industry that is struggling to lay down solid foundations. Even the optimists accept that it could take two years or more for all these issues to shake themselves out – and that could be too late for many of the smaller operators. Baungartner predicts 80-odd licensees being whittled down to a quarter of that in the long term. There are no easy pickings here.
The post A “rollercoaster” ride: Charting the ups and downs of Brazil’s regulated market first appeared on EGR Intel.
The South American country’s transition to a regulated online arena has been far from smooth, while concerns mount about ever-tightening rules and the threat posed by unlicensed operators
The post A “rollercoaster” ride: Charting the ups and downs of Brazil’s regulated market first appeared on EGR Intel.