The journey to regulated online gambling in Brazil was certainly a turbulent one and the sector has been left scratching its head about the future of the market. With the one-year anniversary incoming, key stakeholders consider whether the market’s opening and first year of operation have been a success.
Brazil’s regulated online market launched on 1 January 2025, ending years of delays that plagued the nation’s attempts to bring its vast number of betting websites onshore.
The market opened with 14 operators initially on full licences, and there are now over 80 operating in Brazil with federal authorisation.
Despite the promise, the licensed sector has faced numerous threats to its stability throughout 2025, and that trend is expected to continue into 2026 with tax rises and new advertising measures on the horizon.
As the maiden year of the regulated market nears its conclusion, both Hugo Baungartner and Udo Seckelmann agree it has been a success.
“I think the market is a huge success,” Seckelmann, head of gambling & crypto at Brazilian law firm Bichara e Motta Advogagos, tells iGB. “I think what Brazil has done especially the past two years with all the ordinances, all the regulations, all the federal laws and all the advancements that we’ve had [has] been great.”
For Baungartner, CBO of Esportes Gaming Brasil, the most striking aspect of the first year has been how quickly authorised operators adapted from an informal environment to a federally licensed framework.
“Everyone had to restructure their operations to become fully compliant, and the market responded very well,” Baungartner says. “We’ve seen significant investment in technology, compliance and people. The sector is clearly moving towards a more mature and professional phase.”
KYC friction hopefully easing
In the early stages of the regulated market, many licensed operators lamented friction across the registration and onboarding processes, which stemmed from the clunky Know Your Customer restrictions. Under new regulations, players faced mandatory KYC requirements such as facial recognition and providing extensive personal information to operators.
Baungartner believes the initial friction around KYC was inevitable, largely because players were not yet fully aware of why identity verification was essential for their own protection. “That friction was concentrated in the first two or three months,” he explains. “But that’s how any KYC system evolves. Players gradually understood that verification exists to protect them.”
He notes that friction has eased throughout 2025 as users became more educated and KYC providers improved their tools. “Verification processes are getting faster, smoother and more intuitive every day,” Baungartner says. “Onboarding today is much simpler, and users are far more comfortable with it.”
The regulator, the government’s Secretariat of Prizes and Bets (SPA), published FAQs on its website to try and break down the KYC requirements and processes for operators. However, Seckelmann says there were differences in how operators interpreted the responses. “We also have some regulated operators not exactly following the rules of KYC, so this would be a competitive advantage for them against the ones that are doing the right thing,” Seckelmann says.
“The regulator is issuing the answer to several FAQs to clarify some understandings, and some of them can be interpreted to one side or the other. And some operators interpreted it for one side, the others to the other side, and the ones that interpret it to one of the sides, they had a bit of an advantage because the KYC was not causing the same friction for the bettors.”
Illegal market a primary concern
Despite the optimism, a constant theme this year around the regulated Brazil betting market has been the lingering concern over the presence of illegal operators. Many of the current estimates have illegal operators holding between 41% and 51% of the total iGaming market, fuelling fears of the hugely detrimental impacts that bettors may face playing with black market operators.
Seckelmann says he expected the fight against the black market to be more advanced than it is currently, saying: “We have been talking about fighting the illegal market for years. So this is something that we should have started a long time ago. We’re trying to run against time to combat it right now. And I believe there’s so much to do still.”
Much has been made of the national telecoms operator blocking over 18,000 illegal betting sites this year, but for Seckelmann, this isn’t the most effective measure. In his view, more enforcement against financial providers to prevent them from working with illegal operators is needed.
“Blocking their IPs is the weakest measure that you can take,” Seckelmann adds. “What has advanced in the past months was the dialogue between the SPA and the Central Bank in order to ensure PSPs can block transfers and transactions that involve the illegal market. But to be honest, we haven’t been receiving a lot of information on this in the past month, so we don’t know exactly if it’s being effective or not.”
Cutting off financial access for the black market
When it comes to enforcement, Baungartner believes the real challenge lies in cutting off payment access for illegal operators. “As long as unlicensed operators can process payments or move money, they will continue to operate,” he says.
In this context, he highlights Brazil’s Central Bank-operated Pix system as a structural advantage. “Pix is fully traceable and regulated by Brazil’s Central Bank, which gives the country a powerful enforcement tool,” Baungartner says. “The government has already recognised this advantage and begun working more closely with the payment and financial ecosystem to curb illegal activity.”
He adds that while no regulated market could ever reach absolute zero illegal activity, realistic targets matter. “Even in highly mature markets like the UK, after decades of regulation, there is still a small percentage of illegal activity. If Brazil can reduce that to a minimal level, the system will be working as intended.”
Tax rises a major threat to channelisation
As the year has progressed, the hope that the illegal market would dwindle has been hindered by the threat of new advertising measures and tax rises. In late May, Brazil’s Senate approved a number of new restrictions on betting ads, including watersheds and the prohibition of ads during live sporting broadcasts. Despite Senate approval, it’s not yet clear when the bill will progress.
The discourse over potential new ad measures quieted as the year progressed, but tax rises now dominate the conversation, with the government planning to increase tax rates to help plug a BRL20 billion ($3.6 million) budget hole ahead of next year’s general election.
The government first proposed a 50% rise in the tax rate on gross gaming revenue from 12% to 18%. This measure was quickly revised and then withdrawn, but a retrospective tax on pre-regulation activities was proposed. This also failed to move through Parliament.
But a new measure was quickly draw up and Brazil’s President Lula is soon expected to give his approval to a gradual gambling tax rise that will see the rate on operator GGR jump to 13% in 2026, 14% in 2027 and then finally 15% in 2028.
CIDE-Bets’ impact on channelisation
Perhaps most damning for the sector is the CIDE-Bets measure, which would implement a 15% tax on player deposits, as well as reintroducing a retrospective tax. After being approved by the Senate plenary in December, another vote on the bill is expected in early 2026.
This could have devastating consequences for the licensed sector, with Seckelmann warning channelisation could drop below 20%. While operators could offset an increase in the gaming tax with less player-friendly odds or RTP, a tax on deposits is much more complex to absorb.
“When we talk about deposits and you say every 100 BRL that you deposit here, you’re going to be credited with 85 BRL in your betting account, this is a very direct [impact on the consumer],” Seckelmann explains. “So the bettor will not bet on this. They will bet with the illegal operator that they’re going to be credited for 100%. So, the channelisation would be disastrous if the CIDE-Bets gets approved.”
Consolidation expected in Brazil
Many in Brazil’s online gambling sector are expecting consolidation next year, as smaller operators struggle to compete, particularly considering potential hefty financial barriers. Estimates from H2 Gambling Capital suggest the three dominating brands, Betano, Superbet and Bet365, have a combined 47% market share.
Esportes da Sorte, the flagship brand of Esportes Gaming Brasil, is currently estimated to be among the top five operators in the country. Group CEO Darwin Filho has previously shared his ambition to compete at the very top of the Brazil online gambling market.
Baungartner believes consolidation is likely as well as healthy for the market. “Consolidation is a natural outcome of higher compliance costs and stricter regulation,” he says. “That’s not negative. It leads to a more professional ecosystem, better-capitalised operators and greater long-term stability. We will see a more professional ecosystem, better-capitalised operators and a more stable ecosystem. I think that would be a natural movement of the market.”
Further M&A expected
Christian Tirabassi, founder and senior partner at M&A advisory firm Ficom Leisure, previously told iGB he expected up to 12 operators to dominate the market as tier two and three operators struggle to compete once it reaches maturity.
Tirabassi expects Brazil will become the hottest M&A target in LatAm gaming, and according to Seckelmann, the wheels are already in motion. “We are already seeing these movements right now in terms of M&A,” Seckelmann says. “If I’m a small betting operator, [I’ll consider joining] forces with another betting operator and bring [our combined] GGR up so we can survive.
“Sometimes it’s difficult for you to survive in a country like Brazil when you have some big players fighting for market share and you don’t have the resources to compete with them. If the taxation is increased, the number of operators in Brazil will reduce. Some will join forces, some will just leave Brazil.”
A look to the future
With a year almost in the books, both Seckelmann and Baungartner reference channelisation as a key yardstick to establish whether the online gambling market in Brazil will continue to succeed
“I believe that within the next two to three years, if our channelisation is lower than 60%, I would say there was a failure,” Seckelmann concludes. “To have good regulation, I believe you have to be at more than 70%. I think Brazil is still learning, but there’s still some road to walk. We still have a good 20% to conquer [in the licensed market].”
Looking ahead, Baungartner believes the second year of regulation should focus not only on further tackling illegal operators, but also on strengthening oversight of suppliers through a dedicated B2B regulatory framework.
While some voices warn about overregulation, he takes a pragmatic view. “We started regulation with a high bar, strong KYC, Pix-based payments, no cash, no credit cards,” Baungartner says. “That puts Brazil on a good path.”
“For us, being Brazilian and operating in Brazil, having these tools in place is positive. If someone considers this overregulation, I’m comfortable with that, because strong rules are what build trust and long-term sustainability.”
The first year of regulation in Brazil has laid solid foundations for a sustainable online gambling market. But the second will be determined by whether those foundations can withstand the pressures of further restrictions and damning tax rises.
Kyle Goldsmith
Kyle has been with Clarion since December 2023, joining from the world of sports journalism, subsequently becoming a LatAm-facing senior reporter with iGB.
After years of delays, Brazil finally regulated online gambling in 2025, but its stability remains uncertain as the new year approaches.