In Brazilian business circles, a commonly referenced fruit tree believed to grow exclusively in Brazil is often used as a metaphor for the country’s distinct policies and regulatory nuances, which can make it a baffling landscape for outsiders to navigate.
The term “jabuticaba” aptly captures Brazil’s emerging regulatory framework for online gambling, anticipated to launch on January 1, 2025. The interest in this market is not without reason.
Vixio predicts that in its inaugural year, the country’s online sports betting and casino game markets will generate more than $2.9 billion in gross revenue, placing Brazil in the top 10 regulated markets worldwide. By 2028, revenue is expected to climb to $6.3 billion, making Brazil potentially the second-largest market globally, contingent on developments in other regions like New York.
However, the introduction of online gambling poses significant challenges, as the Brazilian market is fraught with policy risks and compliance hurdles that stakeholders will need to monitor closely in the upcoming months.
**Risk of a Regulatory Reset**
In recent years, many regulated markets, particularly in Europe, have experienced a cycle of liberalization followed by increased regulatory scrutiny concerning advertising, responsible gambling, and taxation as a reaction to societal concerns. Conversely, in Brazil, a potential legislative reversal and regulatory overhaul became palpable throughout 2024, preceding the regulated market’s launch.
Brazilian policymakers have expressed unease following reports from Brazil’s Central Bank and other financial entities concerning the expenditures on unregulated sites. This prompted a policy shift by the SPA in September, barring unlicensed operators from continuing operations.
President Lula subsequently tasked governmental bodies with reassessing the adequacy of regulations established prior to the market’s official opening and hinted at a prohibition of online betting if the regulatory framework proves ineffective.
Restrictions concerning bonuses and payments have been revisited, with certain agencies asserting their influence outside of the SPA’s purview. Concurrently, Brazil’s Senate, initially cautious about a fully open betting market, has initiated a parliamentary investigation to scrutinize the online gambling sector through public hearings around the market launch.
The Senate’s inquiry is set to deliver its findings within 130 days, extendable as necessary. Plans include proposing restrictions on advertising, use of AI, and more. Simultaneously, allegations of match-fixing in Brazilian football have prompted another Senate investigation, potentially influencing betting regulations. A proposed tax-reform package is also under evaluation, which could levy additional taxes on fixed-odds betting products perceived as harmful.
**Court Challenges**
While regulatory changes are under observation, the judiciary, specifically Brazil’s Federal Supreme Court (STF), is also a critical arena. The STF will assess three separate legal challenges against the licensing regime, brought by a retail business association, a political party, and the Attorney General.
These challenges argue that the 2023 law breaches constitutional rights related to public health and economic principles. Although an immediate suspension of the law was averted in November, restrictions on the use of welfare funds for gambling were imposed, and full hearings are expected in 2025.
Other pivotal legal disputes include the federal government’s attempt to halt Rio de Janeiro’s state lottery from authorizing operators to accept bets beyond its jurisdiction. Should Rio prevail, this could undermine the national market framework by providing operators a more lenient licensing route.
**Compliance Complexities**
Companies entering Brazil’s newly regulated market face numerous unique compliance challenges, including regulations on facial recognition and payment processes. Operators must invest significantly in compliance measures and pay an upfront BR$30m (over US$5m) licensing fee before engaging in marketing within the regulated environment.
They are keenly awaiting how authorities will address unlicensed competitors. The SPA, alongside Anatel, Brazil’s telecommunications authority, has already initiated web-blocking efforts, though Anatel’s president likens the endeavor to “wiping up ice.” Observers suggest that the most effective enforcement may come through restricting unregulated operators’ access to the Pix payment system governed by Brazil’s Central Bank.
These regulatory and legal uncertainties place Brazil in a prominent position of interest within the online gambling sector for 2024 and 2025, reflecting the Brazilian saying: Brazil is not for beginners.
Vixio’s analysis team has compiled the “Brazil: Online Gambling Playbook 2025,” providing comprehensive insights into the state of online gambling and sports betting regulations in Brazil as the market launch approaches on January 1st, 2025.