The chairman of the National Gambling and Lottery Association (ANJL), Plínio Lemos Jorge, believes that if the illegal market is not effectively combated, legitimate operators may eventually leave Brazil.
The head of Brazil's Gambling and Prize Secretariat (SPA), Regis Dudena, revealed that 71 operators' license applications have been approved. Sixteen gambling companies have paid a franchise fee of 30 million Brazilian reais (approximately 3.9 million pounds/4.7 million euros/4.9 million dollars).
The legal market will launch on January 1, 2025, but with just over two weeks until the official launch, the threat from illegal operators still exists.
Will illegal competition force licensees out?
ANJL previously disclosed that there are still over 2,000 illegal websites operating in Brazil. The director of the National Telecommunications Agency (Anatel), Carlos Baigorri, warned that attempts to block these operators are like "sweeping ice."
If Brazil cannot find a more effective way to combat the black market, Lemos Jorge believes that legal operators might refuse to provide gambling services in Brazil. He warned that this would further foster illegal competition.
"If the illegal market is not effectively combated, this risk indeed exists," Lemos Jorge told UOL Apostas. "If investors assess that the market conditions are not favorable for expected returns, then those already here will definitely leave the country."
The rise of illegal operators could have extremely serious consequences for player protection.
"Illegal websites negatively impact the industry and society itself in various ways," Lemos Jorge explained. "The main issues are predatory and unfair competition, as these platforms do not pay taxes or bear the inherent costs of setting up and operating in Brazil.
"Moreover, these companies want to continue their underground activities, not caring about the welfare and health of gamblers, nor about the protection of children and adolescents."
What measures can Brazil take?
Anatel's president Baigorri has called for more power to be granted to the agency to assist in its website blocking efforts. Last week, the agency signed a cooperation agreement with SPA to strengthen their collaboration.
Last week, ANJL and Anatel held a meeting to discuss further measures that could be taken. These recommendations will be published in the coming weeks.
In Lemos Jorge's view, Anatel needs more power to increase the effectiveness of its blocking efforts, stating: "It is necessary to grant Anatel greater blocking autonomy. This autonomy should be achieved through specific legislation."
"As Anatel's autonomy increases, the blocking process will become faster. Once an illegal website is detected, Anatel will realize this and immediately block it, thus preventing the website from existing for a long time and causing harm to gamblers."
Payment blocking is a promising alternative
As Anatel makes every effort to ensure all illegal websites are removed, some industry insiders emphasize that blocking payments is a more effective measure against the black market.
Hugo Baungartner, Chief Business Officer at Aposta Ganha, previously told iGB that the "only way" to block illegal operators is through payment blocking, as deleting websites is ineffective because unauthorized domains appear almost as quickly as they are shut down.
Pix is an instant payment system regulated by the Central Bank, widely adopted by the Brazilian gambling industry because it can complete transactions in 10 seconds.
According to Brazil's new gambling regulations, payments made to unlicensed operators via Pix will be blocked.
Lemos Jorge agrees that blocking payments will be an important part of the government's strategy to combat illegal companies.
Lemos Jorge added: "It is crucial to combat the payment methods that allow illegal websites to operate."
"They must also be involved in this fight, as according to the legislation, any financial institution that agrees to transfer funds to an illegal platform operating in Brazil without federal government authorization will also be committing an illegal act."
Lemos Jorge remains confident in Brazilian gambling
Despite ongoing concerns about illegal operators, Lemos Jorge still believes that the regulations formulated by SPA will ensure a safe environment for gambling in Brazil.
"The regulatory framework approved by Congress through Law No. 14,790/2023, and the detailed regulatory framework enacted by SPA, is one of the strictest and most comprehensive in the world," Lemos Jorge stated. "This is a consensus within the industry.
"However, a strong and effective supervisory system in practice is necessary. We believe that Brazil will achieve this goal through the actions of multiple stakeholders such as the government and the private sector. This joint effort is crucial for stopping illegal gambling activities, or at least minimizing them as much as possible."
