BRAZIL’S BETTING BAN RAISES QUESTIONS OVER THE FUTURE OF THE REGULATED MARKET

Brazil’s decision to ban online betting has moved beyond a regulatory dispute and into a wider debate over illegal gambling, tax revenues, sport sponsorship and confidence in the country’s licensing system.

President Luiz Inácio Lula da Silva signed Provisional Measure 1,394 on 25 September, bringing the ban into immediate effect. The measure will expire after 60 days unless approved by Congress, with the possibility of a further 60-day extension.

The industry has challenged the measure in Brazil’s Supreme Court, while licensed operators and trade bodies have also stepped up their public opposition. In recent days, betting companies used advertising boards at top-flight football matches to warn that prohibition could push players towards unregulated operators rather than eliminate demand for betting.

Operators warn of a larger illegal market

The central argument from the industry is that prohibition will remove the controls that were introduced when Brazil established its regulated betting market.

The Ministry of Finance says 31 million people were active on licensed platforms before the ban, with most described as recreational bettors. At the same time, the illegal market was already estimated to account for 41% of betting volume.

That balance is now expected to change rapidly. Legitbet, the monitoring platform of the National Association of Games and Lotteries (ANJL), identified 6,401 new illegal websites between 22 and 28 September, alongside 811 links to illegal platforms on monitored channels.

The industry argues that the shift matters not only for licensed operators but also for consumer protection. Unlicensed sites are outside Brazil’s responsible gambling, identity verification, payment and advertising controls, while enforcement against them becomes more difficult as legal operators disappear.

LCA estimates that up to BRL73 billion ($14 billion) in revenue could be at risk between 2027 and 2030 if betting demand moves entirely to illegal operators.

The same issue applies to responsible gambling. ANJL and the Brazilian Institute of Responsible Gaming (IBJR) have said they are prepared to discuss tighter deposit and time limits, stronger advertising restrictions and additional measures to address problematic gambling and illegal websites.

Those measures, however, depend on there being a regulated market in which operators can be held accountable.

Football feels the immediate impact

The ban is also creating disruption well beyond betting companies.

Licensed operators used advertising boards during matches between São Paulo and Santos, and Atlético-MG and Bragantino, to protest the measure. The campaign highlighted the effect on sponsorship agreements and the wider commercial relationship between betting companies and Brazilian football.

The impact extends to existing commitments as well as future sponsorship negotiations. Clubs have built betting partnerships into their commercial planning since Brazil opened its regulated market, and the sudden change leaves those arrangements uncertain.

The sector is also facing a substantial loss of economic activity. The regulated market was worth an estimated $7.7 billion, according to H2 Gambling Capital, while government figures show that betting generated $1.87 billion in federal tax revenue between January and August 2026.

Around 15,000 direct and indirect jobs are also estimated to be linked to the sector.

For operators that paid substantial sums for licences, the issue is therefore not simply whether Brazil remains an attractive gambling market. It is whether a licence granted by the state can provide meaningful certainty over its stated term.

The political calculation

The timing of the ban has made its political implications impossible to ignore.

Lula introduced the measure shortly before Brazil’s presidential election, where he faced Flávio Bolsonaro in a closely fought race. Gambling has strong public support for prohibition: an AtlasIntel and Bloomberg survey conducted before the measure found that 75% of Brazilians supported banning gambling, while a subsequent Quaest poll put support for Lula’s ban at 62%.

The measure therefore gave Lula a policy that was easy to communicate to voters, particularly among women, lower-income groups and religious voters.

But the election result also shows the limits of the strategy. Bolsonaro finished ahead of Lula in the first round on 4 October, securing 47% of the vote against Lula’s 45%. The two will now face each other in the 25 October runoff.

The ban may have improved Lula’s position among some voter groups, but there is little evidence that it has fundamentally changed the election. The political calculation is also complicated by the economic consequences of shutting down a market that generates tax revenue and supports jobs.

What happens after the election?

The future of Brazil’s betting market will depend on both the presidential result and the composition of Congress.

A Bolsonaro government would be viewed by much of the betting industry as more likely to reconsider the ban, but a return to the previous regulatory model would not be automatic. Congress includes a strong evangelical bloc that has historically opposed gambling, while the broader political debate also includes concerns over household debt, advertising and gambling-related harm.

A Lula victory would make a rapid return to full legalisation less likely, although economic and fiscal pressures could still lead to changes to the current prohibition.

The immediate legal battle will continue regardless of the election. Trade bodies have already asked the Supreme Court to suspend the ban, while the federal government has brought its own legal action against 17 betting companies seeking damages linked to public health concerns.

For the gambling industry, the bigger issue is now clear. Brazil spent years building a regulated market designed to bring betting into a controlled environment. The ban risks reversing that process without removing the demand that created the market in the first place.

Whether Brazil ultimately reverses the measure, introduces a more restricted form of betting or maintains prohibition, the disruption has already raised a difficult question for investors and operators: how much value can be placed on a gambling licence if the regulatory framework can be dismantled so quickly?