They are everywhere. On the jerseys of football teams, in the names of championships, on billboards, on television, on websites, in YouTube videos and on social media. Everywhere you look, there is an advertisement for a sports betting house. And no wonder. It is estimated that the online gaming market will have generated more than R$100 billion (US$17bn) in Brazil in 2023 — money that, according to research, was no longer used for the consumption of essential goods, such as food, and was even spent by beneficiaries of social programs such as Bolsa Família — and around 5,000 companies are competing for this share that continues to grow before our eyes. The competition is so fierce that 39 of the forty clubs in Series A and B of the Brazilian Football Championship are sponsored by companies in the sector, with contract values up to three times higher than previous agreements.
Brazil has become one of the world's leading markets for online betting. According to a survey released in October last year by the DataSenado Institute, an entity linked to the Legislative Branch, more than 22 million people placed a bet that month in the country, with the majority of bettors (56%) being between 16 and 39 years old.
The most impressive thing? The digital casino industry is emerging from its unruly and reckless adolescence and, since the first day of 2025, when its full regulation came into effect in Brazil, has entered an era of even greater growth. “We were living in a lawless land in recent years,” says Fellipe Fraga, executive who heads EstrelaBet’s business. “Now, we will have a mature environment, with the biggest players in the world, security for companies and bettors, and the market is likely to grow rapidly.”
The explosion of sports betting has as its starting point a law sanctioned in 2018 by then-president Michel Temer, which legalized so-called fixed-odds bets, that is, bets on real or virtual events in which, at the time of their occurrence, the prize is defined in the event of a correct prediction. The text required the Ministry of Finance to regulate the modality within four years, but pressure from evangelical parliamentarians prevented any progress in this direction during the Bolsonaro government.
The result was the opposite of what opponents of gambling expected: once it was out of the law, but without any rules to regulate it, the market was flooded with sites operated mostly from locations such as Curaçao, Gibraltar, Malta and the United Kingdom (which allow online casinos to operate overseas). Without regulation, malicious companies refused to let consumers withdraw, offered rigged games, canceled winning bets, among other scams, without any risk of suffering consequences.
With the intention of correcting this distortion — and increasing revenue — the Lula government sent a new bill to Congress last year to tax companies and gamblers and define rules for operating the service.
The rules were published throughout 2024, to come into full effect on the first day of 2025. To operate legally now, interested companies needed to have registered with the Secretariat of Prizes and Betting of the Ministry of Finance (SPA/MF) by August 20, respecting the 150-day assessment period.
Two hundred and seventy-one companies requested a license from the department, of which 106 had their applications assessed by the time this edition went to press. 69 licenses were granted, fourteen of which were definitive and 55 were provisional — some under court injunction. They had to pay a grant of R$30 million (US$5.1m), which gives them the right to operate up to three brands in the country — so far, 153 houses are registered.
In addition, it is necessary to deposit R$5 million (US$850k) in an escrow account in the event of a failure or a rush of withdrawals that leaves the company without liquidity to pay the prizes.
Companies must be incorporated in Brazil, with a legal representative on national soil, and have a minimum net worth of R$30 million. This is the minimum required for them to operate.
But how exactly does a company like this work? Roughly speaking, the sector can be divided into three large groups today. The largest houses are fully-owned, that is, they develop their own gaming technology, calculate their odds (the prize paid for each bet) and provide their own customer service. They only use third-party services for functions that cannot be performed internally, such as payment methods, certification of the suitability of their games and risk analysis (the work of preventing and investigating fraud and bet manipulation). Most of them operate in several countries, have shares listed on stock exchanges or are owned by large investment funds.
The second group includes companies that buy casino games and prize and betting platforms from large multinationals, but have marketing and customer service teams on their staff.
The third category includes the so-called white-labels, companies that sometimes have no more than thirty people and that hand over the entire operation to foreign companies, being responsible only for the legal and financial areas. Until last year, some operations were carried out by four or five people working from their homes or makeshift offices.
Of course, each company has its own particularities, but the sector, although recent in Brazil, is already quite mature in the rest of the world and operates in a similar way. Sports betting is the biggest draw for the public (many bookmakers also offer odds on elections, entertainment prizes such as the Oscars, and even on the winners of Big Brother), but it accounts for 30% of revenue — the remaining 70% comes from online casinos.
Around 90% of the money that enters the company comes back in the form of prizes for winning bets, and 10% remains as gross revenue, which the industry calls GGR (gross gaming revenue). When it is estimated that the market moved more than R$100 billion (US$17bn) in a year, this means that R$90 billion (US$15.5bn) returned in the form of winnings for those who won their bets, and R$10 billion (US$1.7bn) actually went into the companies' coffers.
Operating costs vary enormously, especially if we take into account that the largest companies have a presence in several countries, develop their own technology and have a payroll of thousands of people.
A small white-label spends between 50,000 and 100,000 euros to contract all the betting services, plus a monthly fee of 5% to 6% on the GGR. When you add up the investment in bureaucracy to get the company up and running, obtain licenses and establish the marketing and customer acquisition strategy, the minimum amount to open a casino was R$4 million (US$670k) before the regulation. Now, with the obligations with the SPA, plus all the security and compliance systems, it is difficult to spend less than R$100 million to create a casino from scratch. And that's without counting the marketing: Flamengo, Corinthians and Palmeiras, for example, will receive more than R$100 million per year from their sponsors Pixbet, Esportes da Sorte and Sportingbet, respectively.
For the public, the main change with the regulation is the increase in betting security. Bets were among the companies with the most complaints to Procon and ‘Reclame Aqui’ in recent years, almost always from consumers who were unable to withdraw their winnings, since the companies were located abroad and there was simply nothing the authorities could do about it. The money was not even in the country, since most companies sent the funds through foreign exchange transactions.
Now, “bet.br” websites must be based here, and can only make transactions through Pix, which ensures the speed of payments. The fairness of casino and betting games must be certified by registered certifiers with years of experience and an impeccable international reputation. The requirement for facial recognition for deposits and withdrawals prevents hackers (or underage children with access to their parents' cell phones) from stealing users' funds.
And all bets are recorded in real time in Sigap (the federal government's Betting Management System), to prevent money laundering, monitor schemes and fraud, and even monitor the liquidity of companies. “Brazil is very well-connected with the regulatory agencies of other countries, which have extensive experience in this matter, and the regulations are much more robust to guarantee the safety of bettors and the integrity of companies,” says Magnho de Sousa, president of the Brazilian Institute of Legal Gambling.
The part that interests the government the most, however, is the taxes, which are also changing. In addition to the R$2.07 billion (US$355m) cleared in betting concessions alone, the Treasury will also collect 15% income tax from bettors on their winnings at the end of the fiscal year, and companies will be taxed at 12% on their revenue, in addition to a 13% to 16% tax on taxes such as CSLL, IRPJ, PIS, Cofins and ISS (while the tax reform is not in effect). The most likely consequence of increased costs and obligations is a drastic decrease in the number of houses operating in the country.
The regulatory agency Anatel has already taken down at least 8,300 illegal websites. And a movement of mergers and acquisitions between companies in the sector began to gain momentum last year.
“Without a doubt, assets that are relevant and of good quality will always be targeted by large investors who want to grow,” says Marcos Sabiá, CEO of galera.bet, a company — part of Playtech, listed on the London stock exchange — that acquired F12, owned by Falcão (a former futsal player), and Luvabet (owned by influencer Luva de Pedreiro). Ana Gaming emerged from the purchase of Bet7k, CassinoPix and Betvera, now renamed 7K, Cassino and Vera. The acquisition of 56% of NSX Group, operator of Betnacional, by American iGaming giant Flutter Entertainment, owner of Betfair, for US$350 million made even more noise.
There is a lot of pressure from business owners, as is natural, for regulations not to be too strict, arguing that increased costs could push part of the public into the illegal market. Even a mature environment like the United Kingdom, which regulated the practice in 2005, still sees 6% of bets taking place outside the law. In Brazil, there are many complaints about the requirement for facial recognition at each login — betting owners attribute this friction to the decrease of up to 40% in bets at the beginning of January 2025, compared to the first month of 2024.
The Brazilian effort to make online games safer is welcome and seeks to avoid the mistakes made when bingo was legalized in the 1990s. They were authorized by the so-called Zico Law, in 1993, with the aim of financing the popularization of the sport in the country. The lack of rules and firm supervision generated a flood of complaints of tax evasion, money laundering and the creation of shell clubs to comply with the requirement to allocate part of the revenue to sports entities.
The Pelé Law, enacted in 1998, attempted to tighten control mechanisms through the Caixa Econômica Federal, which already administered the lotteries, but Congress ordered the closure of the establishments in 2000. Many establishments continued to operate thanks to injunctions, but a corruption scandal involving Waldomiro Diniz, a former advisor to the Lula government's Civil House, who appeared in a video demanding bribes from businessman Carlinhos Cachoeira to approve contracts with the Rio State Lottery, led President Lula to issue a provisional measure banning gambling in 2004. The bank is now open again, this time with stricter rules. Apparently, it's for real now. Want to bet?
Source: Veja
