The illegal online betting market in Brazil moves between $5.100 and $7.840 million per year. The legal market, for its part, generates about $7.460 million annually. Both segments are, in practical terms, comparable in volume.
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These data come from a study published in February 2026 by Massonetto Sociedade de Advogados. The research was conducted by Luís Fernando Massonetto, professor of economic law at the University of São Paulo; Bruno Braga Fiaschetti, master in sociology; and Eduardo Moraes de Carvalho, master in philosophy.
The analysis is based on three previous investigations: a report from the Locomotiva Institute from June 2025, a study by LCA Consultores commissioned by the Brazilian Institute of Responsible Gaming, and a market analysis prepared by the firm Yield Sec.
Why regulation in Brazil did not work
Law 14.790 of 2023 was intended to organize the sector and shift demand toward platforms authorized by the Secretariat of Prizes and Betting of the Ministry of Finance. According to the study, that objective was not met.
The authors identify the costs faced by legal operators as the main factor explaining the failure: high license fees, a 12% tax on gross gaming revenue that will rise to 15% for 2028, identity verification obligations with facial recognition, deposit limits, advertising restrictions and anti-money laundering controls.
“If the regulatory design raises the cost of operating legally above the expected cost of operating illegally, it creates an institutional incentive for transgression,” the researchers point out. In other words, when complying with the law is more expensive than ignoring it, a part of the market chooses the second option.
The advantages of the illegal betting circuit
Illegal operators do not carry any of those requirements. This allows them to offer more attractive odds, simpler registration processes and a wider variety of payment methods. Additionally, some informal platforms use visual and branding strategies that give bettors the false impression that they operate within the regulated market.
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A survey cited in the study reveals that 78% of the two thousand bettors consulted had difficulty identifying which platforms were legal. Among women, that percentage rises to 84%. According to data from the Locomotiva Institute, 61% of players made at least one illegal bet during 2025. Among young people aged 18 to 29, the figure reaches 69%.
The self-reinforcing cycle
The study describes a loop that amplifies itself: regulation makes legal operation more expensive; the illegal operator takes advantage of that difference; the bettor, who does not distinguish between both circuits, migrates toward the more favorable conditions of the informal market; this reduces the tax base of the formal sector; and the drop in revenue pressures the State to further raise taxes or requirements for legal operators, which again widens the advantage of the illegal circuit.
Estimated tax losses range between $1.410 and $1.960 million annually, according to LCA Consultores. The study concludes that combating the illegal market would represent significant revenue gains for the Brazilian State.
A hundred-year history in Brazil
The researchers contextualize the problem with a historical review. The jogo do bicho, created in 1892 as a promotion for the Rio de Janeiro zoo, became a symbol of that duality between the legal and the illegal. Gambling was legalized in 1920 under President Epitácio Pessoa and was completely decriminalized in the 1930s under Getúlio Vargas, when Brazil came to have more than 70 casinos and about 60.000 direct and indirect jobs in the sector.
In April 1946, President Eurico Gaspar Dutra prohibited all forms of gambling by decree, with broad support from Congress. The measure strongly affected cities like Petrópolis, Poços de Caldas and Caxambu. However, the jogo do bicho survived in hiding during the rest of the 20th century and part of the 21st.
The study points out that, while penalizing private gambling, the State maintained and expanded its monopoly over federal lotteries. “The central issue was never truly moral or religious, but state control over an economically lucrative activity,” the authors conclude.
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