A shot in the foot? Illegal gambling on the rise in Brazil as betting ban takes effect

Brazilian betting companies may be feeling vindicated this week as statistics showing the impact of President Lula da Silva’s shock ban on online gambling flood in – though the firms involved would likely rather still be in business than feeling vindicated. In the two weeks since Lula announced his ban on online gambling, the announcement coming nine days ahead of the first round of the presidential election, data suggests that the unlicensed and illegal markets have gained both confidence and customers. According to BetLegal, which is maintained by the National Association of Games and Lottery (ANJL), 575 unauthorised betting sites were identified on Saturday 26 September, the day Lula confirmed the ban. This was 244 more than the 311 registered the day before, marking an increase of 74% in 24 hours. More recent data from Blask, meanwhile, suggests that Brazilians are slowly starting to use offshore .com platforms while withdrawing funds from legally held accounts in-line with the government’s time frame. Despite this, some major legal operators are still hopeful that the outright ban will be avoided as it faces debate in the Supreme Court, the Congress, and among voters as Brazilians prepare for the run-off vote on 25 October. “We’re hoping the process will find a different outcome,” said Albert Simehnson, Deputy Chief Executive Officer at Super Technologies, the company behind one of Brazil’s top betting brands, Superbet, at the SBC Summit in Lisbon last week. “The current state … does not reduce betting or gambling harm, it simply moves it to the platforms where people in Brazil will be less protected, less less taken care of, and with far greater risk of addiction or any other side effect that the policymakers might worry about.” Data suggests black market pivot underway Lula’s betting ban was the culmination of a series of political and legislative moves against the sector, with a ban on online casinos widely expected – the President ultimately decided to go all the way, following Sidônio Palmeira, Minister for Social Communication of the Presidency of the Republic (Secom) and the head of his successful presidential campaign in 2022.. As Super’s Deputy CEO’s comments show, operators are banging the black market drum very loudly. Simehnson was joined on stage by executives from Allwyn Digital, Flutter Entertainment and Betsson, who all said the same thing. According to betting industry data provider Blask, Brazilians pivot towards unlicensed betting activity. However, to give the government credit for now, this migration to unlicensed sites hasn’t come as a tidal wave, but rather a steady stream. Blask found that visits to licensed betting sites with the bet.br domain name dropped by a whopping 74% in the week from 26 September to 1 October. Search demand for licensed operator brands also dropped by between 82%-83% over the same period. This is not surprising given companies were shutting up shop, with a deadline of 5 October set for customers to withdraw funds. It seems the initial week saw customers largely scrambling to close their accounts and withdraw monies. The publicity around Lula’s ban has impacted offshore, unlicensed firms much less, however. Blask’s research into branded search activity – the number of AI search engine requests relating to a specific named brand – found that demand for unlicensed firms dropped by only seven percentage points to 17%, as opposed to the much more considerable figures around the licensed market outlined above. The company also found that unlicensed site reach stayed within 11% of normal levels while activity per visitor increased by up to 40%. Offshore brands share of branded search has therefore risen from 4% to 16%, a slow but steady chipping away of overall online search and visibility at the expense of a now declining legal market. More to come… Blask projects that the Brazilian betting market is going to go the same way as India, which last year embarked on a similar path to the one Lula has chosen with a ban on real-money gaming. This similarly sparked an exodus of companies from the market, like Flutter Entertainment and its Junglee brand. Popular fantasy sports platform Dream11 had to completely re-evaluate its business model. Comparing India and Brazil, Blask’s research notes that regulated domestic real-money gaming reach took three months to fall by 73%, but 63% of Indian players were still betting after these three months – largely with unlicensed firms. Brazil’s drop off has been much quicker, with regulated real-money gaming reach falling by 74% in the first week. This is likely due to the tight timeframes imposed by Lula’s order, with the president keen to get things underway before the 4 October election. Based on its comparison of India and Brazil’s respective bans and the aftermath, Blask projects that around 21 million of Brazil’s 25.2 million legal bettors will continue betting with unlicensed betting sites. Summarising the regulated market’s outlook at Lisbon, Allwyn Digital’s CEO, Krasimir Spajic, remarked: “If we ban certain gaming activity from the market, that doesn’t mean that that activity is going to stop existing. “It just means that this activity is going to move to somebody who is not regulated, to somebody that does not pay taxes within the country, and most importantly, to somebody that probably does not follow all the regulatory measures regarding responsible gaming and is not protecting the consumer in the market.”