Study finds decline in Brazil’s illegal betting market during first half of 2026

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The Backstory

Brazil’s regulated market starts to pull users from gray channels

Brazil’s finding that illegal betting fell to 38% to 44% of activity in the first half of 2026 offers an early test of whether regulation, taxation and enforcement can shift one of the world’s largest betting audiences into licensed channels. The decline from the 41% to 51% range estimated in 2025 is modest, but it matters because Brazil only launched its regulated online betting market on Jan. 1, 2025. In less than two years, the country has moved from a fragmented market dominated by offshore brands and weak consumer visibility to a system built around licensed operators, tax collection, domain controls and responsible gambling rules.

The latest LCA Consultores study, drawing on Instituto Locomotiva survey data commissioned by the Brazilian Institute for Responsible Gaming, does not suggest the illegal market is close to being eliminated. About half of bettors still reported conduct linked to unlicensed sites, including using platforms without facial recognition, betting through domains outside the “.bet.br” structure, depositing by credit card or using crypto. Those details show why the illegal sector remains resilient: It offers fewer checks, alternative payments and a faster path around rules that licensed operators must follow.

Still, the direction of travel is significant. Licensed operators paid BRL9.95 billion in taxes and mandatory allocations in the first year of the regulated regime, alongside BRL30 million license fees. That fiscal contribution creates an incentive for the government to defend the legal market, not only to protect consumers but also to secure funding directed to education, tourism, sports and other public sectors. The study’s finding that 77% of bettors see unlicensed platforms as riskier also gives regulators and legal operators a public-awareness foundation that did not exist before formal regulation.

IBJR’s role has grown with the market

The IBJR has become one of the central industry voices arguing that Brazil’s market will only be sustainable if licensed companies are protected from illegal competition. Its own evolution has tracked the market’s transition from legislative design to operational enforcement. Fernando Vieira, who led the institute from October 2024 until his recent departure, framed the group’s mission around stronger regulation, player safety and the fight against offshore operators that remain outside Brazil’s rules.

Vieira’s exit, detailed in the report on Fernando Vieira resigning as executive president of the Brazilian Institute of Responsible Gaming, came after a period in which the organization expanded its membership and became more visible in public campaigns. One of the final initiatives under his leadership, “Chega de Bode na Sala,” used television, radio, airport panels and social media to direct bettors toward platforms authorized by the Ministry of Finance. That campaign reflected a broader realization: Enforcement cannot rely only on blocking domains or punishing operators. Bettors also have to recognize which sites are legal and understand why the distinction matters.

Carlos Lima, who was cited in the LCA study as IBJR’s CEO, has continued that argument by connecting the decline in illegal betting to regulation and government action. The stakes are institutional as much as commercial. If bettors view licensing as a bureaucratic label rather than a marker of safety, illegal operators can compete on looser payment options and lighter identity checks. If the legal market becomes associated with reliability, withdrawals, advertising accountability and responsible gambling tools, the compliance burden becomes a competitive advantage.

International operators see Brazil as a long-term prize

Brazil’s market size has drawn global operators that are willing to absorb licensing costs and compliance requirements in exchange for access to a large, sports-focused population. That dynamic is visible in the IBJR’s expanding roster, which includes major international groups and newer entrants seeking local legitimacy. The institute’s membership has become a signal that operators want to align themselves with the regulated market rather than operate at its margins.

That was the context for DigiPlus joining the Brazilian Institute for Responsible Gaming as it expanded in Brazil. Inside Asian Gaming reported that the Philippine-listed company joined the group while promoting its Brazil strategy and responsible gaming commitments. DigiPlus operates brands including BingoPlus, ArenaPlus and Gamezone in the Philippines and said it wanted to replicate its digital entertainment model in Brazil under local rules.

The timing was notable because the company’s entry came amid stronger pressure on illegal operators, including efforts to freeze illegal betting funds, tighter advertising restrictions and crackdowns on bad actors. For licensed entrants, that enforcement is not a side issue. It is central to the business case. Operators paying for licenses, compliance systems, local marketing and responsible gambling controls need confidence that unlicensed rivals will not be allowed to undercut them indefinitely.

This is why the latest illegal-market estimate will be read closely by both regulators and investors. A narrowing illegal share suggests that the legal framework can gain traction. But a level near 40% still means that billions in activity may be taking place outside tax collection, player-protection standards and official monitoring. Brazil’s market can be lucrative and still structurally fragile if illegal access remains easy.

Consumer behavior raises compliance stakes

Brazil’s struggle with illegal betting is part of a wider global pattern: Digital wagering expands fastest when products are easy to use, mobile-first and integrated with live sports. But those same features make regulatory control more difficult. Bettors often respond to price, speed, promotions and convenience before they consider licensing status. That gives illegal sites an opening if regulated products feel slower or more restrictive.

Research in the U.S. market shows how deeply sports betting has become embedded in consumer habits. An Optimove study on NFL wagering intentions found that 77% of surveyed bettors planned to wager during the season and that mobile or online betting dominated activity. The study also found high awareness of responsible gambling resources, but many bettors still admitted to spending more than they intended. That combination — heavy engagement, mobile access and imperfect self-control — is precisely why regulators insist on identity checks, payment restrictions and responsible gambling obligations.

Another U.S. survey, covered in Jefferies’ analysis of sports betting trends, pointed to growing interest in in-play betting, proposition bets and parlays. Those products can increase handle and user engagement, but they also raise supervisory demands because they encourage frequent, rapid betting decisions. For Brazil, where soccer, mobile payments and social media marketing can combine to create intense betting activity, the challenge is not just legalizing the market. It is ensuring that the legal market can compete while still enforcing limits that illegal sites ignore.

Prediction markets add pressure to definitions

The fight over illegal betting also sits against a changing international debate about what counts as gambling. Prediction markets have grown quickly and, in the U.S., have argued that event contracts are financial instruments rather than sports bets. That distinction has drawn pushback from state gambling regulators and the casino industry, especially when contracts resemble sports betting products.

The dispute was illustrated when Kalshi rejected a Roosevelt Institute analysis of prediction markets, saying the report misread exchange data and wrongly compared prediction markets with casinos. The argument is not directly about Brazil’s illegal betting market, but it highlights a regulatory problem relevant to any fast-growing jurisdiction: If product categories evolve faster than rules, operators can exploit ambiguity.

Brazil’s framework is still young, and its regulators are trying to establish bright lines around licensed betting, approved domains, permitted payments and responsible gambling controls. The LCA findings suggest those lines are starting to matter. But they also show how much activity remains outside them. The next phase will depend on whether Brazil can combine public education, financial enforcement, advertising control and technology-based blocking without weakening the attractiveness of the licensed market. A lower illegal share is progress. A market where roughly four in 10 bets may still be illegal is a warning that regulation has begun, not that the fight is over.