Alex W. Pariente, founder of Pariente Advisory, highlights the impressive revenue growth of Brazil's regulated betting market, which has generated significant tax income. However, he warns that this sector is still grappling with fierce competition from illegal operations. From January to April 2026, the Federal Revenue Service reported tax collections of BRL4.586 billion ($886.2 million) from betting—a nearly twofold increase compared to the same period in 2025.
While these figures reflect early success for the regulated model, they are not sufficient to demonstrate its sustainability. Monthly revenues showed fluctuations over the four months, and estimates indicate that between 41% and 51% of all betting occurs outside the licensed environment. This unregulated activity hampers the channelization of the market.
Brazil has developed a substantial regulatory framework, including initiatives by the SPA (Secretariat of Prizes and Bets), integration into the Sigap (Integrated System for the Management of Public Administration), and the Federal Police's establishment of the Betting Database. Nevertheless, Pariente emphasizes the limitations in institutional capacity to effectively manage illegal operators, thereby weakening oversight and allowing a considerable share of demand to escape state regulation.
The upcoming 2026 World Cup is poised to be a critical challenge for Brazil's betting market, with projections suggesting it could generate around BRL19 billion domestically. Pariente asserts that this event will test whether the regulated system can adequately absorb this demand in the face of competition from offshore platforms that ignore compliance regulations, responsible advertising standards, and consumer protections.
Pariente notes Brazil’s swift demonstration of fiscal and regulatory potential but stresses the need for this progress to evolve into enduring operational coordination. He identifies the upcoming months as crucial for enhancing the integration between regulation, oversight, and market operations, aiming to thwart any attempts by the illegal sector to bolster its standing during this pivotal moment.
The Federal Revenue Service indicates that tax revenue from betting could reach between BRL11 billion and BRL13 billion in 2026, reflecting growth from BRL9.95 billion in 2025. The tax rate on GGR will rise from 12% to 13% in 2026, expected to reach 15% by 2028. If market projections hold true, Brazil could establish itself as one of the highest tax-contributing markets globally in less than two years of regulated operations, currently ranking as the fifth-largest betting market after the US, the UK, Russia, and Italy.
The monthly revenue data warrants closer scrutiny. January's high of BRL1.49 billion fell to BRL1.04 billion in February, then decreased further to BRL859 million in March, before rebounding to BRL1.189 billion in April—a 38.4% increase from March but still below January's starting point. While this volatility isn’t alarming for a new market, it signals a need for monitoring, as inconsistencies suggest an unstable operating environment.
On the structural side, the Federal Revenue Service’s figures only reflect the licensed market's performance, with no comparable data available for the illegal sector. Independent estimates suggest that illegal betting activities account for between 41% and 51% of total market activities. The 2025 Global Report by Gaming Compliance International highlighted that 78% of online gaming globally remains outside formal regulatory frameworks, placing Brazil's scenario in a broader context of illegal market challenges.
Brazil has built an institutional framework capable of governance, with the SPA beginning enforcement actions in 2026 against licensed operators failing to meet KYC requirements. Integration of the Sigap system has begun, and cooperation between the SPA and the Brazilian Digital Council continues, facilitating actions against illegal operators and advertising.
The new Betting Database aims to enhance sophistication in addressing illegal betting through data analysis, financial intelligence, and anti-money laundering capabilities. It serves as the foundation for better collaboration among law enforcement, regulators, and licensed operators, fostering a unified approach for data and compliance oversight.
Nonetheless, institutional constraints remain. SPA leaders have cited resource limitations that affect enforcement reach. A market analyst indicated that tax revenue could potentially double with intensified actions against illegal betting. This isn’t a critique of SPA but rather an acknowledgment of the reality when 41% to 51% of total market activity is outside regulatory control.
The structural problem manifested during the Desenrola Brasil program, which limited licensed platform access for certain beneficiaries, inadvertently redirecting those bettors to illegal alternatives. Licensed operators incurred compliance costs while illegal ones captured the demand—illustrating a clear channeling issue.
The 2026 FIFA World Cup, shared by the US, Canada, and Mexico, will mark the first global tournament allowing Brazilians to bet legally through licensed platforms. Betlaw estimates that about 10% of global betting volume, approximately BRL19 billion, will be placed in Brazil. Overall, global betting for the tournament could exceed $50 billion, driven by an additional 40 matches and favorable timing for international audiences.
For Brazilian licensed operators, the World Cup represents a significant test. While demand is anticipated to surge, the real measure will be how much of it the licensed market can capture compared to illegal offshore platforms, which avoid compliance obligations that licensed entities face.
The advertising regulations for this major event introduce further complexities, requiring all promotions to include licensed operator authorization numbers and prohibiting misleading claims and targeting minors. Though these regulations set higher standards, they also create compliance imbalances in which licensed operators invest in lawful advertising while illegal platforms impose none.
A match-fixing incident during the World Cup would not only undermine the sport's integrity but also impact market integrity, particularly if a considerable amount of betting activity occurs via unlicensed channels. Such an event would have significant fiscal and reputational repercussions, disproportionately affecting the licensed operators.
Brazil has made impressive strides in just 18 months of regulated market operations, with essential frameworks like the Federal Revenue Service's reporting requirements, the SPA's transition toward enforcement, Sigap system integration, and the Betting Database in place.
While the architecture is established and fiscal proof of concept is evident, the gap remaining is not so much structural, but operational, hinging on coordination. Closing the channeling gap requires extensive alignment on the enforcement side, bringing together operators, payment providers, advertisers, search networks, and investors toward a unified goal. Effective actions seen in other countries, such as the UK, Sweden, and Denmark, demonstrate that a combination of product regulation, payment enforcement, consumer education, and sufficient oversight can effectively curb illegal markets. Brazil now has an opportunity and a critical moment ahead with the World Cup just a year away. The next 12 months will reveal if the coordination among regulatory, enforcement, and commercial sectors can become systematic or if the illegal market will solidify its presence amid this pressure.
