Plínio Lemos Jorge, president of the National Association of Games and Lotteries (ANJL), believes legal operators could end up exiting Brazil if the illegal market isn’t effectively tackled.
Last week Regis Dudena, the leader of the Secretariat of Prizes and Bets (SPA) in Brazil, revealed 71 operators have had their licence applications approved. Already 16 betting companies have paid the BRL30 million (£3.9 million/€4.7 million/$4.9 million) concession fee.
The legal market is due to launch on 1 January 2025, but with that go-live date now just over two weeks away, the threat of illegal operators is still lingering.
Could illegal competition force licensees out?
The ANJL previously revealed over 2,000 illegal sites are still operating in Brazil. Carlos Baigorri, the president of the National Telecommunications Agency (Anatel) has warned its attempts to block these operators are like “mopping up ice”.
If Brazil doesn’t find a more effective way to clamp down on the black market, Lemos Jorge feels legal operators may turn their back on offering bets in Brazil. This would further illegal competitors, he warned.
“This risk does exist if the illegal market is not effectively combatted,” Lemos Jorge told UOL Apostas. “If investors assess that the market scenario is not favourable to the expected returns, those who are already here may certainly leave the country.”
The rise of illegal operators could have hugely detrimental consequences in regards to player protection.
“Illegal websites negatively impact the industry and society itself in several ways,” Lemos Jorge explains. “The main one is predatory and unfair competition, since these platforms will not collect taxes nor will they have the costs inherent to the entire structure necessary for installation and operation in Brazil.
“Furthermore, these are companies that wish to remain underground, without any concern for the well-being and health of bettors or the protection of children and adolescents.”
What measures could be taken in Brazil?
Anatel president Baigorri called for the agency to be given increased powers to aid its site blocking efforts. Last week it signed a cooperation agreement with the SPA to enhance their collaboration.
The ANJL and Anatel met last week to discuss what further measures could be taken. Those suggestions are due to be released in the coming weeks.
In Lemos Jorge’s view, Anatel requires more power to make its blocking attempts more effective, saying: “It will be necessary to give Anatel greater autonomy to block. This autonomy should come through a specific law.
“With Anatel’s greater autonomy, the blocking process will be much faster. As soon as the illegal site is detected and Anatel becomes aware of it, the blocking will be carried out, thus preventing the site from having a long life and causing losses to bettors.”
Payment blocking a promising alternative
With Anatel struggling to ensure all illegal sites are removed, payment blocking has been highlighted by some in the industry as a more effective measure to combat the black market.
Aposta Ganha CCO Hugo Baungartner previously told iGB the “only way” to block illegal operators was through payment blocking, with site removal ineffective as unlicensed domains pop up almost as quickly as they are taken down.
Pix is an instant payment system regulated by the Central Bank, widely adopted by Brazil’s gambling industry due to its ability to facilitate transactions in under 10 seconds.
Under the new betting regulations in Brazil, payments made via Pix to unlicensed operators will be blocked.
Lemos Jorge agrees payment blocking will form a key part of the government’s strategy to counter illegal companies.
“It is of utmost importance to combat the payment methods that allow the illegal sites to operate,” Lemos Jorge added.
“They must also be part of this fight, since, according to the legislation, any financial institution that agrees to operate transfers to illegal platforms, not authorised by the federal government to operate in Brazil, will also be committing an illegality.”
Lemos Jorge still has faith in Brazil betting
Despite the ongoing illegal operator concerns, Lemos Jorge remains confident the regulations set out by the SPA will ensure a safe environment for betting in Brazil.
“The regulatory framework approved by the national congress through Law 14,790/2023 and detailed by the SPA, through the publication of various ordinances, is one of the most rigorous and complete in the world,” Lemos Jorge said. “This is a consensus within the industry itself.
“However, a strong oversight system that works in practice is necessary. We are confident that Brazil will have this through the actions of several stakeholders, both from the government and the private sector. This joint effort will be essential to stop illegal betting activities, or at least reduce them as much as possible.”
