Brazil betting ban will boost black market, experts warn
Industry leaders warn that Provisional Measure 1,394/2026 breaches legal certainty, erodes investor trust, and strips away vital punter protection.
Key takeaways:
- Experts warn President Lula’s decision to ban betting and online casinos breaches legal certainty and will push punters from the regulated market into the illegal one.
- Letícia Ferraz (LabSul) says the ban is “highly misguided” and could be overturned by the judiciary as unconstitutional.
- Amilton Noble calls the measure “disastrous”, arguing it will strengthen the black market and damage Brazil’s credibility with investors.
- Ricardo Costa (Febralot) says excluding the lottery network was a mistake and calls for stricter, enforced rules instead of abrupt prohibition.
Special report.- Brazil’s federal government has ordered an immediate ban on the operation, offering, intermediation and advertising of fixed-odds online betting and digital casinos, less than two years after regulating the sector. Industry experts told Focus Gaming News the abrupt move, enacted through Provisional Measure 1,394/2026, undermines legal certainty, risks expanding the black market and could be challenged in court.
According to Letícia Ferraz, executive director of the Laboratory for Human Rights and New Technologies in the Global South (LabSul), the decision to impose a total ban on the regulated betting market was “highly misguided” and will lead to “serious and unintended consequences”.
“The studies we have been carrying out for almost two years on this subject and the research we have conducted are quite clear in concluding that debt, gambling addiction and other negative externalities stem, for the most part, from the illegal market. The regulatory legislation, which was in force until recently, was very robust in terms of providing tools to protect punters and promote responsible gambling,” said Ferraz.
“I have always argued, and continue to argue, that the focus should be on monitoring and combating the illegal market. The real villain the State should be fighting is the black market, not authorised, regulated gambling. I therefore view the measure taken with regret and hope that this situation can be rectified within a short space of time,” he added.
In the view of LabSul’s executive director, the fact that the measure was introduced abruptly, without any awareness-raising or education policy, will not put an end to gambling simply because the government has blocked legal websites. “From September 25 to 26, those who gambled were no longer able to do so within the legal market. Many of those who gamble will look for ways to gamble and turn to the black market. This market is known for fraud, a total lack of tools to protect gamblers and a complete absence of responsible gambling measures. Not to mention that these illegal operators often have links to organised crime,” said Ferraz.
Ferraz believes that the judiciary could overturn the provisional measure, as it was imposed in an unconstitutional manner. “Fundamental rights under our legal system have been violated. Legal certainty is the most important of these. While the decision to remove fixed-odds betting from the Brazilian landscape is possible, our legal system is not set in stone and our political decisions must keep pace with socio-economic developments. However, it is wrong to change things in such an abrupt and imposed manner by means of a provisional measure.”
According to the LabSul representative, changes such as this should be analysed carefully and involve discussions with the entire relevant production chain. They should also be underpinned by public education policies. If the decision is taken to discontinue this activity after consulting experts, industry representatives and civil society, the initiative should be implemented gradually.
“The studies we have been carrying out for almost two years on this subject and the research we have conducted are quite clear in concluding that debt, gambling addiction and other negative externalities stem, for the most part, from the illegal market.”
Letícia Ferraz, executive director of LabSul.
Focus Gaming News also spoke to Amilton Noble, an expert and consultant in the igaming and lottery sectors with 30 years’ experience in the field, about the ban on fixed-odds betting in Brazil.
“It is a disastrous measure, as it runs counter to its stated primary objective, which was to protect vulnerable punters. You do not combat the illegal market by stifling the legal market. Combating the illegal market requires rigour and control within the legal market. The aim is to channel betting towards the regulated market, and to monitor and supervise it. That was the way forward. And it was already being done. There were signs that the illegal market was resurging. And now the government is trying to put out a fire with petrol. The underground market will only grow stronger,” said Noble.
“Regulated companies are obliged, under specific regulations, to provide consolidated activity data on a daily basis. Everything is updated daily. All of that will be completely lost. The same goes for the self-exclusion register, which will cease to have any effect, as the illegal market couldn’t care less about controls or the protection of punters. It wants to bleed them dry,” he added.
In Noble’s view, the provisional measure may have negative effects not only on the gambling sector, but also on other areas of the country’s economy. “This is the major adverse effect of the provisional measure: throwing Brazil’s credibility in the bin. The signal sent to domestic investors – and, above all, to international investors – is appalling. The country will pay dearly for this,” he said.
Noble also criticised the federal government’s announcement that it intends to expand the use of tools to take illegal betting sites offline. He questioned why the Executive intends to shut down thousands of illegal betting sites only 22 months into the regulated period, bearing in mind that the sites go offline within a day and resume operations shortly afterwards under a new URL.
“What tax concession previously prevented the takedown of more than 66,000 illegal websites? How many punters were left unprotected during that period because the tools the government claims to have now were not being used? Why did officials from the Secretariat for Prizes and Betting (SPA) not attend the open meetings held exclusively with people hand-picked for their opposition to the activity? As we can see, there are more questions than answers,” concluded Noble.
“This is the major adverse effect of the provisional measure: throwing Brazil’s credibility in the bin.”
Amilton Noble, expert and consultant in the igaming and lottery sectors.
Ricardo Costa, president of the Brazilian Lottery Federation (Febralot), also commented on the ban on the regulated betting sector. In his view, the decision to shut down the legalised market was misguided.
“Apart from the seriousness of the breach of legal certainty, I have serious doubts about the government’s ability and effectiveness in controlling the parallel and illegal gambling market. Any product of this nature must be subject to clear, strict and effectively enforced rules, with mechanisms for consumer protection, operational controls and the prevention of illegal activities,” he said.
In Costa’s view, it was a mistake to have excluded the lottery network from the betting market during the period when it was regulated, particularly given the lottery sector’s decades of experience in marketing games. “We believe that the more rigorous and organised the regulatory environment is, the greater the contribution lottery operators can make. The network of lottery outlets has a physical presence throughout the country, experience in selling official lottery products and a well-established relationship of trust with the public,” said the Febralot representative.
“Our proposal was not simply to bring betting into lottery outlets, but to make the most of the network’s unique characteristics: clearly identified physical premises, business owners responsible for operations, face-to-face customer service and the possibility of implementing additional mechanisms for control, supervision and the protection of punters. We are talking about a network accustomed to operating regulated products, complying with procedures, being accountable and maintaining a face-to-face relationship with millions of Brazilians,” he added.
“I have serious doubts about the government’s ability and effectiveness in controlling the parallel and illegal gambling market.”
Ricardo Costa, president of Febralot.
Frequently asked questions (FAQs)
- Why are industry experts opposing Brazil’s online betting ban? Experts contend that prohibiting regulated operators removes essential consumer protection tools, destroys investor trust, and drives punters into the hands of illegal black-market sites that lack responsible gambling controls.
- Could Brazil’s betting ban be overturned? Yes, according to Letícia Ferraz, who says the manner in which the measure was imposed is unconstitutional and violates fundamental rights, especially legal certainty. She expects the judiciary could reverse the provisional measure if challenged.
- How many illegal betting sites operated during Brazil’s regulated market period? Federal authorities identified and used tools to take offline more than 66,000 illegal gambling websites during the 22-month period in which fixed-odds betting was regulated in Brazil.
