Legal vs Illegal Gambling Sites: Brazil's Regulatory Challenge in 2026

While one might think that Brazil's newly regulated market would be the major player, it has been shown that illegal gambling sites, which account for approximately 41% to 51% of its online betting market, completely control the field. The Brazilian government officially opened its regulated online market on January 1, 2025, after years of delay, giving much-needed organization to an industry with approximately 20 million Brazilians tapping into the online betting world today. However, the change from gray market to regulated has turned out to be much more complicated than expected.

Conclusively, authorities have blocked upwards of 12,000 unauthorized domains; however, nearly 80% remain accessible to players. The key to determining the best betting website requires an understanding of the legal environment and an understanding of why unlicensed sites are still operational. This terrain will shape the Brazilian gambling landscape through 2026.

Brazil's Regulated Gambling Market Takes Shape in 2025

Market Entry Requirements and Best Gambling Sites Criteria

Operators wishing to enter Brazil’s regulated market contend with tough restrictions. The cost of the licensing fee for a five-year license covering three brands is BRL 30 million (which translates to around USD 6 million). In addition to the licensing fee, there is also the requirement that the operator has an investment of not less than BRL 30 million in paid-in capital, with an amount of at least BRL 30 million in net assets, and with a reserve of BRL 5 million.

The corporate structure requirement necessitates that applicants form a Brazilian entity that has its head office and management in Brazil; however, the company must have a minimum of 20% of its capital owned by a Brazilian citizen or firm. Compliance with the technical requirements encompasses a number of other aspects including the need to have its systems certified by laboratories recognized by SPA and the company must have its certification validated every year. Operators are also required to have different directors for accounting/finance, data protection, and betting. Meeting the entry requirements is only the first step, once an operator is live, casinopro.mx looks at what players actually deal with — game selection, bonus terms, casino reviews and reported payment issues.

Early Traffic Numbers Signal Strong Demand

The initial months since implementation of rules indicated a huge market interest but complications were also discovered. KYC rules such as compulsory facial recognition and verification of personal information brought issues with signing up. This consequently led to the technical evolution of the verification process as industry players recognized the benefits of identity security alongside providers improving technology. By mid-year 2025, a notable decrease in onboarding problems was observed as the speed and ease of verification increased drastically.

How Illegal Betting Sites Continue Operating Despite Regulation

12,000+ Blocked Domains Yet 80% Remain Accessible

In October 2024, Anatel denied access to more than 39,000 illicit gambling websites and around 200 illegal gambling apps. In 2025, SPA provided a list of 12,500 gambling sites to be banned. Out of this, almost 80% of them can still be accessed through other means such as mirror sites or as a result of other techniques. Banks blacklisted around 700 accounts which were supposedly involved in illegal online gambling. Additionally, 24 payment companies sent 277 notices and closed 255 accounts opened to support the black market. A site being accessible does not make it legal or trustworthy. CasinoAtlas.se takes the opposite approach in Sweden, covering casinos with a Swedish licence and showing their bonus, payment and game conditions in one place.

Mirror Sites and Technical Workarounds Outpace Enforcement

It is common to find previously banned gambling websites being relaunched via a different online address within a few hours of the ban. This practice being adopted by illicit operators is facilitated by automating URL changes to keep routing users to gambling sites as soon as a domain name is rendered inactive. Some gambling websites use GPS blocking. Regulatory authorities see a real challenge in enforcement as they keep banning gambling websites on popular sites and within a few days new names are created for the same sites.

Player Preference: Why Users Stick with Unlicensed Platforms

In 2025, a study found that 73% of gamblers had bet with at least one illegal platform with 61% admitting they placed bets on sites that were not regulated. Many gamblers prefer illegal sites because they tend to be familiar, offer faster payouts, and do not require registration. In addition, illegal gambling sites tend to cover high odds, and their customers do not feel they would be monitored. Also of note is the fact that 78% of respondents have trouble knowing which gambling sites are legal and 46% of those that responded have deposited money on a site that was latter determined to be illegitimate. That legal-versus-offshore split is not unique to Brazil. In Mexico, portalapuesta.com breaks down operators by licensing, bonus terms, payment methods and other conditions that help show what separates a regulated site from an offshore one.

The Parallel Market Reality: Legal and Illegal Coexist

Unregulated areas in Brazil’s betting market comprise between 41% and 51%. Regulated operators introduce new players and earn back those who have placed bets informally, but veteran users of offshore betting sites still attract new business. While government policy comes to bear on one market, the other will not likely alter its lack of regulation, causing an ongoing dual-market situation.

Regulatory Tools Brazil Deploys to Channel Players to Licensed Platforms

Payment System Controls Through Pix and Central Bank

The Closed-loop payment system was implemented by Portaria Normativa SPA/MF Nº 615, which stated that all incoming and outgoing transactions from players will be from their registered account with the operator to their transaction account held with Central Bank approved financial institutions. The volume of deposits linked to regulated online gambling sites as a result of the implementation of Pix is estimated to be between 78 and 96 percent of the total gambling deposit volume, meaning the Central Bank acquired authority to limit the deposits via Pix made by unauthorized operators. All Pix transactions will have to include the CPF of the sender, which will correspond to the KYC verified CPF on the gambling account.

Domain Blocking Partnerships with Anatel

The Technical Cooperation Agreement was signed by the SPA and Anatel on October 9, 2024, establishing the steps involved in obtaining a blocking action against domains. Anatel blocked around 8,560 illegal gambling websites, informing over 21,000 telecom companies to enforce the domain blocking actions starting from October 2024. The Superintendent at Anatel said that Anatel only informs service providers of the blocking orders made by the Ministry of Finance but has no mandate over either the Domain Name System (DNS) servers or the Content Delivery Networks (CDNs), such as Google and Cloudflare.

KYC and AML Requirements Create Compliance Barriers

Operators with licenses are required to use government databases to authenticate consumers through a CPF record as well as biometric facial recognition to match the person’s face associated with the country’s records. Platforms will apply biometric re-authentication every seven days or when inactivity starts to approach 30 minutes. In addition, operators are obligated to conduct screening for Politically Exposed Persons, as well as observe transaction patterns and report any suspicious behavior directly to COAF using the SISCOAF. Any non-compliance can lead to penalties that can reach up to BRL 2 billion.

Financial Institution Transaction Monitoring

Central Bank Resolution No. 569 widened the scope of risk analysis for fraud, focusing particularly on financial transaction analysis with an aim of capturing all transactions associated with illegal gambling operations. Financial institutions should comply with monitoring and starting reporting of suspicious accounts under the Fraud Marker scheme effective December 1, 2026.

Content Provider Regulation to Cut Illegal Supply

The Brazilian Digital Council works alongside the SPA to oversee the advertising endeavors on major technology platforms, specifically identifying promotional materials that attract visitors to illegal gambling enterprises.

National Self-Exclusion System Development

The Brazilian roulette self-exclusion program is operational and provides a method for players to prevent them from playing in federally licensed platforms from one month to one year or indefinitely. Sigap, developed by Federal Data Processing Service (Serpro), obligates operator verification before signing for access to Sigap to create/create every cause login for access to Sigap as well as for registration, first login and every 15 days after login for active players.

Will Brazil's Enforcement Strategy Overcome Regulatory Challenges in 2026?

Tax Rate Increases Threaten Legal Market Competitiveness

Effective October 1, 2025, Brazil's gross gaming revenue (GGR) tax rate increased from 12% to 18%, significantly raising operator costs. This, when combined with corporate income tax, PIS/COFINS taxes, and municipal taxes, leads to an overall consumption tax burden of around 25%. Furthermore, the GGR tax increases again ongoing to a rate of 13% in 2026 and 15% in 2028. Currently, there are more than 34 bills proposed in congress looking at increasing the amount, with some suggesting rates of up to 24%.

CIDE-Bets Deposit Tax Could Drop Channelization Below 20%

The CIDE-Bets tax which is being proposed will cost 15 percent of whatever the player decides to put into a licensed platform to play. The concern with this is that whenever taxable procedures are employed, there will be a likelihood that there would be less than 20 percent of channelization as illegal operators will still give you the full value of the deposit and legal platforms will give you only 15 percent of the value of the deposits you make. After significant pressure from the gambling industry, the full assembly voted to remove Article 14 from the anti-gambling bill, doing away with the standard.

Multi-Agency Coordination Gaps Slow Response Times

The leaders of SPA recognize that limited resources can impede the enforcement limits. During the first four months of 2026, BRL 3.64 billion worth of taxes on betting activities has been collected by government authorities from 87 authorized gambling providers; however, 41% to 51% of market activities remain unregulated.

Proposed Solutions: Government Verification Portals and Legal Seals

The government's intention is to unify the flow of information with the creation of a National Betting System. The proposed system will be based on the SIGAP technology, which will ensure real-time monitoring and cross-platform analytic integrity.