Legal Betting Operators in Brazil Could Exit if Illegal Market Persists
Plínio Lemos Jorge, president of the National Association of Games and Lotteries (ANJL), believes that legal operators may leave Brazil if the illegal market is not effectively combatted.
Recently, the Secretariat of Prizes and Bets (SPA) in Brazil announced that 71 operators had their license requests approved. Sixteen betting companies have already paid the concession fee.
The legal market is scheduled to launch on January 1, 2025, but with the launch date approaching, the threat of illegal operators remains.
Illegal Competition Could Force Licensed Operators Out
ANJL has previously revealed that over 2,000 illegal sites are still operating in Brazil. Carlos Baigorri, president of the National Telecommunications Agency (Anatel), warned that their attempts to block these operators are proving difficult.
If Brazil does not find a more effective way to suppress the black market, Lemos Jorge believes that legal operators may abandon betting in the country. This would further increase illegal competitors, he warned.
“This risk exists if the illegal market is not effectively combatted,” said Lemos Jorge. “If investors assess that the market scenario is not favorable to expected returns, those who are already here may certainly leave the country.”
The increase in illegal operators could have extremely detrimental consequences regarding player protection.
“Illegal sites negatively impact the industry and society itself in several ways,” explains Lemos Jorge. “The main one is predatory and unfair competition, since these platforms will not pay taxes nor have the costs inherent to the entire structure necessary for installation and operation in Brazil.”
“Furthermore, these are companies that wish to remain clandestine, 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’s president, Baigorri, has requested that the agency receive more powers to assist in site blocking efforts. Recently, he signed a cooperation agreement with the SPA to improve their collaboration.
ANJL and Anatel met to discuss what other measures could be taken. These suggestions are expected to be released in the coming weeks.
In Lemos Jorge’s view, Anatel needs more power to make its blocking attempts more effective. According to him: “It will be necessary to give Anatel greater autonomy to block. This autonomy must come through a specific law.”
“With greater autonomy for Anatel, the blocking process will be much faster. As soon as an 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 as a Promising Alternative
With Anatel struggling to ensure that all illegal sites are removed, payment blocking has been highlighted by some in the sector as a more effective measure to combat the black market.
Previously, it was stated that the “only way” to block illegal operators was through payment blocking. This is because removing sites is ineffective, as unlicensed domains appear almost as quickly as they are taken down.
Pix is an instant payment system regulated by the Central Bank and widely adopted by the Brazilian 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 that payment blocking will be a fundamental part of the government’s strategy to combat illegal companies.
“It is extremely important to combat the payment methods that allow illegal sites to operate,” added Lemos Jorge.
“They must also be part of this fight, as, according to the legislation, any financial institution that agrees to operate transfers to illegal platforms, not authorized by the federal government to operate in Brazil, will also be committing an illegality.”
Lemos Jorge Still Believes in Betting in Brazil
Despite ongoing concerns about illegal operators, Lemos Jorge remains confident that the regulations established 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 several ordinances, is one of the most rigorous and complete in the world,” said Lemos Jorge. “This is a consensus in the industry itself.”
“However, a strong supervision system that works in practice is necessary. We are confident that Brazil will achieve this through the actions of various 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.”
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