Concerns Mount as Funding for Brazil’s Betting Regulation Dwindles
Eduardo Ludmer, who leads the legal division at BetMGM, has voiced significant worries regarding the distribution of the BRL2.3 billion accrued from license fees. This comes as Brazil grapples with the escalating challenge of illegal betting operations.
Reports indicate that Brazil’s National Telecommunications Agency (Anatel) is facing a financial crunch, hindering its efforts to crackdown on unauthorized betting sites. Just last week, Folha highlighted that Anatel lacks both the necessary funds and staff to execute blocking orders mandated by the Secretariat of Prizes and Bets (SPA), the nation’s betting authority.
This budget strain has been exacerbated by recent government cuts and the impending wave of retirements within the agency anticipated in 2026, further limiting its resources.
As Brazil’s regulated online betting landscape struggles against rampant black market activities, Ludmer has raised critical questions about the allocation of funds intended for enforcement. Betting operators, having contributed substantial license fees, understandably expect that these funds would aid in combating the very illegal operations undermining their business.
“You cannot have ineffective enforcement of laws,” Ludmer articulated in a recent interview. “Public expenditure in Brazil has reached unprecedented levels, yet the outcome is often subpar.”
Ludmer suggests that rather than efficiently utilizing the funds generated from the legal betting sector, the government appears to rely on hefty tax revenues to support a burgeoning deficit, which he finds troubling.
Anatel’s Head of Enforcement, Gesiléa Teles, noted that the agency has successfully blocked over 15,000 illegal sites since the regulated environment began. However, Teles and Anatel’s president, Carlos Baigorri, have called for enhanced authority to bolster this enforcement.
Regulatory Targeting and Fiscal Pressure
The Brazilian betting industry recently found itself in turmoil following a drastic tax increase, which raised the government’s share of gross gaming revenue (GGR) from 12% to 18%. This significant adjustment was enacted through a provisional measure, which Congress must ratify within 120 days to become permanent.
As the government seeks to eliminate its budget deficit by 2025, the gambling sector has been labeled as a convenient source of revenue amidst tighter fiscal constraints, especially given the current scrutiny the industry faces from various political factions.
“They’re choosing the easier target,” Ludmer explained, noting a trend among lawmakers to avoid facing opposition from constituents by targeting the betting sector instead. “The intricacies of the political landscape complicate matters, especially when stakeholders are wary of the gambling industry.”
Implications of Taxation on Illegal Markets
The Brazilian Institute of Responsible Gaming (IBJR) has cautioned that the recent tax hikes could encourage a surge in illegal betting, projecting that such operations could capture between 50% to 60% of the market as users migrate to avoid the increased costs.
According to the IBJR, exacerbating the tax load on legitimate operators could backfire significantly. “Collecting more revenue shouldn’t come at the expense of punishing compliant businesses; rather, we should intensify efforts against illegal markets and enhance the protection of bettors through stringent regulation.”
With Anatel already grappling with limitations and calls for expanded capacity unmet, it appears that legal operators may continue to contend with the persistent threat posed by illicit betting activities, jeopardizing both their operations and the integrity of the regulated market.