As Brazil's online gambling market is expected to become legal on January 1, 2025, the government has intensified its efforts to regulate and crack down on the illegal gambling sector in recent months. According to the National Gaming and Lottery Association (ANJL), clear advertising strategies and effective regulation will be key to the market's success post-legalization.

The Review Progress is On Schedule

Regis Dudena, Secretariat of Prizes and Bets (SPA) under Brazil’s Ministry of Finance, stated at the 3rd Sports Integrity Summit on September 5 that the review of gambling licenses in Brazil will be completed by November 2024. Dudena emphasized that regulatory laws will have a profound impact on Brazil’s online gambling industry. He said, "We successfully issued all relevant regulations by the end of July, ensuring that the industry has clear guidelines to follow. From January 1, 2025, any operators without a legal license that continue to operate will face strict penalties."

By the application deadline, a total of 114 companies had submitted their operating license applications through the official system, committing to comply with the regulations set by the Brazilian government. Dudena revealed that all compliant companies would be granted their operating permits at that time. However, the review process requires a thorough examination of extensive company documentation, making it a challenging task to complete the review by November.

Proper Advertising Strategy is Key to a Legal Market

In addition to strict regulations, Plínio Lemos Jorge, President of the National Association of Games and Lotteries (ANJL), urged gambling operators to adopt clear advertising strategies to help players distinguish between legal and illegal platforms. He emphasized, "Advertising is the best tool to guide players into the legal market. Through effective communication, we can ensure that players understand gambling is purely entertainment, not a way to make money."

Lemos Jorge further pointed out that illegal platforms, which are not subject to taxes, can offer higher rewards to attract players. Therefore, if advertisements lack clear guidance and explanations, players are likely to turn to the black market, further weakening the competitiveness of the legal market.

Additionally, Brazil's Ordinance SPA/MF No. 1,233 establishes specific regulations for advertising content in the gambling industry. For example, all ads must display an "18+" symbol and emphasize the risks involved in gambling. The Brazilian government also prohibits gambling companies from using social media for marketing, especially when targeting minors, and will enforce a zero-tolerance policy for such violations.

Challenges and Risks of the Black Market

Despite Brazil's efforts to promote a legal market, the black market remains a significant challenge. According to the latest data from Yield Sec, approximately 49 million Brazilians engaged in gambling through illegal channels in the first half of 2024, accounting for around 23% of the country's population. These figures indicate that the black market still controls a large portion of the market.

Currently, the Brazilian government is actively working with digital media giants like Google and Meta to remove ads for illegal websites and plans to restrict illegal operators from using Brazil's instant payment tool, Pix. However, ANJL President Plínio Lemos Jorge expressed concerns about overly restrictive advertising regulations, warning that an extreme regulatory regime could push players toward illegal platforms. He cited Germany and Italy as examples where excessive regulation led to an increase in black market activity. "Banning gambling ads is not the solution, and it will only allow illegal operators to monopolize the market," said Lemos Jorge. "The right advertising strategy and a sound regulatory framework are key to driving the growth of the legal market."

Outlook

As Brazil moves toward the legalization of gambling, the government and industry players are working to guide the market transition through clear regulations and effective advertising. Both Dudena and Lemos Jorge believe that with proper regulation and promotional strategies, the legal market will gradually expand, offering players a safer and more protected gambling environment. The direction of Brazil's policies also suggests that the government will continue to crack down on the illegal market while encouraging more operators to participate in the legal market, promoting the overall healthy development of the industry.