Brazil begins cracking down on illegal online gambling as addiction concerns rise | business

Authorities have begun enforcing a law signed by President Luiz Inácio Lula da Silva in December 2023 that regulates and taxes betting companies. Brazil’s government estimates that more than 52 million people started gambling online in the past five years.

Most types of gambling, such as casinos and slot machines, are illegal in Brazil, but online gambling was authorized in 2018.

Currently, 96 companies that have 210 gambling websites are still active. The federal government said in a statement that these companies have demonstrated a willingness to comply with the new legislation and can operate until the end of the year while their license applications are reviewed.

Some of the betting companies that are not authorized to operate in Brazil are taking their case to court. Others are seeking state authorizations that could give them the rest of the year to seek federal approval.

Starting January 1, 2025, companies with operating authorization will have to pay 30 million reais ($5.3 million) and permanently comply with federal rules to curb fraud, money laundering and abusive advertising to stay in business.

Dario Durigan, executive secretary of the Ministry of Finance, said the government hopes to protect the integrity of players with these measures.

Brazil legalized online gambling in 2018, but the lack of regulation has raised concerns among financial and health authorities. Psychiatrists have reported an increase in gambling addiction, while banks have seen an increase in related expenses.

Media companies and football clubs, however, benefited as betting firms increased their sponsorship. Almost all clubs in Brazil’s top football division are sponsored by betting companies.

The Central Bank of Brazil estimates that Brazilians wager about 20 billion reais ($3.5 billion) on bets every month. This includes beneficiaries of the federal cash transfer welfare program Bolsa Família (family subsidy), which spent 3 billion reais ($530 million) on online gambling in August.

At the end of September, the federal government announced plans to implement measures to prevent social benefits from being used for gambling. These programs were designed to guarantee food security and cover the basic needs of vulnerable families.

Uncertainty about the future of some betting companies has affected Brazilian teams in several sports, mainly soccer. Local sports executives have expressed concern about losing revenue if these businesses are permanently shut down and have called on the federal government to allow them to continue operating.