Brazil was once regarded as one of the most promising investment destinations in the global gaming and betting industry. However, regulatory uncertainty, market restrictions, taxation pressures and the evolving political climate are raising difficult questions about its investment attractiveness.

In this exclusive interview, Gildo Mazza, Editor of Brazil iGaming Business examines the realities confronting Brazil’s gaming market, including the current ban debate, regulatory developments, investor sentiment and the challenges facing operators and suppliers.

He offers an insider’s perspective on whether Brazil is losing its competitive edge and what the future holds for international gaming investors.

Lula’s victory: What should Investors Expect?

Brazil has been facing a major institutional crisis since the regulation of the sports betting and online gaming sector. The activity was legalized in 2018, with a two-year deadline, extendable by a further two years, for the sector to be regulated.

However, former President Jair Bolsonaro’s government did nothing in this regard, allowing the market to grow without any oversight.

Discussions on regulating the sector only began in 2023, when President Luiz Inácio Lula da Silva (PT) took office, with the creation of the Secretariat of Prizes and Betting (SPA) within the Ministry of Finance.

Rules were established for licensing operators, implementing Responsible Gambling practices, accrediting international laboratories and defining the sector’s tax burden. The licensing fee was set at R$30 million per company, for a five-year term and the right to operate up to three brands. A R$5 million security deposit and a monthly supervision fee were also established.

On January 1, 2025, companies began operating formally, increased investment in advertising and staff recruitment, and started paying 12% of gross gaming revenue (GGR) in direct tax, in addition to the other taxes applicable to any economic activity. As a result, companies faced a tax burden of more than 35%. The first change came with the increase in the direct tax rate to 13% in 2026, rising to 14% in 2027 and reaching a ceiling of 15% in 2028.

Throughout 2025, companies contributed R$9.95 billion in taxes to the public coffers, and in just the first nine months of 2026, R$11.1 billion. The expectation was that this would reach R$15 billion had Provisional Measure (MP) 1,394 not been issued at the end of September.

By banning the activity, the government breached an agreement after just 22 months of regulation, making it clear that it would not refund the amount paid as a licensing fee.

As a result, Brazil has lost its appeal as an investment destination for the gaming and betting sector. No international investor will take on any risk until the future of MP 1,394 has been determined. And even if it is overturned by the Supreme Federal Court (STF) or the National Congress, uncertainty over possible new measures against the sector will lead investors to assess very carefully whether to enter Brazil or resume operations in the country.

Is Brazil still Investable for Gambling Companies

Given the current uncertainty, I would say that Brazil is not a viable market. The impact of banning an activity that was supposed to operate for five years after just 22 months of operation means that no one can be certain about the market’s future.

Moreover, with the ban, illegal activities, which accounted for around 40% of the market, have been growing day by day. A study by H2 Gambling Capital indicates that banning “bets” (the term commonly used in Brazil for sports betting and online gaming operators) could channel a further R$25 billion to unlicensed operators.

This amount already represents more than twice what the sector generated in the first nine months of 2025 (R$11.1 billion). The illegal market already accounted for around R$28 billion. As a result, the underground industry could end the year with revenue of more than R$50 billion.

Brazil will only be viable for betting companies if the MP is rejected by the Supreme Federal Court or the National Congress. An additional concern relates to Congress’s review of the Provisional Measure. There is convergence among the amendments submitted around retaining sports betting while banning online casino games. In Brazil, online games account for more than 50% of operators’ business. For some operators, online casinos account for as much as 70% of their business.

Legal uncertainty therefore remains high and is a barrier to international investors. Only companies willing to operate in the illegal market may have any success in the country for now. Even then, they risk being blocked through actions by the Secretariat of Prizes and Betting, which remains active, and the National Telecommunications Agency (Anatel), which has adopted measures to block betting domains. Since the ban, more than 6.00 websites have been blocked, out of a total of more than 20,000 that have emerged in the past month.

What are the three most plausible Scenarios

There are three possible scenarios:

The STF could uphold the legal challenges alleging that Provisional Measure 1,394 is unconstitutional. Next week, on November 3, a public hearing will take place with industry associations, government bodies, including the Office of the Attorney General (AGU), which is calling for the Provisional Measure to remain in force, an association of radio and television broadcasters, the Brazilian Football Confederation (CBF) and football clubs.

The aim is to assess the impact of the sector’s ban and gather further input so that Justice Luiz Fux, who is overseeing the case, can reach his decision, which will not be made on November 3 itself. If the Supreme Court does not uphold the claim that the MP is unconstitutional, it may amend certain provisions of the Provisional Measure. In that case, it will be up to the National Congress to deliberate on the matter.

Congress has 60 days, extendable by a further 60 days, to review the MP and the 94 amendments submitted. From November 9, the Provisional Measure will take priority over other business in whichever house it is in—the Chamber of Deputies or the Federal Senate. Given the parliamentary recess, deliberations could continue until early March. In Congress, there are different possible outcomes for the Provisional Measure.

One is the outright rejection of the MP. In that case, the sector would resume normal operations, although it remains to be seen how the market would readjust. Numerous companies have already indicated that they will not return, given the financial difficulties caused by the ban. And the longer it takes for the MP to be rejected, the more companies will go out of business.

Another possibility is for Congress to review the amendments and approve the Provisional Measure with the proposed changes. There is convergence around retaining sports betting while banning online casino games. In addition, other amendments restrict advertising and introduce stricter rules, such as banning sports bets on individual event markets, including cards, send-offs, penalties and so on.

Congress could also approve the Provisional Measure as submitted by the Executive. In that case, sports betting and online gaming would be permanently banned.

The third scenario is for Congress to allow the 60-day deadline, plus the 60-day extension, to expire without considering the Provisional Measure. This scenario is second only to a permanent ban on iGaming in Brazil in terms of its severity. The reason is simple: all small operations would go out of business because they would lack the cash to withstand such a long shutdown.

Medium-sized companies, meanwhile, would undergo an extensive mergers and acquisitions (M&A) process, both among themselves and through acquisitions by ten or twelve major global operators that had previously operated in Brazil and are better able to withstand more than four months of interrupted operations.

Who Pays the Price for the Regulatory Reversal in Brazil

The operators are the ones who pay the price. They invested R$30 million in the licensing fee and a further R$5 million in a reserve fund. They contracted KYC, data and odds companies, as well as providers of other betting services. They also invested substantial amounts in sponsorship and advertising.

Teams such as Flamengo, Corinthians and Palmeiras, for example, were receiving more than R$400 million a year in main sponsorship deals. The investment was made, but the return is not immediate. Brand recognition fades as the days go by. Football clubs are also suffering considerably from the loss of sponsorship funding.

Indirectly, they too are paying for the sector’s ban. Television broadcasters, both free-to-air and pay-TV, are suffering from the loss of advertising, which had been extremely high through the post-World Cup period.

Could Brazil’s Decision Trigger a Latin American Domino Effect

I do not believe there will be a domino effect, because the sector is well regulated in other Latin American countries. Only Argentina has begun a push to ban sports betting in the province of Buenos Aires. They are calling it the “Lula effect” there.

Could Colombia, Peru and Mexico Benefit from Brazil’s Uncertainty

Not only those three countries, but others in the region could benefit as well. Brazilian operators are already looking to expand into new markets in Uruguay, Paraguay and Chile. Some payment service providers are also already looking at these countries.

Has Brazil Exposed a Fundamental Weakness in Gambling Investment

This question has already been answered in questions 1 and 2… but yes, there is considerable institutional fragility, which will hold back any new investment initiative in Brazil’s betting sector.

What does Lula’s victory Mean for the Industry’s Political Strategy

The sector had been hoping for Flávio Bolsonaro’s election, believing that he could reconsider the ban. In my assessment, under the new government (with te same Lula), Brazil will need the taxes paid by sports betting and online gaming companies to keep public finances in order.

There is disagreement within the government itself over the activity’s future. Sidônio Palmeira, the minister heading the Presidency’s Secretariat of Communication, is completely opposed to the sector and is calling for the ban to be permanent.

He argues that Lula’s victory in the second round was due to the betting ban. The Ministry of Finance, on the other hand, which understands the sector, is hoping for the activity to return, with an eye on tax revenue. The associations representing the sector will make a major lobbying effort to preserve the activity. They are willing to discuss advertising restrictions, stricter rules on the games offered and restrictions on how quickly players can place another bet.

What Lessons should Global Investors Take from Brazil? 

They themselves are very cautious about investing in Brazil again. The legal uncertainty caused by banning betting through a Provisional Measure tore up contracts and showed that the government does not maintain lasting rules. Major global companies, many of them publicly traded, are unlikely to risk investing in Brazil for some time, until the Brazilian market settles. They had already invested in the country under rules that appeared clear, only to be caught off guard by the ban.

They will certainly examine the outcome of the review of MP 1,394, what will happen to the licenses, which were terminated on October 25, and the model for new concessions, provided that Brazil establishes a technical regulator with the capacity and independence to challenge political measures. They will also be looking for a tax burden that is not only acceptable but, above all, stable. Investors have already learned that tax changes have occurred, and they will not invest without guarantees that lasting rules will be maintained.

What Would Make you Bullish on Brazil and Latin America Again?

Brazil, with more than 215 million inhabitants, has a strong gaming and betting culture. It had already become the world’s third-largest iGaming market. If the activity resumes and investors feel secure, they should enter—or return to—Brazil. Numerous live casino studios were established in the country, and payment and KYC companies have also been preparing to serve the legal market. Major game providers have their eyes on Brazil as well. Some developers even launched Brazil-themed games, demonstrating their interest in the country.

Major investor-operators could operate in Brazil and turn their facilities into hubs to reach other Latin American countries whose markets are growing or being established. All that remains is for Brazil to offer sustainable and credible conditions to attract investors who have been frightened away.

Gildo Mazza – Brazilian journalist and editor who has specialized in the iGaming, sports betting, and lottery markets for more than 30 years. He is Brazil Editor at iGB (iGaming Business, part of WorldGaming, formerly Clarion), serving as the lead editor for Brazilian market content on the prestigious international iGB – iGaming Business platform.

Throughout his career, he has followed the industry’s major developments at trade shows around the world, including G2E (Las Vegas), ICE (London and now Barcelona), SBC Summit (Miami, Rio de Janeiro, and Lisbon), Sagse (Buenos Aires), and GAT (Bogotá and São Paulo). He frequently moderates sessions at major global and national industry events, such as ICE VOX in London and GAT Events. He regularly leads panels focused on the regulatory landscape, market transitions, and legal compliance for betting operators in Brazil.