Brazil’s Permanent Subcommittee on Sports Betting Regulation has stressed that greater focus must be placed on the massive revenue losses to the illicit black market.
In recent days, a public hearing in Congress detailed that the underground gambling sector is believed to generate around R$35 billion ($6.4 billion) per year. That is thought to equal around half of all online gambling activity in Brazil.
There was a consensus at the hearing that the primary challenge facing the South American nation was not the regulated gambling industry, but the proliferation of illegal platforms, and the absence of any controls or player protections.
As with all underground gambling networks, the government in Brazil does not receive any tax revenues from these operations.
Participants at the hearing included the Brazilian Institute for Responsible Gambling (IBJR), together with lawmakers, industry representatives, and other authority bodies.
Fernando Vieira, CEO of the IBJR, noted that the illegal market’s revenue rivals the legal market’s R$38 billion figure, causing the government to lose approximately R$10.8 billion ($2 billion) in tax revenue annually due to untaxed operations.
The discussion placed great emphasis on the fact that illegal platforms operate without any oversight, age controls, or user protections, which only increases the risks of underage gambling, fraud, and other illicit activity.
Last month, the IBJR presented new data showing that the Central West region uses illegal betting platforms more than anywhere else.
Call to suffocate the financial operations of illegal gambling operators in Brazil
Since last year, authorities in Brazil are estimated to have blocked around 17,000 unauthorized websites, averaging over 1,700 per month.
However, the Brazil Congress hearing was told that efforts must be increased to combat the illegal market, especially with the funds that are collected from the regulated sector.
Deputy Caio Vianna, the President of the Subcommittee, who initiated the hearing, called for “financial suffocation” of illegal operators by targeting their payment methods, as shutting down websites alone is insufficient due to their ability to quickly relocate under another jurisdiction.
There was also significant opposition expressed toward the proposed measure, currently under review in the Brazil Congress, to increase the tax on gross gaming revenue from 12% to 18%, which the IBJR warns could weaken the legal market and create further momentum for the growth of illegal platforms.
IBJR chief Viera added, “This is a turning point. If Brazil shifts just 5 percentage points from the illegal to the regulated market, the additional revenue could reach R$1 billion per year.
“The solution is not to hastily increase taxes, but rather to invest in oversight, monitor financial transactions, certify suppliers, and raise consumer awareness. Only then will we reduce the scale of illegality and consolidate a strong and sustainable regulated sector.”
Image credit: IBJR
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