Brazil’s government must explain how banning fixed-odds betting will not boost the illegal market

A police operation in São Paulo against clandestine betting platforms is the kind of reminder regulators usually get before they move, not after. The underlying issue for PSPs and acquirers is simple: shutting down licensed operators does not remove demand, it can push volume toward unlicensed operators that are harder to monitor, block, or collect from.

1. On Tuesday, 13 Oct. 2026, the São Paulo Civil Police launched an operation against illegal betting platforms. Investigators said the scheme may have moved millions of reais, defrauded consumers, and laundered money for criminal organizations. The case is being used as evidence that Brazil already has a structured illegal betting market outside normal supervision.
2. The author argues that Lula’s government, by banning fixed-odds betting, hit companies that had been authorized by the state for less than 2 years. Those operators had paid licensing fees, received 5-year operating rights, and accepted regulatory duties covering user identification, anti-money laundering controls, and consumer protection. A provisional measure can terminate that authorization, but it does not erase the customer base those operators served.
3. The São Paulo investigation is presented as proof of the operational risk. According to the authorities, consumers were harmed by platforms that did not honor payments, while funds moved through structures designed to hide their origin. The point for payment providers is not subtle: if regulated rails disappear, the same demand can migrate to actors with no interest in compliance and no incentive to keep clean transaction records.
4. The text also pushes back on the idea that blocking thousands of websites is enough. Domain names can be changed, platforms can move to foreign servers, and payments can flow through increasingly opaque intermediaries. In other words, site blocking may reduce visibility, but it does not, by itself, eliminate wagering or the financial plumbing behind it.
5. Senacon, Brazil’s National Consumer Secretariat, is named as the key agency that needs to explain how it will handle harmed consumers, identify responsible operators, and recover funds that were improperly withheld. The article also says the government should publish verifiable indicators on fraud, complaints, and reimbursements, rather than relying on the number of pages taken offline.

There is a regulatory contradiction here that matters to PSPs: until recently, the state required betting companies to identify customers, monitor suspicious transactions, and maintain support channels. Now, with the authorized supply being cut off, the government will need to show it can offer something comparable against clandestine operators that have no regular presence in the country and often sit outside Brazilian jurisdiction.