Lula’s online betting ban in Brazil hands the illegal market a nearly R$100 billion opening

Brazil’s provisional measure No. 1,394 has reversed the 2023 regulatory framework for online sports betting, putting licensed operators in legal limbo and, according to the reported analysis, opening the door for organized crime to take a much larger share of a market worth up to R$97 billion in 2025. For PSPs, acquirers, and banks, the immediate issue is not theory: when legal rails disappear, volume does not vanish — it migrates.

1. President Luiz Inácio Lula da Silva signed the measure on Tuesday (25/9), and it prohibits online sports betting in Brazil. The report says the move undoes the government’s own 2023 framework, which had required licensed operators to pay a R$30 million fee for a five-year license, keep their headquarters in Brazil, use biometric registration for players, and block underage betting.
2. Licensed operators lose the legal basis to keep operating, and the text says there is no provision for reimbursing the investments they already made. That is the part payment teams should care about first: contracts, settlement flows, and compliance setups built for a regulated market can be stranded overnight.
3. According to LCA consulting data cited in the report, online betting in Brazil moved up to R$97 billion in 2025. Illegal operators accounted for 44% of that volume, or R$43 billion. Before the measure, the projection for 2026 was a total market of R$100 billion, with the criminal share falling to R$41 billion; after the ban, illegal operators are now competing for the entire amount.
4. The first weekend after the measure was signed, 4,700 illegal websites were created in Brazil. That is a fast, visible signal of what happens when regulated demand does not disappear but is forced into darker channels. Bernardo Itri, vice president of the Paulista Football Federation, said: “Prohibiting bets is a mistake. The measure will inevitably push bettors into the illegal market.”
5. The report also points to international precedent. The Philippines, Cambodia, Laos, and Myanmar banned platforms that had been operating legally, and the result was to turn Southeast Asia into the region with the highest concentration of illegal betting in the world, according to UNODC. China banned gambling in 1949 and barred bets on foreign sites in 2020; even so, Chinese players spend $145 billion a year on betting hosted in neighboring countries, more than the $91 billion handled by the country’s official lottery. David Forrest, professor of economics at the University of Liverpool and a gambling specialist, said: “I do not know of any country that has succeeded in banning online betting.”

For high-risk PSPs, the operational lesson is blunt: when a state flips from licensing to prohibition, the market usually does not shrink on schedule. It fragments, compliance becomes harder, and illegal operators get the volume that regulated firms were built to process.