The Risks of Banning Regulated Betting in Brazil

Brazil’s federal government is reportedly preparing a Provisional Measure (MP) to ban fixed-odds betting. For PSPs, acquirers, and operators in high-risk verticals, the issue is not just whether demand disappears — it is whether it gets pushed from regulated rails into unmonitored ones.

1. Fixed-odds betting was legalized in 2018, but the regulatory framework was approved only in 2024. The regulated market started operating in January 2025, more than six years after legalization, and the tools governing it are still being refined.
2. The delay left room for unlicensed operators to expand without effective oversight. According to LCA, Brazil’s illegal market represents between 38% and 44% (it was 41% to 51% in 2025). That improvement suggests formalization and consumer protection are moving forward, but the market is still far from contained.
3. The article argues that ending legal supply would not end demand. Some consumers would cut spending or stop altogether, but a significant share would move to clandestine sites. That is especially relevant for users who already struggle to stop gambling: they are exactly the people regulated channels are supposed to keep inside monitored systems.
4. In the regulated environment, the state requires user identification, transaction monitoring, responsible-gambling controls, and enforcement against firms. In the clandestine market, those protections do not exist. So the practical trade-off is not “gambling or no gambling,” but “monitored activity or activity outside the perimeter.”
5. A partial ban on online games would also hit authorized sports betting. Regulated operators offering both products could revisit investments, jobs, contracts, and sports sponsorships, while clandestine operators would become the only ones offering the full menu of services. That weakens the competitive position of licensed firms and, by extension, the case for pushing activity onto regulated rails in the first place.

For high-risk payment firms, Brazil’s point is straightforward: if the legal channel is closed too early, the volume does not vanish. It migrates. And once it migrates, transaction visibility, identity checks, and responsible-gambling controls migrate out with it.