According to recent figures, Brazil currently has 2,316 identified illegal operators, compared with just 167 licensed platforms, creating a ratio of nearly 14 illegal operators for every legal one.
The numbers explain concerns around tax evasion, consumer deception and problem gambling continue to dominate public debate, even as the regulated market expands.
The scale of the illegal market has tangible financial consequences. Estimates indicate that illegal operators generate BR18.1bn ($3.26bn) in gross revenue, slightly surpassing the BR17.4bn attributed to licensed platforms.
The same pattern appears in tax collection: BR4.6bn is believed to be evaded by illegal operators, compared with BR4.5bn in taxes effectively collected from the legal market.
In practice, a relatively small number of licensed companies are shouldering the fiscal burden, while thousands of unregulated platforms operate with minimal friction.
Industry executives argue that much of the sector's reputational damage stems from this imbalance.
Guilherme Figueiredo, commercial director at Betano, said that many of the accusations levelled at betting companies, including failure to pay taxes, misleading players and exploiting problem gambling, are mostly associated with the illegal market.
However, he noted that "the bad reputation ends up affecting the entire industry," blurring the distinction between licensed and unlicensed operators in the eyes of the public.
Enforcement challenges have played a central role in allowing the illegal market to flourish. Brazil's Secretariat of Prizes and Betting operates with limited resources and has historically relied on blocking illegal websites.
This approach has proven insufficient, as illegal operators can rapidly migrate to new domains with little impact on their underlying business.
Still, these steps aim to disrupt illegal operators before players are onboarded, rather than reacting after harm has already occurred.
An anti-gambling front was recently formed in Brazil's Senate
