Brazil: Illegal betting probe targets $10bn network across three states

Brazilian authorities have launched a new phase of Operation Lucky Tail, targeting a large-scale illegal betting network that may have moved up to BR50bn through unauthorized gambling operations.

The operation, coordinated by prosecutors in Rio Grande do Norte and Pernambuco alongside the Federal Revenue Service, saw 14 search warrants executed across Pernambuco, Ceará and São Paulo. 

No arrests were made during this phase of the investigation.

According to investigators, the case centres on dozens of betting companies that allegedly continued operating without authorization after receiving credentials linked to Lotseridó, a municipal lottery entity created by the city of Bodó in Rio Grande do Norte.

The arrangement was later challenged by the Federal Government, with Brazil’s Supreme Federal Court ruling that municipalities do not have the authority to license betting operators.

Finance Minister Dario Durigan said the companies continued operating even after the authorization model had been struck down.

“One municipality in the interior of Rio Grande do Norte granted authorization to this group of companies for a period of time. That authorization was later revoked by the Supreme Court at our request, but the operation continued,” he said.

Authorities are investigating allegations including money laundering, illegal gambling operations, criminal association, consumer-related offences and tax violations.

Prosecutors allege the group created dozens of betting and payment companies that were formally registered under individuals with little or no financial capacity, while control allegedly remained with a central network. Some entities were reportedly registered under relatives of those involved, while others existed primarily to facilitate financial transactions.

Investigators also pointed to suspected tax evasion, real estate acquisitions linked to money laundering activities and failures to make statutory payments required under Brazil’s betting legislation.