Summary
- Illegal gambling poses an increasingly serious threat to the regulated market in Brazil
- The tables have turned - 55% of the market is now supposedly controlled by offshore operators
- Black market operators are flexible, adaptable, and quick, whereas regulators are still struggling to muster a response
Illegal gambling operators in Brazil are still a threat to the regulated market, with 55% of the total controlled by such entities, a new report by VEJA Negócios highlights. The report cites André Gelfi, President of the Brazilian Institute for Responsible Gaming, who argues that despite the initial rush towards the regulated sector, there are thousands of clandestine websites that continue to operate locally. While they may be based offshore, and not necessarily unlicensed, they are considered illegal under local law, which prohibits companies not licensed by Brazil from offering games of chance or sports betting products domestically.
Consumers are not always sure which websites are legal
VEJA Negócios argues that the black market is adaptable, flexible, and ultimately motivated to grow its reach in the country. While in the first quarter of the year, the legal market accounted for 55% of the total, the media writes, this has quickly tipped in the black market’s favor after that, with the legal market pared down to 45% compared to 55% for black market operations. VEJA Negócios delved into what made these black market operations competitive, arguing that they are not beholden to regulatory standards, nor having to pay tax locally, and thus free to plow any revenue they generate back into promotions, better products (read more advantageous odds), and more. Such websites often do not have obligations to protect consumers the same way regulatedcompanies do, argues the report. According to the media, at least 22,000 new promotions target young people a day in Brazil, with marketers using mid-level influencers, as well as messengers such as WhatsApp and Telegram, to leverage the messengers’ encryption protocols to hide their digital footprints. The report cites instances that a number of these offshore websites are set up for the purposes of duping players out of their money - large wins may not be honored, with websites disappearing, as setting up a new domain and mirror website is usually very easy. One of the issues is that 72% of local gamblers can hardly distinguish between a legal and illegal betting platform, which is an issue that consumers and regulators face in other markets, including the United States.
The regulator has limited resources to crack down on illegal websites
The process that allows Brazil to respond to such issues is also somewhat complicated and understaffed. The national regulator, the Secretariat of Prizes and Betting (SPA), has been looking to counteract illegal gambling operators, but only a handful of its employees are actually monitoring for illegal gambling sites and responding to signals about such operators. A compounding issue is that once these domains are detected, they still need to be referred to the telecommunications watchdog before they can be shuttered. Brazil is not unique in dealing with illegal gambling. Europe could have a black market as high as 71% of the total.
