Why Brazil’s Legal Betting Market Still Has a 38–44% Illegal Share

Brazil launched its fully regulated online betting market in January 2025, bringing sportsbooks and online casino operators under a federal licensing system. By August 2026, dozens of authorized companies were active in a market that includes major international brands, certified casino games and a broad sports betting product.

Despite that framework, illegal betting remains substantial. Research published in August 2026 estimated that 38% to 44% of online betting volume still takes place on unauthorized platforms, down from an earlier estimate of 41% to 51%.

Brazil’s experience shows that legalization can move a large share of betting activity into a regulated system, but it cannot automatically eliminate an offshore market that was already established before regulation began.

Brazil Built a Competitive Legal Betting Market

Brazil’s regulated market is not a limited alternative to offshore betting. Sports betting received its legal framework under Law 13,756/2018, while Law 14,790/2023 established the current rules for fixed-odds betting and online games.

Since January 1, 2025, companies operating nationally have required authorization from the Ministry of Finance’s Secretariat of Prizes and Betting. Licensed operators use .bet.br domains, giving consumers a visible way to identify federally authorized platforms.

By August 2026, 85 companies had received federal authorization, with each authorization able to cover up to three brands. This created a competitive private market with a large number of operators rather than a restricted system dominated by only a small legal offering.

The casino product is also broad. Certified slots and live casino games, including blackjack and roulette, can be offered legally if they comply with Brazil’s technical and certification standards.

Some formats remain outside the legal framework, including certain skill-based games, peer-to-peer products and fantasy sports. For mainstream users looking for football betting, live betting, slots or live casino, however, the regulated market already offers a product close to international standards.

Why Players Still Use Illegal Betting Sites

The size of Brazil’s illegal market cannot be explained simply by weaker odds or a poorer legal product. Licensed operators face taxation, licensing fees, compliance costs, technical certification and responsible gambling requirements, but those expenses do not automatically translate into worse prices or fewer betting markets.

In a competitive market, operators can absorb part of those costs through profit margins, marketing budgets and operational efficiencies. Offshore operators can also keep their lower cost base for themselves rather than passing it directly to customers through better odds.

The more important difference is found in the restrictions surrounding the product. Among 2,291 bettors surveyed in May 2026, 53% said they had used platforms that did not require facial recognition, while 48% had used domains outside the .bet.br system.

The same research found that 37% had used credit cards and 23% cryptocurrencies. Those payment methods sit outside Brazil’s regulated framework, making the illegal market more flexible for users who want to avoid certain verification or payment controls.

Promotion rules create another gap. Brazil restricts incentives designed specifically to attract customers to open an account or place a first bet, while unauthorized operators can use welcome bonuses, deposit offers, VIP incentives and aggressive affiliate campaigns without following the same limits.

The offshore advantage is therefore not necessarily a superior sportsbook or casino. It is the ability to offer a familiar betting product with fewer regulatory restrictions around registration, payments and promotions.

Consumer Habits Were Established Before Regulation

Brazil’s legal market only began operating in its current form on January 1, 2025, but offshore betting had already been present for years. By the time regulation arrived, users had existing accounts, preferred brands, payment habits and familiar interfaces.

Some established companies entered the licensed system, while others remained offshore. For users who were already comfortable with a particular platform, the introduction of a federal licence did not automatically create a reason to change their behaviour.

This problem is reinforced by limited consumer awareness. Earlier Brazilian research found that 78% of respondents considered it difficult to distinguish between legal and illegal betting sites, while 72% said they did not always check whether the operator they used was authorized.

Professional design, large sports markets and familiar casino products can make an unauthorized platform look very similar to a licensed competitor. The introduction of the .bet.br domain helps create a clearer distinction, but changing habits built over several years takes more than a new domain standard.

Blocking Illegal Betting Sites Has Not Been Enough

Brazil has already used website blocking on a large scale. By mid-2026, authorities said cooperation between the betting regulator and telecommunications authorities had resulted in the blocking of more than 50,000 illegal domains, alongside removals of unauthorized apps and social media content.

The Federal Court of Accounts nevertheless identified important weaknesses in the system, including reactive domain detection, fragmented institutional coordination and delays in identifying unauthorized operators. Those weaknesses help explain why large-scale blocking has not eliminated the market.

A blocked domain can be replaced quickly while customer databases, affiliate relationships, payment arrangements and marketing channels remain active. This creates a continuous cycle in which authorities remove one access point and the operator returns through another.

Brazil Is Now Targeting the Money

Brazil strengthened its enforcement strategy in June 2026 by moving beyond domain blocking and targeting the financial infrastructure behind illegal operators. Financial and payment institutions can now be required to block accounts linked to unauthorized betting and prevent related transactions.

Under the new framework, identified accounts can be frozen within 24 hours following the relevant notification. This is a more direct form of disruption because it targets the operator’s ability to receive and move money rather than only restricting access to a website.

The timing is also important. The survey behind the latest 38% to 44% illegal-market estimate was conducted in May 2026, before the stronger financial-blocking measures were introduced.

Future channelization data will show whether attacking payment infrastructure can reduce the illegal market more effectively than repeated domain blocking.

Other Regulated Markets Still Face Illegal Betting

Brazil is not the only regulated market where offshore gambling remains active. Mature systems in Europe and North America show that legalization improves channelization, but rarely removes illegal betting completely.

• Netherlands: Around 91% of players gamble exclusively with licensed operators, but the legal market captures only about 53% of gambling expenditure.
• Sweden: The regulated market reached an estimated 84% channelization rate in 2025, leaving part of the market outside the licensed system.
• Germany: Research commissioned by the regulator estimated that 22.97% of online gambling activity remained unauthorized.
• Ontario: A 2026 study found that 91.1% of surveyed online players used regulated sites, supported by broad product availability and strong operator competition.

The difference between these markets is not simply whether betting is legal. The key measure is channelization: how effectively regulation moves existing gambling activity into licensed operators and keeps users there.

What Brazil’s Betting Market Shows Turkey

Turkey follows a very different model. Legal sports betting operates under a state-controlled monopoly structure, while online casino gambling is not part of an open licensed commercial market.

The main response to illegal betting has therefore focused on access restrictions, criminal investigations and financial enforcement. The 2025–2026 action plan coordinated by MASAK includes measures targeting illegal betting websites, payment networks, advertising channels and the financial infrastructure supporting unauthorized operators.

Brazil shows why enforcement alone has limits, but it also shows why simply opening the market would not solve the problem. A country can introduce private licences, major international operators and a broad legal product while still retaining a substantial offshore sector.

Turkey also has years of established illegal betting habits behind it. Many users already know offshore platforms, their interfaces, payment systems and betting products, so changing that behaviour would require more than issuing new licences.

Any broader legal market would need a clear channelization strategy from the beginning. The legal product would have to become stronger in betting depth, pricing, technology, market variety and user experience, while illegal operators would simultaneously face pressure across payments, advertising, affiliates, domains and digital infrastructure.

The lesson from Brazil is straightforward: neither licensing alone nor blocking alone is enough. A competitive legal product and strong financial enforcement have to work at the same time if long-established offshore betting habits are to be reduced.