The anatomy of Brazil’s online casino legalisation: From legal framework to market reality

Brazil has emerged as a true giant in the iGaming industry. According to Blask, 173 online casino and sports betting brands are actively operating in the country.

The Blask Index is a quantitative indicator that estimates the size of the iGaming market in various countries and shows the market share of each brand.

Brazil leads the index at 189 million as of August 2024, a significant increase from the 1.3 million reported in January 2016.

The nearest competitor, South Africa, lags far behind with a Blask Index of 55 million.

The Brazilian iGaming market has demonstrated phenomenal growth, attracting an increasing number of operators.

However, in December 2023, the country adopted a new law regulating online gambling and betting.

How will the market react to these changes in the rules of the game? Let’s examine this with the Blask team.

Rapid market growth prior to regulation

The Brazilian government’s desire to regulate the online gambling and betting market is understandable, given its rapid development in recent years:

• • January 2020: Blask Index 7.5 million
• • January 2021: Blask Index 17 million (126.7% growth compared to January 2020)
• • January 2022: Blask Index 43 million (152.9% growth compared to January 2021)
• • January 2023: Blask Index 158 million (267.4% growth compared to January 2022)

However, in January 2023, amidst political instability and attempts to remove President Lula da Silva from power, growth slowed:

• • January 2024: Blask Index 155 million (1.9% decrease compared to January 2022)

Market peak in September-October 2023

Despite the slowdown at the beginning of the year, the iGaming market in Brazil reached its absolute peak in September and October 2023, with the Blask Index hitting 199 million each month.

This surge in activity could be attributed to several factors:

1. 1. The start of a new football season and other popular sporting events
2. 2. Economic recovery following the political instability at the beginning of the year
3. 3. Anticipation of imminent market regulation, stimulating both players and operators

Milestone 1: The first version of the law – 25 July 2023

After years of delays, sports betting was legalised in Brazil. President Lula signed Provisional Measure No. 1182, implementing Law No. 13,756/2018 with several amendments.

This landmark decision marked a significant shift in Brazil’s gambling landscape. Key changes included:

1. 1. An increase in the gross gambling revenue tax from 16% to 18%
2. 2. A higher license fee, expected to reach R$30 million (€4.84m), up from R$22.2 million
3. 3. The establishment of the National Secretariat for Games and Betting (SNJA) to regulate the sector
4. 4. More stringent marketing and advertising restrictions
5. 5. Explicit permission for foreign operators to apply for licenses

The Brazilian legislature had 120 days to approve the Provisional Measure, although the regulation was then the law of the land.

This legalisation endured a long journey in the period since sports betting was first approved in 2018, when the government missed deadlines to approve technical regulation.

President Lula, considered more gambling-friendly than his predecessor Jair Bolsonaro, signed the measure amid public pressure following match-fixing scandals in the country.

This watershed moment represents the most significant step forward in regulating sports betting in Brazil since the 2018 law was first passed by the Senate.

The state of iGaming in Brazil as of July 2023

• • 157 brands active in the market
• • Blask Index: 183 million
• • eFTD (estimated First Time Depositors): 5.6 million
• • eGGR (estimated Gross Gaming Revenue): 403 million

Top 5 brands by Relative Market Share (RMS) and Blask Index

1. 1. Betano: 21.11% | 38m
2. 2. Bet365: 16.76% | 31m
3. 3. Betnacional: 8.04% | 15m
4. 4. Esportes da Sorte: 7.36% | 13m
5. 5. Sportingbet: 6.85% | 12m

Milestone 2: A pivotal moment in Brazil’s iGaming regulation – 13 September 2023

On 13th September 2023, Brazil’s Chamber of Deputies prepared to vote on an amended version of the sports betting regulations, marking a significant development in the country’s iGaming landscape.

This bill, an evolution of President Lula’s July Provisional Measure, introduced several key changes:

1. 1. Expansion to online casinos: The bill notably extended regulation to online casino gaming, broadening the scope beyond sports betting. This move potentially opens up a substantial new market segment for operators.
2. 2. Definition of online games: The legislation defined online games as virtual betting determined by random future events, establishing a legal framework for a wide range of casino games.
3. 3. Tax rates: The bill maintained the 18% tax on gross gambling revenue and introduced a 30% tax on prizes over R$2,112, despite industry criticism of these high rates.
4. 4. License fee: The R$30 million license fee remained unchanged, potentially creating a barrier for smaller operators.

Market impact

While these changes were still at the proposal stage, they signalled the direction of regulation and highlighted potential opportunities and challenges for the industry. The market responded positively:

• • The number of brands increased from 157 to 163.
• • The Blask Index grew from 183 million to 199 million (+8.7%).
• • eFTD rose from 5.6 million to 6 million (+7.1%).
• • eGGR increased from 403 million to 423 million (+5%).

Top 5 brands by RMS and Blask Index in September 2023

1. 1. Betano: 18.32% | 37m
2. 2. Bet365: 15.51% | 31m
3. 3. Betnacional: 9.22% | 18m
4. 4. Esportes da Sorte: 7.94% | 16m
5. 5. Sportingbet: 6.33% | 13m

Analysis

1. 1. Overall market growth was evident across all key indicators.
2. 2. Market share redistribution occurred among the top brands, with Betano and Bet365 slightly losing ground while others gained.
3. 3. User activity generally increased, as reflected in the rising Blask Index for most brands.
4. 4. The entry of new brands suggested growing operator interest in the Brazilian market ahead of regulation.

This legislative development, while still pending approval, represented a significant step towards a comprehensive regulatory framework for iGaming in Brazil, with the market showing clear signs of anticipation and growth.

Milestone 3: A landmark decision for Brazil’s iGaming industry – 21 December 2023

On 21st December 2023, Brazil’s Chamber of Deputies approved Bill No 3626/23, marking a significant milestone in the regulation of sports betting and online gambling in Brazil.

This decision followed the Senate’s approval on 12th December, with several key amendments:

• • Mandatory Brazilian partnership: Operators must have a Brazilian partner holding at least 20% of the company’s capital in the country.
• • Enhanced security measures: Implementation of appropriate cybersecurity systems and player identification processes.
• • Advertising restrictions: Unlicensed operators are prohibited from advertising in Brazil.
• • B2B limitations: B2B partners cannot provide technology to unlicensed B2C companies.
• • Bonus ban: Bonuses will be prohibited.

The bill was ready for President Lula’s final approval. If signed into law, the regulated market was expected to launch in 2024, potentially helping the government achieve its goals of increasing revenue while reducing the fiscal deficit.

Market impact

The iGaming landscape in Brazil showed mixed reactions to these developments:

• • The number of brands reached a peak of 173, indicating growing interest despite regulatory changes
• • Blask Index slightly decreased to 181 million from 199 million in September
• • eFTD decreased to 5.4 million
• • eGGR slightly decreased to 420 million

Top 5 brands by RMS and Blask Index in December 2023

1. 1. Betano: 20.86% | 38m
2. 2. Bet365: 16.34% | 30m
3. 3. Esportes da Sorte: 7.71% | 14m
4. 4. Betnacional: 7.69% | 14m
5. 5. Sportingbet: 6.77% | 12m

Analysis

1. 1. Market consolidation: Leading brands like Betano and Bet365 strengthened their positions, while others saw slight declines in market share.
2. 2. Temporary slowdown: The slight decrease in key indicators (Blask Index, eFTD, eGGR) suggested a period of adjustment as operators prepared for the new regulatory environment.
3. 3. Increased competition: The rise in the number of brands to 173 indicates growing interest in the Brazilian market, potentially leading to increased competition and temporary pressure on individual operators’ performance.

Milestone 4: An Unexpected Downturn – February 2024

In February 2024, Brazil experienced several significant events that potentially impacted the iGaming market:

• • Political developments: On 26 February 2024, a massive rally in support of former President Bolsonaro took place in São Paulo. This event, attracting tens of thousands of supporters, highlighted the ongoing political tensions in the country.
• • Sporting events: The Brazilian football championship matches held in February likely influenced sports betting activity.
• • Regulatory changes: Preparations continued for the launch of the regulated iGaming market, scheduled for 1 January 2025, potentially causing uncertainty among operators and players.

Analysis of Brazil’s iGaming market data for February 2024

1. 1. The number of brands remained stable at 173, indicating market stability.
2. 2. Blask Index dropped to 126 million (from 181 million in December 2023), signalling a significant decrease in activity.
3. 3. eFTD decreased to 3.8 million (from 5.4 million in December 2023), suggesting a reduction in new deposits.
4. 4. eGGR fell to 369 million (from 420 million in December 2023), reflecting an overall decline in revenue.

Top 5 brands by RMS and Blask Index in February 2024

1. 1. Betano: 24.09% | 30m
2. 2. Bet365: 17.80% | 22m
3. 3. Sportingbet: 7.76% | 9.8m
4. 4. Esportes da Sorte: 7.75% | 9.7m
5. 5. Betnacional: 5.27% | 6.6m

Possible reasons for the decline

1. 1. Seasonality: February is traditionally a less active month for iGaming in Brazil.
2. 2. Political uncertainty: The pro-Bolsonaro rally may have diverted attention from online gambling.
3. 3. Regulatory anticipation: Operators and players might have adopted a wait-and-see approach ahead of new regulations.
4. 4. Economic factors: A potential economic downturn could have led to reduced spending on gambling.

A February 2024 survey of 627 adult Brazilian real-money players revealed strong support for iGaming regulation. 84% backed online gambling licensing, 92% advocated for clear laws, and 87% believed it’s important for gaming companies to be registered, licensed, and pay taxes in Brazil. 69% of respondents actively follow news and updates on online gambling rules.

The survey also highlighted player concerns: 47% worried that legalisation could increase gambling addiction risks, while only 61% felt confident in distinguishing safe gaming sites from fraudulent ones. Just 60% knew how to protect their personal information when gambling online.

Comparing online casino players to sports bettors showed that casino players were slightly worse at recognising safe sites (58% vs 75%).

However, both groups highly approved of licensing (88-89%) and were more aware of laws (60-68%) than lottery and bingo players.

Milestone 5: Brazil’s four-stage plan for iGaming regulation – 10 April 2024

On 10th April 2024, Brazil’s Ministry of Finance published a crucial ordinance outlining a four-stage plan to implement regulations for fixed-odds betting, as approved in Bill No 3626/23.

This marked a significant milestone in the country’s journey towards a fully regulated iGaming market.

Key points of the plan

1. 1. The Regulatory Policy of the Prizes and Betting Secretariat (SPA) was to structure and publish the regulations.
2. 2. The process was set to be completed by the end of July 2024.
3. 3. Four stages of implementation:
   • • Stage 1 (until April 2024): Technical, payment, security requirements, and licensing rules for operators.
   • • Stage 2 (until May 2024): Anti-money laundering, anti-terrorist financing, fraud prevention policies, and rules to protect bettors’ rights.
   • • Stage 3 (until June 2024): Technical and security requirements for online gaming and procedures for monitoring gambling advertising.
   • • Stage 4 (until July 2024): Procedures for allocating industry contributions to socially responsible causes.

Market impact

The iGaming market in Brazil showed positive signs following this announcement:

• • The number of brands remained stable at 173, indicating market maturity.
• • Blask Index increased to 152 million (from 126 million in February 2024).
• • eFTD rose to 4.6 million (from 3.8 million in February 2024).
• • eGGR slightly increased to 370 million (from 369 million in February 2024).

Top 5 brands by RMS and Blask Index in April 2024

1. 1. Betano: 26.66% | 41m
2. 2. Bet365: 17.18% | 26m
3. 3. Sportingbet: 9.56% | 15m
4. 4. Esportes da Sorte: 8.31% | 13m
5. 5. Betnacional: 5.47% | 8.3m

Analysis

1. 1. Positive market reaction: The clear regulatory plan seems to have boosted market confidence, reflected in the growth of key indicators.
2. 2. Strengthening of market leaders: The top 5 brands, especially Betano and Bet365, significantly strengthened their positions, suggesting better preparedness for upcoming regulatory changes.
3. 3. Market stability: The consistent number of brands (173) indicates market maturity and a cautious approach from new entrants.
4. 4. Cautious optimism: While indicators improved, the modest eGGR growth suggests operators are still cautious about major investments or expansions.
5. 5. Preparation for change: The clear regulatory timeline allows operators to better prepare for upcoming changes, potentially explaining the increased market activity.

Overall, the publication of this regulatory plan brought more clarity to Brazil’s iGaming market, leading to moderate growth in activity.

However, operators appeared to maintain a cautious stance, likely waiting for full implementation of all regulatory stages before making more aggressive moves to expand their market presence.

Milestone 6: The Licensing Deadline – 20 August 2024

On Tuesday, 20 August 2024, an important moment in Brazil’s iGaming regulation journey occurred as the deadline for federal license applications closed.

The Ministry of Finance’s Betting Management System (SIGAP) registered 113 applications for accreditation, marking a significant milestone in the country’s move towards a regulated online gambling market.

Key points

1. 1. 113 companies submitted applications for federal licenses by the 20 August 2024 deadline.
2. 2. The first official list of approved brands is expected to be published in July 2025, indicating that decisions on applications are still pending.
3. 3. Meridianbet, a subsidiary of Golden Matrix Group, was shortlisted for an exclusive license. This priority status means their application will be processed by 1 January 2025, the projected launch date for the legal sports betting and online gambling market in Brazil.

Market Analysis in August 2024

• • The number of brands remained stable at 173, indicating market maturity.
• • Blask Index increased to 189 million (from 152 million in April 2024), showing significant growth in activity.
• • eFTD rose to 5.6 million (from 4.6 million in April), indicating an increase in new deposits.
• • eGGR grew to 412 million (from 370 million in April), reflecting overall revenue growth.

Top 5 brands by RMS and Blask Index in August 2024

1. 1. Betano: 21.68% | 41m
2. 2. Bet365: 13.88% | 26m
3. 3. Esportes da Sorte: 10.94% | 21m
4. 4. Sportingbet: 8.71% | 16m
5. 5. Betnacional: 7.89% | 15m

Implications

1. 1. Market growth: The significant increases in Blask Index, eFTD, and eGGR indicate continued growth and development of Brazil’s iGaming market.
2. 2. High competition: The large number of license applications (113) demonstrated strong operator interest in the Brazilian market.
3. 3. Market consolidation: The stable number of brands alongside growing overall indicators suggested strengthening positions of existing players.
4. 4. Leadership changes: Esportes da Sorte significantly improved its position, rising to third place since April 2024.
5. 5. Regulatory anticipation: Operators are actively preparing for the regulated market, reflected in the high number of license applications submitted by the deadline. The first official list of approved brands, expected in July 2025, will provide clarity on which operators have successfully secured licenses to operate in Brazil’s regulated iGaming market.

Conclusion

In conclusion, Brazil’s iGaming market has demonstrated remarkable resilience and growth throughout its journey towards regulation.

From the initial legislative steps in July 2023 to the license application deadline in August 2024, the market has shown significant development and adaptation.

Key takeaways from this period include:

1. 1. Steady market growth, with the Blask Index rising from 183 million in July 2023 to 189 million in August 2024.
2. 2. A stable number of brands (173) indicating market maturity.
3. 3. Shifting market shares among top operators, with Esportes da Sorte notably improving its position.
4. 4. Strong interest in the regulated market, evidenced by 113 license applications.
5. 5. Ongoing preparation by operators for the new regulatory environment.

The market has responded positively to regulatory clarity, with key indicators such as Blask Index, eFTD, and eGGR showing growth. However, operators remain cautious, likely waiting for full implementation of regulations before making aggressive expansion moves.

As Brazil’s iGaming landscape continues to evolve, Blask and NEXT.io will vigilantly monitor market changes and provide monthly updates on developments. These reports will offer valuable insights into market trends, regulatory impacts, and shifts in operator dynamics, helping stakeholders navigate this exciting and rapidly changing market.

Stay tuned to the latest Blask x NEXT.io analysis for the most up-to-date and comprehensive analysis of Brazil’s iGaming market as it enters this new regulated era.

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