According to André Gelfi, cofounder and CEO of the Brazilian Institute of Responsible Gaming (IBJR), over 60% of Brazil’s monthly gross gaming revenue (GGR) still comes from the illegal market.
On January 1st, Brazil opened its regulated online betting industry, ending years of regulatory delays that many attribute to the growth of illicit gaming and betting websites.
But there is still worry about the black market, and licensed operators are afraid of unfair competition from operators who don’t follow the stringent rules that the Secretariat of Prizes and Bets (SPA) enforces for registered businesses.
Among those who are worried about the Brazilian black market is Gelfi, who also serves as managing partner for Betsson’s business there.
In order to give the industry independent representation and voice concerns to federal regulators, he assisted in the creation of the IBJR trade association.
He said that unlicensed operators were in charge of over BRL1 billion (£125.5 million/€160.8 million/$175 million) in GGR betting each month, which amounts to 60% of the online market, in an interview with Poder360.
He calculated that the sector’s yearly earnings amounts to BRL25 billion using pre-regulation data.
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“The formalization of our betting market is our biggest challenge moving forward,” Gelfi stated. “This market has unreported, untaxed economic activity, which makes it extremely challenging to create a sustainable market.”
Despite the black market’s alleged dominance, Gelfi thinks that Brazil’s strict regulations will eventually place it among the most controlled gambling markets in the world.
“We recognize that [our] regulation, as a framework, is modern and makes the market competitive, even though we see informality at completely unsustainable levels,” Gelfi continued.
Working together is essential to limiting illicit operations
Giants like Bet365, Entain, and Flutter are among the members of the IBJR, which asserts that it represents 75% of the Brazilian betting market.
In order to crack down on the illicit betting market, it has promised to cooperate with the SPA and other government organizations like the Federal Revenue Service and Central Bank of Brazil.
In order to truly speed up this formalization process, Gelfi clarified, “as an institute, led by [IBJR executive director] Fernando Vieira, our main objective today is to raise awareness and collaborate with the authorities and regulatory agencies.”
“We are aware that our work will be more successful if this conversation is more fluid.”
Site blocking is one tactic being utilized to combat the black market; according to Gelfi, 12,000 unlawful websites have been taken down to date.
Gelfi has expressed doubts about the efficacy of site blocking, arguing that it is “not enough in itself” to combat illicit operations.
Like others, he instead thinks that payment blocking is the best approach to limit unlawful operations, citing a restriction on the rapid payment provider Pix as a more successful enforcement measure.
“Monitoring financial transactions may be the primary tool we use to suppress the illicit market,” Gelfi continued. “Pix is at the center of our operation.
“We can suppress this informality if financial entities have efficient monitoring of who is using Pix [for illegal betting].”
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