Brazil was meant to be the showcase for regulated online betting in Latin America. Less than two years after its licensed market opened, the government has moved to close it down. The result is one of the most dramatic regulatory reversals the industry has seen, and it is being watched closely well beyond Brazil’s borders.
What the measure actually does
President Luiz Inacio Lula da Silva signed Provisional Measure 1,394/2026 on 25 September 2026. It bans the operation, offer, intermediation and advertising of fixed-odds betting across the country, and the ban covers online sports betting and online casino games. Federal licences end 30 days after publication, and state and district licences have also been cancelled.
The government has also sent Congress an urgent bill that would criminalise running, operating or promoting sports betting, with proposed prison terms of four to six years. Payment processors that handle betting transactions would face shorter sentences under the same proposal. Lula has described the betting industry as a cancer that needed to be removed before it killed the patient.
The timing was pointed. The ban was signed just over a week before the first round of the presidential election on 4 October, and the measure was presented as a public health decision.
A licensed market that barely got going
Brazil’s regulated market opened nationwide only in January 2025. Trade reports put the number of licences issued at roughly 85 to 90, depending on the source, and each licence cost R$30 million. Operators paid that fee on the basis that the licences would run for five years. Flutter has argued that closing the market removes that investment as well as the jobs attached to it.
The clubs were among the first to feel the pressure. Brazilian football had warned that betting firms would pull sponsorships if a ban went through. In 2025 the clubs received R$1.1 billion from betting sponsors, a small fraction of the R$62.5 billion the industry took in that year, according to figures reported by the BBC.
The illegal market moves first
The clearest warning sign has been the rush of unlicensed sites. Bet Legal recorded a 141% rise in detected unauthorised betting domains in the two days after the measure was signed, reaching 710 by the Sunday evening. The Brazilian betting association ANJL reported 6,401 new illegal sites between 22 and 28 September, including a single-day spike of 3,094 on the Sunday after signing. It described that as around 67 times the typical volume.
It is important to read these numbers carefully. Many of the domains detected were not new operators entering the market, but sites that were already operating and had gone undetected. Even so, the pattern is clear: when licensed operators are removed, customers do not stop betting. They look for alternatives, and those alternatives usually have none of the protections a licensed operator must provide.
Flutter’s own estimate is that the illegal share of Brazil’s online betting market fell from 41% to 51% in 2025 to 38% to 44% in 2026. Even on the more favourable figure, the company says up to 44% of the online market remains illegal. Those ranges are a reminder that the market was already large before the ban, and that the debate over whether to close it is also a debate about where players will go next.
The fight is moving to the courts and Congress
The measure is now being challenged. Several football clubs, including São Paulo FC, have petitioned the Supreme Federal Court to suspend it, arguing that it disrupts sponsorship and financial planning agreed years in advance. A separate bill, PL 4,977/2026, would prohibit betting advertising and sports sponsorship while allowing current licences to expire.
Enforcement has also tightened in football. The Brazilian Football Confederation said it would enforce a ban on club sponsorship by bookmakers that lack approval from the Secretariat of Prizes and Bets, starting from 11 October. Clubs and leagues were told to end deals with unapproved operators, following orders from the Ministry of Finance.
Trade coverage published this week describes the campaign against gambling as set to escalate after Lula’s election victory. Whatever happens in the courts, the direction of travel from the government is clear.
Who gets hurt
The immediate losers are the licensed operators and their staff, along with the clubs and media businesses that depended on betting money. Brazil was already a difficult market for some groups. JPMorgan, as reported by Reuters, named the listed companies most exposed to Brazil, and Entain has said its operations there are complying with the measure. For Allwyn, Brazil is Betano’s largest market, which makes the ban a significant issue for its group earnings.
The longer-term losers may be the players. Regulated markets offer identity checks, deposit limits, self-exclusion and transaction monitoring. Illegal sites usually offer none of these, which is the central argument the industry is making to lawmakers.
What operators and affiliates should take from this
The Brazilian case offers some practical lessons, although these are our analysis rather than conclusions drawn by the sources.
- Treat licence stability as a risk to be priced. A licence can be valid today and under review tomorrow, especially in a politically charged market.
- Watch advertising and sponsorship rules as closely as the licensing rules. Bills that ban marketing can reshape a market even when the licences survive.
- Be cautious about content that promotes unlicensed operators. Enforcement is already reaching the commercial partners that drive traffic to them.
- Plan for scenarios where a market closes faster than expected. Diversified exposure across several regulated markets reduces the damage from a single political decision.
The bigger question for regulators
Brazil has raised a question that every regulator should ask: what happens when the licensed market is closed and the demand does not go away? The government’s answer is that a clean break is better than a flawed regulated market. The industry’s answer is that the illegal market will grow in the meantime, and that players will be less protected. Both sides will be tested in the months ahead.
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