Brazil Introduces New Rules to Combat Illegal Betting

Brazil has introduced a new regulatory framework to combat illegal betting transactions. The Secretariat of Prizes and Bets (SPA) released Normative Ordinance No 566 on March 21, 2025, which aims to further strengthen the federal betting law established in December 2023. The ordinance introduces new procedures for payment institutions, outlining how they should identify and report illegal gambling transactions, a crucial step in addressing the growing concern over Brazil’s black market for online betting.

A Tougher Stance on Illegal Betting

The new ordinance enforces the stipulations of Article 21 of Law No 14,790, also known as Brazil’s federal betting law. This law, enacted in December 2023, prohibits financial institutions from facilitating or accepting transactions involving gambling operators who have not been licensed by the government. The goal of this law—and now the new ordinance—is to curb the reach of illegal betting operators in the country by leveraging financial controls to block illicit activities.

Under the new regulation, financial institutions are required to put in place systems to identify transactions linked to illegal betting operators. The institutions must report any suspicious activity to the SPA within 24 hours of discovering such transactions. These reports must include detailed information on the individual involved, including their Individual Taxpayer Registration (CPF) number, as well as the rationale behind the suspicious transaction report.

Once the SPA verifies that a financial institution has processed illegal betting transactions, it will notify the relevant payment companies to sever ties with the offending client. This action comes as part of a broader effort to block illegal gambling activities and hold financial institutions accountable.
Clear Guidelines for Financial Institutions

Normative Ordinance No 566 sets out clear guidelines for how financial institutions should operate within the scope of the law. Institutions must develop internal procedures and controls to monitor and identify payments tied to unauthorized gambling activities. The ordinance further stipulates that the SPA will maintain an updated list of legal operators, as well as entities that have either been denied a license or are under investigation by the National Telecommunications Agency (Anatel) for involvement in illegal betting activities.

The financial penalties for failing to comply with these regulations are steep. According to Normative Ordinance No 1,225 and Normative Ordinance No 1,233, institutions that process transactions linked to illegal betting may face fines ranging from 0.1% to 20% of their proceeds, with a maximum penalty set at BRL 2 billion (approximately £271.5 million or €323.9 million). These penalties underscore the seriousness of the Brazilian government’s effort to regulate the betting sector and eliminate illegal operators.

Fighting the Black Market and Protecting Licensed Operators

The launch of Brazil’s regulated online betting market on January 1, 2025, was a significant step towards legalizing and controlling the gambling industry. However, despite the new regulations, the black market remains a persistent issue. Licensed operators argue that illegal gambling entities undermine the competitive landscape by avoiding taxes and bypassing regulatory requirements. This creates an unfair playing field, particularly as licensed businesses are forced to adhere to strict federal guidelines, including paying taxes and implementing robust security measures.

Efforts to tackle the black market through domain blocking have faced challenges. Carlos Baigorri, president of Anatel, likened the process of shutting down illegal betting sites to “mopping up ice”—an ongoing and difficult task. However, industry experts agree that payment blocking is a far more effective way to curb illegal activities.

One of the most impactful measures against illegal betting is the blocking of payments made through Pix, an instant payment system widely used in Brazil. Pix is regulated by the Central Bank and has become a popular payment method in the gambling sector. By banning illegal gambling transactions through Pix, the SPA and Central Bank aim to restrict access to funds for black market operators.

A key figure in this effort, Ari Celia, director at Pay4Fun, a payment services provider, expressed confidence that blocking Pix payments would have a significant impact on the black market. He explained that once commercial banks are alerted to the use of their services for illegal betting, they would be required to shut down the offending accounts immediately. Banks that fail to comply risk heavy fines, leaving little incentive to support illegal operators.

This shift towards payment blocking is expected to be one of the most effective tools in reducing the prevalence of unlicensed gambling in Brazil. By tightening control over financial transactions and reinforcing penalties for non-compliance, the government is working to ensure that only licensed operators can legally process bets in the country.

If any commercial bank isn’t aware they have a company or client that is using illegal sites, as soon as they receive a warning from the Central Bank they will shut down their bank account immediately.

Conclusion

Brazil’s new regulatory measures under Normative Ordinance No 566 mark a critical step in the country’s efforts to regulate its online betting market. By imposing strict reporting requirements on financial institutions and threatening severe penalties for non-compliance, the SPA is seeking to curb the illegal betting industry that continues to undermine licensed operators. With the added focus on blocking illegal payment transactions, particularly through the popular Pix system, the government is making a concerted effort to create a more secure and fair betting environment for both operators and consumers. As these regulations take effect, Brazil is likely to see a more effective fight against illegal gambling and a stronger, more regulated betting market moving forward.