O artigo, assinado por Alex W. Pariente, fundador da Pariente Advisory, analisa o momento decisivo vivido pelo mercado regulado de iGaming online no Brasil. A primeira fase da regulamentação concentrou esforços em licenças, tributação, exigências de conformidade e autorização de operadores.
The next stage will probably be defined by a more complex question: to what extent will Brazil be able to transform illegal market activity into regulated, taxed, monitored and protected activity for consumers?
The discussion does not just involve the iGaming sector. It also covers tax collection, financial integrity, consumer protection and institutional credibility.
The GCI Online Gaming 2025: Global report, from Gaming Compliance International (GCI)¹, estimates that unregulated online gaming handled approximately US$5.9 trillion in betting volume — that is, total bet value, not GGR — globally. The same report estimates that, based on global GGR, only 22% of online activity is regulated, while 78% remains outside formal regulatory frameworks.
For Brazil, this scenario has special relevance because the country is not just building a betting market. It is building one of the most important regulated iGaming ecosystems in the world.
The illegal market is not a separate market
One of the most relevant conclusions of the GCI report shows that the so-called “illegal market” should not be understood as an independent universe. It operates within the same consumer ecosystem as licensed operators.
Consumers simultaneously encounter regulated operators, illegal operators and legally ambiguous products in the same digital channels: search engines, affiliates, applications, social networks, payment systems, advertising, streaming platforms, communications between users and cross-selling strategies.
GCI describes this phenomenon as a “white noise market” in which consumers often cannot clearly distinguish which products are regulated, which are not, and which operate in a regulatory gray zone.
This concept is highly relevant for Brazil. If consumers cannot easily identify licensed operators in the face of illegal alternatives, regulation alone will not be enough to guarantee market integrity. In this context, plumbing becomes the main strategic objective of public policy.
Why plumbing is important
Channeling represents the percentage of consumer activity captured by licensed and regulated operators. A market with high levels of channeling generates:
- higher tax revenue;
- greater visibility for anti-money laundering (AML);
- better responsible gaming controls;
- greater consumer protection;
- more sustainable economies for regulated operators;
- greater confidence from institutional investors;
- better quality of information for regulators;
- less migration to offshore or illegal platforms.
On the other hand, low channeling produces exactly the opposite effect. It allows unlicensed operators to compete without assuming tax burdens, regulatory costs, responsible gaming obligations, KYC controls, AML standards, advertising restrictions or local responsibilities.
This is not competition. It’s regulatory arbitration.
A scenario for Brazil: what if the illegal market represents 50%?
For institutional analysis purposes, consider the following scenario: the legal online iGaming market represents 50% of total GGR, while the other 50% corresponds to illegal or unregulated activity. The example does not represent a definitive estimate of the market. This is a conceptual exercise created to illustrate the economic and regulatory importance of plumbing.
In this scenario, every five percentage points of activity transferred from illegal operators to regulated operators would generate significant value for the country. This move would create new GGR subject to taxation, greater monitoring of player activity, better AML oversight, more consumer protection, more efficient responsible gaming controls, and greater sustainability for licensed operators.
If Brazil were able to reduce the share of the illegal market by approximately five percentage points per year, it could substantially improve the structure of the regulated market over five years. A reduction from 50% to 25% of illegal participation would represent an institutional achievement of enormous relevance. This would not completely eliminate the illegal market — no mature jurisdiction has achieved this result — but it would put Brazil on a trajectory much more aligned with best international practices.
The international reference
GCI’s global findings demonstrate that unregulated activity remains a significant challenge, including in developed markets. The study identifies three main categories:
- regulated gambling;
- unregulated gambling;
- products with characteristics similar to games, but insufficiently recognized or regulated.
These include predictive markets, sweepstakes, social casinos, skin trading and various promotional mechanics similar to gambling games.
The recent regulatory position adopted by Brazil in relation to prediction markets demonstrates that the country understands these risks. Brazil has the opportunity to avoid some of the structural ambiguities observed in more mature markets through clear and upfront definitions on classifications, regulatory perimeters, payments, advertising and inspection mechanisms.
The private sector must be part of the solution
No regulator can resolve migration to illegal markets alone. An effective channelization strategy requires coordinated action between licensed operators, payment providers, app stores, affiliates, advertising platforms, sports media outlets, streaming platforms, search engines, integrity monitoring providers, financial institutions and oversight bodies.
The role of the regulator is to define the regulatory framework. The role of the private sector is to make the regulated market more attractive, safer, easier to identify and operationally competitive.
The five priorities for Brazil
- Make licensed operators clearly identifiable — consumers need to immediately recognize which operators are licensed in Brazil.
- Combat payment leakage — illegal operators cannot operate on a large scale without access to payment systems.
- Regulate the advertising and affiliation ecosystem — the growth of the illegal market depends not only on websites, but also on traffic.
- Improve competitiveness within the regulated market — a sustainable market needs to be secure, but also commercially viable.
- Use data as a regulatory asset — the next phase of market maturity must be driven by data insights and analytics.
What this means for licensed operators
For licensed operators, plumbing is not just a matter of public policy. It also represents a core business issue.
If illegal operators maintain a significant share of consumer activity, regulated companies will continue to compete on an uneven playing field. They pay taxes, comply with KYC requirements, invest in responsible gaming, undergo audits, respect advertising restrictions and maintain local responsibilities. Illegal operators do nothing of the sort.
For this reason, licensed operators must actively support consumer education, responsible advertising, cooperation with regulatory bodies, information sharing, identification of illegal operators and commercially sustainable regulatory frameworks.
What this means for regulators
For regulators, the main challenge is to avoid measuring success solely by the number of licenses granted or the revenue obtained in the first regulatory cycles.
The really relevant indicator will be to verify whether regulated operators are able to gain market share in relation to illegal competitors.
The most successful jurisdictions combine legal clarity, enforcement capacity, consumer education, payments oversight, commercial realism and constant market monitoring. Brazil has the opportunity to build this model.
What this means for institutional investors
Institutional capital will increasingly evaluate Brazil from the perspective of market integrity. Investors will ask fundamental questions:
- Can licensed operators compete profitably?
- Is the illegal market decreasing?
- Do payments receive adequate oversight?
- Is the regulatory perimeter clear?
- Do ambiguous products receive correct classification?
- Are consumers protected?
- Does the inspection have credibility?
- Does the regulatory environment offer sufficient stability to attract long-term capital?
If the responses are positive, Brazil could attract higher levels of institutional investment, not just from iGaming operators, but also from payments, media, technology, compliance, hospitality companies and investors interested in the entire entertainment infrastructure.
Brazil’s strategic opportunity
Brazil entered the modern cycle of online regulation later than other jurisdictions. This can turn into an advantage. The country has the opportunity to learn from more mature markets and avoid many of the mistakes observed abroad.
If it continues to strengthen regulatory coordination, formalize cooperation with the private sector, and build a measurable channeling strategy, it could become one of the leading global success stories in converting illegal activity into regulated economic value.
The real opportunity is not just about reducing the illegal market. It consists of transforming invisible activity into visible activity; activity not taxed in tax collection; unmonitored activity in AML visibility; activity without protection in effective consumer protection; and unstable activity in institutional trust.
This is the true hidden economic value of plumbing.
Conclusion
The illegal online iGaming market does not just represent a regulatory compliance problem. It represents a national economic drain.
For Brazil, reducing the share of the illegal market should become one of the main objectives of the next phase of regulatory maturity.
A disciplined strategy that reduces unregulated activity by just five percentage points per year could generate significant cumulative benefits for the State, licensed operators, consumers and institutional investors.
The path does not depend solely on inspection. It requires a coordinated strategy based on regulation, technology, payments oversight, advertising responsibility, consumer education, business competitiveness, and public-private sector collaboration.
If this process is executed properly, Brazil could evolve from a newly regulated market to a global benchmark in channeling, market integrity and sustainable governance.
This is the real opportunity and, probably, one of the most important economic and regulatory issues for the future of Brazilian iGaming.