Illegal Sites Surge as Shock Brazil Gambling Ban Faces Supreme Court Challenge

Hundreds of previously undetected illegal betting websites have surfaced in Brazil since President Luiz Inácio Lula da Silva abruptly banned online gambling on Friday (September 25).

That’s according to Bet Legal, a monitoring platform that operates in partnership with cybersecurity company Iron Security.

The platform identified 295 unauthorized betting domains as of 6 p.m. Friday, when Lula announced the ban. By Sunday evening, that number had risen to 710, an increase of 141% in two days. Some 294 additional illegal sites were identified on Saturday alone, according to Bet Legal.

This doesn’t mean hundreds of new illegal operators entered the Brazilian market in response to the ban. Iron Security was able to establish registration dates for 322 of the newly detected domains and found that 320 had been registered before the prohibition was announced. Just two were registered afterward.

The figures nevertheless illustrate the scale of the illegal market Brazil will have to police as it prepares to dismantle its regulated betting industry.

The government has responded by taking down 506 websites suspected of offering unauthorized betting following the enactment of the ban, according to the Ministry of Justice and Public Security. Authorities also identified 43 Telegram channels and groups promoting illegal betting to more than 212,000 members.

Black Market Warning

Brazil was already fighting a large illegal betting market before Lula signed the measure Friday. Between January 1 and September 22, the Secretariat of Prizes and Betting referred 57,691 web addresses to telecommunications regulator Anatel for blocking.

The National Association of Games and Lotteries (ANJL) argues that eliminating regulated operators will make that task harder by pushing gamblers toward offshore alternatives that do not comply with Brazilian licensing and oversight requirements.

The government says the prohibition is intended to address gambling-related harm and household indebtedness while strengthening action against illegal operators. The measure prohibits the offering, operation, intermediation, and advertising of fixed-odds betting nationwide.

Licensed operators can no longer accept new deposits and must take their websites and apps offline October 6. Federal licenses are scheduled to be revoked October 25.

Supreme Court Challenge

Whether that shutdown occurs on schedule could now depend on Brazil’s Supreme Federal Court (STF).

The ANJL and Brazilian Institute for Responsible Gaming (IBJR) filed a joint petition Sunday asking Justice Luiz Fux to immediately suspend the provisional measure while its constitutionality is considered.

The groups argue the government has failed to demonstrate the urgency constitutionally required to introduce the prohibition through a provisional measure. They note that concerns about vulnerable gamblers, advertising, and online casino gaming were extensively debated when Brazil created its regulated market.

They have asked the court to suspend the ban entirely or, alternatively, protect existing licensees from the measure. A third option would give operators at least six months to wind down rather than forcing an almost immediate shutdown.

A separate industry organization, the National Association for Legal Certainty in Gaming and Betting (Anseja), has also filed a constitutional challenge seeking an urgent injunction.

The provisional measure took immediate effect but must ultimately pass Congress to become permanent. Meanwhile, the discovery of hundreds of previously undetected illegal betting domains highlights the scale of the black market Brazil will have to confront if its licensed operators disappear.