IBJR Brazil CEO warns illegal operators account for 60% of betting market
Brazil launched its regulated online betting market on 1 January, bringing to an end years of regulatory delays, which many blame for a proliferation of illegal betting and gaming sites.
However, concern over the black market still lingers, with licensed operators wary of unfair competition from operators not adhering to the strict regulations enforced by the Secretariat of Prizes and Bets (SPA) for licensed companies.
Gelfi, who is also managing partner of Betsson’s operations in Brazil, is among those concerned by the black market in Brazil. He helped establish the IBJR trade body to provide the sector with independent representation and raise concerns with federal regulators.
In an interview with Poder360, he said unlicensed operators were responsible for approximately BRL1 billion (£125.5 million/€160.8 million/$175 million) of betting GGR a month, equating to 60% of the online market.
In his estimation he utilised pre-regulation figures to estimate the sector’s annual revenue amounts to BRL25 billion.
“Our main challenge going forward is the formalisation of our betting market,” Gelfi said. “There is unmonitored, untaxed economic activity taking place in this market and this makes the development of a sustainable market very difficult.”
Despite the reported dominance of the black market, Gelfi believes its stringent regulation will ultimately bring Brazil among the top regulated global gambling markets.
“Despite seeing informality at absolutely unsustainable levels, we understand that [our] regulation, as a framework, is modern and makes the market competitive,” Gelfi added.
Collaboration key to restricting illegal operators
The IBJR claims to represent 75% of the Brazilian betting market, with its members including giants such as Bet365, Entain and Flutter.
It has vowed to work alongside the SPA, as well as governmental agencies such as the Federal Revenue Service and Central Bank of Brazil, to clamp down on the illegal betting market.
“As an institute, under the leadership of [IBJR executive director] Fernando Vieira, our main objective today is to raise awareness and collaborate with the authorities and regulatory agencies so that we can actually accelerate this process of formalisation,” Gelfi explained.
“We understand that the more fluid this dialogue is, the more effective our work will be.”
One measure being used to counter the black market is site blocking, with Gelfi noting 12,000 illegal sites have so far been taken down.
However, Gelfi has raised concerns over the effectiveness of site blocking as “not enough in itself” to tackle illegal operators.
Instead he, like others, believes payment blocking is the way forward for restricting illegal operators, pointing to a ban on instant payment service Pix as a more effective enforcement effort.
“Perhaps the main mechanism for us to curb the illegal market is the monitoring of financial transactions,” Gelfi added. “The heart of our activity is Pix.
“If financial entities have effective monitoring of who is using Pix [for illegal betting], we can stifle this informality.”