Brazil’s iGaming Market Faces Black Market and KYC Challenges: Insights from Betano’s Regulatory Chief
Published: June 6, 2025
Author: Betrebels BLOG Editorial Team
- Introduction: Booming Market, Hidden Risks
- The Black Market: Still Dominating the Numbers
- KYC: Crucial but Costly
- Was the Delay Worth It? Brazil’s Regulatory Strength
- Ad Restrictions and the Importance of Balance
- Concrete Measures to Combat Illegal Operators
- Betano’s Response: UX and Education
- Looking Ahead: Transformation in Progress
- Key Takeaways
Introduction: Booming Market, Hidden Risks
Since Brazil officially launched its regulated iGaming market in January 2025, the country has seen explosive growth across both casino and sportsbook segments. But behind the scenes, a pressing concern remains: illegal operators still account for nearly 60% of monthly gross gaming revenue (GGR). Ioannis Spanoudakis, Chief Regulatory Affairs Officer of Betano (Kaizen Gaming), warns that the black market continues to undermine regulatory progress.
The Black Market: Still Dominating the Numbers
IBJR Estimates: Over BRL 5.5 Billion Lost Annually
According to the Brazilian Institute of Responsible Gaming (IBJR), illicit gambling operations still generate over BRL 5.5 billion per year. That’s equivalent to the entire national budget for medical equipment under Brazil’s public health system.
How Illegal Operators Persist
- Payment channels: Crypto and offshore e-wallets bypass central banking oversight
- Promotion tactics: Influencer marketing and social media campaigns
- Domain cycling: Regular rotation of domains (.bet, .live, etc.) to avoid IP blocks
KYC: Crucial but Costly
Betano’s Multi-Layer KYC Flow
- Customer enters name, date of birth, and CPF (Brazilian taxpayer ID)
- Cross-verification with public and private databases (e.g., SERPRO, OFAC)
- Facial recognition with liveness detection via smartphone camera
- Deposit limits and loss caps are automatically assigned post-verification
User Friction vs. Compliance Gains
Betano reported a 12% increase in registration drop-offs after strengthening KYC steps. Yet, the same system successfully blocked over 96% of underage or high-risk accounts.
Was the Delay Worth It? Brazil’s Regulatory Strength
Benchmarking Brazil’s Framework
| Feature | Brazil | UK | Spain |
|---|---|---|---|
| Facial Recognition | Mandatory | Optional (high-risk only) | Not required |
| Ad Watershed | 10:30 PM – 6:00 AM | 9:00 PM – 5:30 AM | 9:00 PM – 8:00 AM |
| Pre-KYC Deposit Cap | BRL 200 | £100 | €150 |
Spanoudakis believes Brazil’s five-year delay allowed regulators to integrate global best practices and design one of Latin America’s most comprehensive systems.
Ad Restrictions and the Importance of Balance
New Senate Measures at a Glance
- TV/radio ads restricted to 10:30 PM–6:00 AM
- Celebrity endorsements banned (including athletes and influencers)
- Ads banned on youth-oriented websites and apps
The Danger of Overregulation
Past examples, such as the UK in 2017, showed that excessive restrictions can drive users back to the black market. Spanoudakis advocates for “smart nudges” and user education over hard bans.
Concrete Measures to Combat Illegal Operators
Payment Blocking
Brazil’s Central Bank is piloting tools to flag and block suspicious transactions via the Pix network.
DNS and IP Blacklisting
The national telecom regulator ANATEL is moving toward ISP-level IP range blocks by 2026, modeled after Australia’s fast-track injunction system.
International Collaboration
Brazil is sharing a unified domain blacklist with Spain’s DGOJ to coordinate enforcement across LATAM markets.
Betano’s Response: UX and Education
- One-click reauthentication: Returning users only need a brief facial scan (avg. 3 seconds)
- “Safe Play” tutorials: Over 60% viewership among verified users, reducing support requests by 28%
- Reward incentives: Verified users earn weekly free bets to promote legal engagement
Looking Ahead: Transformation in Progress
Brazil aims to shift 75% of its GGR to the licensed ecosystem by the end of 2025. According to Spanoudakis, “a strong regulatory framework is the foundation for sustainable growth and player protection”. The influx of international operators is a clear sign of the market’s long-term potential.
Key Takeaways
- Eliminating the black market is essential — over BRL 5.5 billion is leaking annually.
- Stringent KYC improves safety but must be paired with frictionless UX.
- The delay in regulation allowed Brazil to learn from global leaders.
- Advertising limits must strike a balance — overregulation is counterproductive.
- Tech-driven enforcement (blocking payments, domains) will be key to success.
Brazil’s iGaming industry is at a turning point. Its future depends on robust enforcement, smart regulation, and user trust in safe, licensed operators.
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