The man who legalized online gambling in Brazil now wants to ban it.
In December 2023, President Luiz Inácio Lula da Silva signed the law that created Brazil’s regulated sports betting market. Lawmakers had expanded the bill during congressional passage to include online casino games — slots, live dealer tables, the full suite of digital casino products. Lula signed the final version without vetoing the casino clause.
Within eighteen months, Brazil became the third-largest online gambling market in the world, behind only the United States and the United Kingdom. Brazilians were transferring between R$20 billion and R$30 billion per month — roughly $3.9 to $5.8 billion — to betting platforms via Pix, the country’s instant-payment system. The government collected nearly R$10 billion ($1.95 billion) in taxes and licensing fees from the sector in 2025 alone.
And now, weeks before a national election, Lula is preparing an executive order to ban online casino games entirely.
“I think they are an evil for society,” he told a room of civil-society representatives at the Planalto Palace on September 1. He compared gambling addiction to crack cocaine. He said the decision was “two-thirds taken.” On September 16 — one day before Reuters reported the details of the provisional measure — he told a podcast audience that his “personal disposition is to end the bets.”
What is happening in Brazil is not a regulatory adjustment. It is a government attempting to dismantle a major part of an industry it created less than two years ago, while a presidential election runs in the background, and while 188 licensed operators, billions in tax revenue, and the sponsorship economics of Brazilian football all hang in the balance.
How Brazil Built This Market — Then Turned Against It
The regulated gambling framework Brazil launched in January 2025 was, by any measure, a serious piece of regulatory architecture. Law 14.790, signed in December 2023, established a licensing regime, tax framework, and compliance infrastructure for fixed-odds sports betting. During its passage through Congress, the text was expanded to include online casino products — and the government, at that stage, did not resist.
The market grew with extraordinary speed. By mid-2025, Brazil ranked third globally for online gambling revenue. The Secretariat of Prizes and Betting (SPA) — the regulatory body housed within the Ministry of Finance — licensed 188 operators. Major international companies embedded themselves in the market: Bet365, Betano (Kaizen Gaming), Betsson, Flutter Entertainment’s FanDuel-adjacent brands, and Entain, among others.
The football industry moved immediately. Thirteen of the twenty clubs in Brazil’s top-flight Brasileirão signed sponsorship agreements with betting companies. Betano’s deal with Flamengo — the country’s most supported club — runs through 2028, worth approximately €143 million in total over 40 months. Across the league, betting sponsorships are worth approximately R$1 billion annually.
The government, meanwhile, collected R$8.7 billion from the sector between January and July 2026 alone — up 76% year-on-year. Receita Federal has forecast R$13 billion for the full year, money the government has already budgeted toward social programmes.
Everything appeared, from the outside, to be working.
What the Revenue Numbers Were Hiding
Brazilian households recorded R$62.5 billion in net losses from betting between October 2024 and March 2026. That is money that left Brazilian wallets and did not come back — absorbed by operators, with a fraction returned to the state as tax.
The social consequences were not abstract. Brazil’s public health system saw demand for gambling-addiction support surge from approximately 600 consultations per month to 100,000 monthly appointments — a number that strains credibility until you consider the scale of the market and the speed of its growth. Health Minister Alexandre Padilha confirmed the figure publicly.
The Clarice Institute published survey data showing that 1 in 4 Brazilians had reported an episode of family violence linked to betting. Four in ten Brazilian women had had contact with gambling; more than half reported suffering the effects of someone else’s betting problem. Women represented 55% of those seeking addiction treatment — a counterintuitive finding given that men represent a larger share of active bettors, and one that points to how gambling addiction radiates outward through households.
A consulting group estimated that online gambling had absorbed 1.38% of household budgets among families in Brazil’s poorest social categories. The National Trade Confederation reported that online casinos had put 1.3 million Brazilians into default, removing R$1.1 billion from national retail consumption. Among young people, spending on betting was cited as the reason 34% of those who postponed starting university made that decision.
“Although most addicts are men,” Lula said publicly, “the burden falls disproportionately on women. It’s money meant for food, rent, and children’s school that disappears on the cell phone screen.”
The political context matters here. Polls show approximately 75% of Brazilians oppose betting operations. That opposition is strongest among women and young people — the two demographic groups Lula most needs for his October 4 re-election campaign. His opponent, Romeu Zema, announced on August 18 that his first act as president would be to end online betting entirely.
What began as a social policy question had become the most contested consumer issue in Brazilian electoral politics.
The Provisional Measure: What It Would Actually Do
The mechanism Lula is preparing is a Medida Provisória — a presidential provisional measure that takes effect immediately upon publication, with no prior congressional vote. Under the Brazilian constitution, Congress then has 60 days (extendable once by another 60) to convert it into permanent law, or it lapses.
The measure, as reported by Reuters on September 17, would ban online casino games while preserving sports betting. The specific carve-out matters enormously for operators: sports betting and the sponsorship agreements associated with sporting competitions would remain legal. Online slots, live dealer games, and the broader casino vertical would not.
The problem — for the government’s own calculations — is what that carve-out actually leaves intact.
Casino games account for approximately 73.9% of total sector revenue, according to figures from the licensed operators’ association. Sports betting generates the remaining 26.1%. For individual operators, the casino share can run as high as 75-80% of total gross gaming revenue. A ban on casino games, even with sports betting intact, removes the economic engine of most licensed operators’ business models in Brazil.
Those operators paid licensing fees to operate both verticals. They built technology infrastructure, compliance teams, customer support operations, and marketing budgets around those licenses. The National Association of Gaming and Lotteries (ANJL) has estimated that compensation claims could reach R$120 billion if the government changes the rules after operators invested in good faith in the regulated market. That figure includes lost revenue projections, sunk licensing costs, and infrastructure investment.
The industry’s legal position is not without precedent. In Colombia, President Gustavo Petro issued an emergency gambling VAT by decree — and courts blocked it, forcing him to seek congressional approval instead. Brazilian operators are explicitly preparing to pursue the same path.
The Regulator Is Fighting Its Own Government
One of the more unusual dynamics in this story is that Brazil’s own gambling regulator — the SPA — is pushing back against the presidential office’s direction.
The SPA, housed within the Ministry of Finance and therefore technically subordinate to Lula’s government, has argued publicly for “softer measures” rather than prohibition. Its position: enforcement efforts should focus on the clandestine platforms — the unlicensed offshore operators that already account for an estimated 38-44% of total Brazilian gambling activity — rather than banning licensed operators who have complied with the regulatory framework.
This is not a bureaucratic turf dispute. It reflects a genuine analytical disagreement about what a ban would actually achieve. The regulator’s argument is straightforward: if you ban regulated casino games, you do not eliminate demand. You redirect it to unregulated, unlicensed platforms where the state has no visibility, no consumer protection capability, and no tax collection mechanism.
ANJL put it plainly in a public statement: “Instead of reducing the problem, prohibition may transfer it to an environment in which the State has less capacity to monitor, prevent indebtedness, and protect the citizen.”
The black market argument is not a self-serving industry talking point — it reflects the actual experience of jurisdictions that have tried prohibition. Research on markets where regulated gambling was restricted or banned consistently shows that illegal alternatives absorb a significant share of diverted demand. In Brazil, where 38-44% of gambling activity already occurs through unlicensed channels, the baseline for grey market absorption is unusually high.
Who Stands to Lose — and How Much
The Operators
Bet365, Betano, Betsson, Entain, and Flutter are among the major international operators with Brazilian market positions. For all of them, Brazil was the strategic growth market of the decade — the country that would do for Latin American iGaming what the United States did for North American sports betting: open a vast, previously unregulated market to licensed, taxed, responsible-gaming-compliant operators.
For those who built their Brazil strategy around the casino vertical — which is most of them — a casino ban does not merely reduce revenue. It potentially makes the business model of the Brazilian operation unviable. Pragmatic Solutions CEO Ashley Lang has described the potential ban as “a low probability but high-impact scenario.” Others in the industry have used the phrase “treacherous waters.”
The specific exposure varies by operator. Companies with diversified global portfolios can absorb Brazilian casino losses more readily than those that entered the market specifically to capture casino revenue. But even for the largest operators, Brazil at scale was meant to be a flagship market — not a write-off.
Football
Brazil’s football economy is entwined with betting sponsorship in a way that has no parallel in European markets. Betano’s Flamengo deal alone — €143 million over 40 months — represents a level of single-sponsor commitment unusual anywhere in global football. Across the top flight, R$1 billion in annual sponsorship revenue is at risk.
The clubs have already begun organizing. Flamengo, Corinthians, Palmeiras, and São Paulo have all engaged in opposition efforts. Their argument is financial: if casino revenue dries up, operators restructure their marketing spend, and sponsorship budgets follow casino revenue down. The contracts were signed under a regulatory framework that is now being reversed.
The Government Itself
Perhaps the most self-defeating dimension of the proposed ban is what it does to Brazil’s own fiscal position. Receita Federal has forecast R$13 billion in gambling revenue for 2026 — money already committed to social programmes. Between January and July 2026, the sector contributed R$8.7 billion, growing at 76% year-on-year.
A casino ban does not merely reduce future projections. It creates immediate fiscal uncertainty, potential compensation liability of up to R$120 billion, and the ongoing costs of attempting to enforce a prohibition against a well-resourced underground market.
The World Bank’s growth downgrade for Brazil — now at 1.6% — adds context. An economy growing this slowly cannot easily absorb either the social costs of uncontrolled gambling addiction or the revenue hole that prohibition would create. Lula’s government is trying to solve a social crisis in a way that may worsen the fiscal conditions that make social programmes possible.
What Actually Happens Next
The timing of everything pivots around October 4 — the date of Brazil’s first-round presidential election.
Lula’s political calculus is clear: a casino ban announcement before the election is worth more votes than the tax revenue it costs, given the 75% public opposition to betting. Whether the provisional measure is actually published before October 4, or used as a campaign commitment for after, is the immediate question.
If Lula wins re-election, the provisional measure becomes likely. If he loses to Zema — who has made betting prohibition his opening campaign promise — the industry faces a potentially harsher environment from a president with an even stronger popular mandate for action.
The operators’ legal strategy assumes survival through the courts — the Colombia precedent as their template. Challenge the provisional measure as constitutionally improper, force the government to seek congressional approval, and fight the political battle in a legislature where the “betting caucus” of industry-affiliated lawmakers has real influence. Lula himself has acknowledged that congressional math makes a full ban difficult.
The most plausible outcome, at this stage, is a negotiated middle position: a provisional measure that announces the intent to restrict or ban online casino games, followed by a period of industry challenge, political negotiation, and eventual legislative compromise that imposes tighter restrictions — game design rules, advertising bans, deposit limits — rather than outright prohibition.
That is essentially what happened in Brazil with alcohol, tobacco, and high-interest consumer lending: industries that the government found socially harmful, regulated rather than eliminated, because the revenue and employment involved made prohibition economically irrational.
The difference with gambling is the speed. Brazil went from zero to the world’s third-largest gambling market in eighteen months. The social harms that took decades to materialize in tobacco and alcohol arrived in Brazil’s gambling market in quarters. The regulatory whiplash is a consequence of how fast the industry grew — and how unprepared the regulatory and public health infrastructure was for what that growth actually meant on the ground.
The Global Lesson
The Brazil story is not unique to Brazil. It is the compressed, high-speed version of a dynamic playing out across every major gambling market simultaneously: a government legalizes a product it expects to regulate for revenue, discovers that the social harm profile is faster and more severe than anticipated, and then faces a binary choice between prohibition (which has its own costs) and regulation (which requires the kind of enforcement and consumer protection architecture that takes years to build properly).
The UK, the Netherlands, Germany, Sweden — all have gone through versions of this reckoning with online casino in particular, arriving at different positions on the spectrum from restriction to prohibition to regulated access. Brazil is attempting to skip the years of gradual learning and jump straight to the hardest decision.
What makes Brazil different is the scale. At 215 million people and the world’s third-largest gambling market at eighteen months old, whatever Brazil decides becomes a template — or a warning — for every other emerging market watching. India, Nigeria, Indonesia, Mexico: all have large populations, expanding smartphone access, and governments weighing whether to regulate or restrict online gambling.
If Brazil bans casino games and the black market swallows the demand anyway, that failure will be the cautionary example. If Brazil finds a regulatory middle path that actually reduces harm without destroying the fiscal base, that model travels too.
The October 4 election is not just a Brazilian story. The entire global iGaming industry is watching Lula’s next move.
