Eduardo Ludmer, head of legal at BetMGM, raises concerns over the allocation of the BRL2.3 billion collected in licence fees, amid mounting challenges in combatting Brazils black market.
Brazils National Telecom Agency (Anatel) is reportedly running out of funding to support efforts to block illegal betting sites in Brazil.
Last week, Folha reported Anatel is lacking the funds and personnel necessary to carry out site blocking orders issued by the Secretariat of Prizes and Bets (SPA), Brazils betting regulator.
The report said Anatel had been impacted by government budget cuts, which was being made worse by the upcoming retirements of civil servants in 2026.
With the illegal market continuing to prove an issue to the newly regulated online betting market in Brazil, BetMGMs Head of Legal Eduardo Ludmer has questioned where the funding for enforcement has been spent. To date, betting operators have paid around BRL2.3 billion ($416,793) in licensing fees, which in part should fund black market enforcement.
You cannot not have resources to enforce the law, Ludmer tells iGB. Everything relates to government spending. Public expenditure has reached unprecedented levels.
Public services in Brazil often fall short in quality, despite being generously funded. So, when we say that our industry is financing the costs of the administration, it feels more like were underwriting a record-breaking level of government expenditure and debt.
Anatel Head of Enforcement Gesil�a Teles told Valor International in June that the agency had blocked over 15,000 illegal sites since the markets inception, with the bodys president, Carlos Baigorri, calling for additional powers to further increase its capabilities.
The licensed Brazil betting sector was rocked recently when the government raised the tax rate on operators GGR from 12% to 18%, a 50% hike, in the form of a provisional measure.
Congress has 120 days from the provisional measures publication on 11 June to vote on whether to make the tax rise permanent.
The government is working to eliminate its budget deficit by the end of 2025. Previous plans to increase the rate of financial transactions tax were altered after the Congress put pressure on the government to adapt the policy. But an alternative policy has also faced pushback.
BetMGMs Ludmer believes betting has been identified as an easy target to help with the budget, especially considering the current public and political pressure on the gambling sector.
They are just trying to go after, lets say the weaker [option], and then they know that many politicians in the opposition are not fond of the betting sector, Ludmer adds.
Its not easy to have all these nuances and the political aspects and complexities that are very intrinsic to this sector right now.
In response to the tax rise, the Brazilian Institute of Responsible Gaming (IBJR) warned the illegal market could grow from a 50% to 60% share of the overall market, as players avoid increased costs.
Increasing the tax burden on operators could be a critical error in the IBJRs view. The way to increase collection is not to penalise those who operate within the law, but to rigorously combat illegality and protect bettors by following the regulation of the sector.
With Anatel already under significant pressure and its powers seemingly waning, rather than being increased as Baigorri said was necessary, it appears the illegal market could continue to prove the biggest threat to licensed operators.
