A new study by Aposta Legal has found that several betting platforms licensed solely by state lotteries are operating beyond their sanctioned boundaries — reigniting long-standing tensions over Brazil’s divided gambling governance.

According to the report, state-licensed entities represented less than 1% of all online betting traffic in Brazil during Q3 2025, generating approximately R$15.4m in revenues.

In theory, such platforms must serve only players within their own jurisdictions. Yet 87% of those websites remained accessible nationwide, according to data collected between July and September — a finding that underscores the blurred line between state and federal authority.

Grey area of boundaries 

The revelations have revived debate over the scope of state powers versus federal oversight in gambling regulation. While Paraná, Rio de Janeiro, Paraíba, and Maranhão each have advanced frameworks for state-level licensing, critics argue that these do not comply with federal law applied since the launch of the Bets market on 1 January 2025. 

Under Brazil’s constitution, state boards may authorise lotteries and jogo do bicho, but not online gambling, a grey zone now under formal review by the Secretariat of Prizes and Betting (SPA).

States defend oversight

Francisco Petrônio de Oliveira Rolim, Superintendent of the Paraíba State Lottery (Lotep), said the authority maintains “a permanent routine of monitoring and supervision through its Technical and Inspection Management Office and State Intelligence Division.”

“When signs of irregularities arise, Lotep conducts formal investigations. Confirmed cases result in administrative measures including warnings, suspensions, fines, or even licence revocation,” Rolim stated.

Aposta Legal estimated that state-licensed operators exceeding their jurisdictions could account for a potential federal tax loss of up to R$2m per quarter. The estimate, based on Ministry of Finance data, highlights the murkiness of revenue attribution between state and federal markets.

Eric Brasil, economist at LCA Consultores Econômicos, explained that once bets are processed and taxes are paid, the resulting proceeds are absorbed into the national accounts.

“They’re illegal only in the sense that they take bets outside the state,” he said. “But once GGR is generated and taxed, it’s recorded here anyway — we simply can’t separate what’s legal from what isn’t.”

SPA reasserts authority

Following the report, the SPA reaffirmed that the Ministry of Finance holds sole national authority over the regulation and authorisation of fixed-odds betting.

“The law permits states and the Federal District to operate only within their own territories,” SPA clarified. “Where illegal activity is detected beyond these boundaries, the Ministry notifies the responsible entity. Repeated violations may prompt legal action from the Attorney General’s Office.”

The SPA confirmed that its compliance unit reviewed the platforms cited in the report and found four – from Paraná, Sergipe, and Tocantins – to be compliant, noting that while accessible nationwide, they do not permit registration or betting outside their home jurisdictions.

Final vote on tax doubling 

State licensing remains a contentious issue within Brazil’s fragmented gambling framework, with further tensions expected in 2026 as Congress and the Senate revisit long-delayed legislation to legalise land-based casinos, bingo halls, arcades, and horseracing.

For now, attention turns to Senate hearings this week, where lawmakers are expected to vote by the end of November on the proposal to raise the Bets licence tax from 12% to 24%.

The measure, part of a broader fiscal package affecting fintech firms and Bets licensed operators, represents a final opportunity for Finance Minister Fernando Haddad and President Lula da Silva to revise the 2026 federal budget and close the funding gap for key social programmes.