Brazil’s Ministry of Finance has moved decisively to choke off funding for unlicensed betting operations, placing the burden squarely on financial institutions to police illegal transactions or face joint tax liability themselves. The new framework, formalised through Ordinance No. 1,766, represents a major escalation in the government’s crackdown on clandestine gambling and arrives as the regulated market continues to mature.

The 24 Hour Rule

Under the ordinance, banks, payment processors, and other financial entities now carry shared responsibility for unpaid taxes owed by unlicensed betting operators. The mechanism is straightforward: once the Ministry of Finance issues formal notice of an illegal operation, institutions have exactly 24 hours to block all related transactions. Fail to comply, and they’re jointly liable for the full tax bill.

This puts real teeth into enforcement. Financial institutions cannot simply claim ignorance when a regulator identifies problematic activity flowing through their rails. The notification will be issued jointly by the Secretariat of Lotteries and Betting (SPA) and the Federal Revenue Service, and must include specific details: the operator’s business registration number, the transactions in question, and the account holder facilitating them.

Advertising and Promotion Under Fire

The ordinance extends liability beyond transaction facilitators. Anyone publishing promotional material or advertisements for unlicensed betting websites now faces joint tax liability with no advance notice required. This targets the marketing ecosystem that sustains illegal operators, from social media influencers to affiliate networks promoting unregulated platforms.

It’s a clever two pronged approach. By making financial institutions active gatekeepers and advertising networks exposed to liability, the government creates friction at multiple points in the value chain rather than relying solely on direct enforcement against operators themselves. Most of these operators work from jurisdictions beyond Brazil’s reach anyway.

The Regulatory Context

The ordinance formalises provisions already outlined in Complementary Law No. 224/2025, Brazil’s broader betting regulation framework. As the licensed market expands with newly regulated operators, authorities recognise that clandestine competition represents both a revenue loss and a regulatory legitimacy problem. Unlicensed sites operate with no consumer protections, no tax contributions, and no compliance obligations, undercutting the value proposition of the licensed sector.

The framework also guarantees operators procedural fairness, formalising any tax liability through administrative proceedings with full appeal rights. This balances aggressive enforcement with legal due process, which matters when inevitable legal challenges come.

For the iGaming industry, the signal is clear: Brazil is building the institutional infrastructure to make illegal operations genuinely difficult to sustain. Whether financial institutions cooperate fully remains to be seen. But the liability structure creates powerful incentives to comply.

What the team thinks

Baz Hartley says:

Philippa’s piece rightly highlights Brazil’s muscular approach to shutting down unlicensed operators, and I’d argue this is exactly the regulatory medicine the market needs, but what’s crucial here is execution. Financial institutions will inevitably face compliance costs that get passed down the chain, and the real question Ashworth doesn’t dig into is whether legitimate operators get adequate breathing room during this transition, or whether the joint liability framework becomes so onerous that it punishes law-abiding sportsbooks trying to compete fairly. The 24-hour rule itself is clever consumer protection, yet without clear guidance on what constitutes “reasonable verification,” banks could become so risk-averse that they choke off payments to licensed operators too, which would ultimately harm the regulated market Brazil’s trying to build rather than strengthen it.