Brazil’s President Luiz Inácio Lula da Silva has drawn sharp criticism from the gambling sector after calling for a complete ban on online betting during a national address marking International Women’s Day. The comments have raised serious questions about regulatory stability in Latin America’s largest igaming market, barely a year after the licensed industry launched.

Speaking on Sunday, Lula described gambling addiction as a national tragedy and urged government branches to unite in prohibiting online betting. He framed the issue as disproportionately affecting women, who he said bear the burden when household income disappears on mobile screens. “Gambling dens are prohibited in Brazil,” Lula stated. “It makes no sense to allow gambling to enter homes, indebting families through cell phones.”

Regulatory About-Face Stuns Investors

The president’s call for prohibition comes with a heavy dose of irony. It was Lula’s own government that regulated online gambling in December 2023, establishing the licensing framework that brought operators into the legal fold on 1 January last year. That legislation included extensive player protections. A recently launched national self-exclusion scheme, for instance.

Ramiro Atucha, founder and CEO of Atucha Strategic Advisory, described the president’s comments as “disrespectful” to investors who entered the market in good faith. Speaking to trade press, Atucha warned that regulatory uncertainty could seriously damage Brazil’s appeal for mergers and acquisitions in the sector. The criticism stings particularly given that licensed operators face stringent KYC requirements, costly certification processes, a 30 million real licence fee, and a big tax burden.

“I struggle to believe that someone as smart as [Lula] will not know that the players are going to end up in the unregulated market,” Atucha said. “All the problems they are listing are to do with unregulated operators, not with regulated operators.”

Black Market Concerns

Legal experts echoed the industry’s scepticism. Udo Seckelmann, partner for gambling and crypto at Bichara e Motta Advogados, argued that Lula fundamentally misunderstands how Brazil’s online betting sector actually works. Online gambling existed for years through offshore operators before regulation brought activity under government supervision.

“Prohibition would not eliminate the market,” Seckelmann explained. “It would simply push it back into the shadows.” He put the likelihood of an actual ban as limited, noting that reversing the regulatory system would require fresh legislation and broad political support. Neither of which appears forthcoming.

The economic consequences of prohibition would be real. Brazil would forfeit major tax revenues while facing a wave of lawsuits from licensed operators. Atucha suggested such a reversal would set a damaging precedent for any company considering investment in Brazil across sectors.

Women’s Industry Group Rebukes Timing

The Association of Women in the Gaming Industry (AMIG) said it was surprised and concerned at both the content and timing of Lula’s remarks. The group criticised what it called the president’s lack of understanding of the sector and took particular issue with his decision to threaten prohibition on a day meant to celebrate women’s contributions.

“Taking advantage of a moment that should be one of celebrating Brazilian women, to threaten a measure that could have a direct impact on working women who support their families ethically and with dignity cannot be acceptable under any circumstances,” AMIG stated. The group highlighted the growing role women play in leadership positions across Brazil’s gambling industry.

Pattern of Regulatory Hostility

This is not the first clash between Lula’s government and the sector it ostensibly regulated. Since the licensed market launched, officials have repeatedly attempted to increase tax burdens on operators. The government initially sought to raise the gross gaming revenue tax from 12% to 18% as part of efforts to address a 20 billion real budget shortfall. That attempt failed. But a gradual increase to 15% by 2028 was eventually approved.

Finance Minister Fernando Haddad sparked similar controversy last July when he claimed he would vote to ban gambling if such legislation reached the Chamber of Deputies. The pattern suggests an ambivalent relationship with the sector, with officials quick to seek revenue from licensed operators while publicly condemning the activity itself.

For now, industry observers consider an outright ban unlikely. The political and economic obstacles appear insurmountable. But the uncertainty itself represents a cost, undermining confidence in a market that only recently emerged from the grey zone.