Analyst warns ‘overblown’ Brazil illegal market is driving new restrictions

Summary

H2 Gambling Capital managing director Ed Birkin says claims the illegal betting market in Brazil accounts for 60%-80% are exaggerated. H2 estimates the illegal share is closer to 30%, and Birkin warns that inflating the figure risks convincing policymakers the sector is out of control — which could trigger tougher measures against licensed operators.

Since regulation began on 1 January, Brazil’s online market has grown rapidly (H2 puts January revenue at BRL2.2bn and April at about BRL4bn). Yet talks of a massive illegal market persist. Birkin argues some operators are overstating the problem to deflect from their own underperformance, and points to the Netherlands as a cautionary example where rapid growth followed by alarm led to advertising curbs, higher taxes and player limits.

Key Points

Ed Birkin (H2) believes the illegal market in Brazil is significantly overstated; H2 estimates ~30% rather than 60%-80%.
Brazil’s regulated online revenue rose from BRL2.2bn in January to around BRL4bn by April, showing fast legal market growth.
Exaggerating illegal activity could mislead legislators and prompt stricter rules — example: possible GGR tax rise from 12% to 18% and new advertising restrictions.
Birkin suggests some operators inflate illegal-market figures to excuse poor performance in the regulated market.
The Netherlands is cited as a precedent where alarm over growth led to heavy regulation and a now-large illegal segment.
Brazil’s market is top-heavy: removing the top 19 brands leaves many sites with negligible market share, highlighting competition issues among licensed operators.

Context and Relevance

The piece is important for operators, regulators and investors following Brazil’s newly regulated market. It frames current policy debates (tax rises, ad watersheds, KYC friction) and warns that misleading public figures can shape regulation. The article links industry behaviour (marketing, reporting) to potential regulatory backlash — a live issue as governments respond to perceived gambling harm across regulated markets.

Why should I read this?

Short version: if you want to know why shouting that Brazil’s illegal market is ginormous could boomerang and bring harsher taxes and ad bans — read this. Birkin cuts through the drama: the legal market has grown fast, some operators aren’t performing, and exaggerating the problem risks the whole industry getting clobbered. It’s a quick reality check that matters if you work in or with the Brazilian market.

Source

Source: https://igamingbusiness.com/offshore-gaming/brazil-illegal-market-overblown-ed-birkin-h2/