Welcome to Curaçao: How a Caribbean island facilitates the illegal betting boom

On the last day of the State Championship of Rio de Janeiro Division B in November 2023, São Cristóvão hosted FC Rio São Paulo. The teams had nothing to play for, and the away team lined up with ten players because no one else was available. By the start of the second half, FC Rio São Paulo was down to nine men after a player limped off with cramps. 

Yet, in the press box, data scouts from data companies Genius Sports and Stats Perform, accredited by local sports press body, ACERJ (Associação Cronistas Esportivos Rio Janeiro), collected all the match data. Worryingly, a major sports data and integrity company did not flag the match as suspicious. The match was offered in-play on major betting sites Betano and Pixbet in Brazil, and abroad on 1XBet in Spain and 1XRaja.com in Ghana.

Brazil is the Wild West of betting. With no proper domestic regulation, offshore betting companies have descended on the country in droves. 

If anyone asked (and few did), these betting operators would reassure them that they had licences from other jurisdictions, some from Malta, but many from Curaçao, where the identity of betting operators is shrouded in secrecy. 

These international licences are not required to disclose the ultimate beneficial owner of the betting companies. There are no requirements to report signs of suspicious betting, which can indicate match-fixing, and there is little or no recourse for bettors who are not paid.

Swamped by offshore operators who insist these ‘licences’ allow them to operate there, Brazil’s lawmakers have been slow to respond but are moving to create a legal framework for the betting industry that will curb its worst excesses. 

However, what hit Brazil is also hitting other countries which have also been unprepared for an invasion by internet-fuelled offshore betting operators looking for the next unregulated frontier. 

Betting is everywhere on the streets of Brazil

In 2018, the Brazilian legislator moved to overturn a decades-long blanket ban on all gambling that had been imposed by the governments of Getúlio Vargas and Eurico Gaspar in the 1940s. 

Law 13,756 legalised ‘fixed-odds sports betting’ and gave the Ministry of Economy four years to regulate the industry and provide a framework for issuing licences. 

However, because of their religious convictions, Evangelical backbenchers delayed the bill of law moving through Congress and the Senate. As a result, sports betting remained in a grey zone in Brazil between 2018 and 2023. 

Due to the lack of federal regulation, offshore betting operators flooded the market despite the theoretical risk of criminal persecution. More than 1,000 betting operators were estimated to be active and keen to capitalise on a fast-growing market.

On the streets in Brazil, betting is everywhere. Rio de Janeiro perfectly illustrates how omnipresent betting advertisements seek to persuade Brazilians to bet. 

The world-famous Ipanema beach is buzzed by sports planes trailing banners of sports betting operators Esportes da Sorte and Rivalry.bet, promising bonuses of 210 per cent. 

Sportingbet, official sponsor of South America’s premier club competition the Copa Libertadores, advertises at newsstands. On the bus, Aposta Ganha sports the slogan ‘Play for fun’. In the metro, BestBet claims ‘it is the most reliable’, promising a bonus of up to 500 reals (93 euros) for signing up. 

At Maracana metro station, “Betano” is plastered all over the pillars that support the structure of the station. Betano is the title sponsor of the Rio de Janeiro state championship, and the name of the Malta-based operator also features on match tickets. 1XBet features on the advertisement hoardings when Brazil’s national team plays.

Close to 40 per cent of the population over 15 are betting

Online sports betting in Brazil has exploded with betting sites accumulating a total of 2.1 billion visits and 64.1 million unique visitors between September and November 2023, according to Similarweb which measures website traffic.

64.1 million people equal 38 per cent of the Brazilian population, male and female, aged 15 or more. In November 2023, 66 per cent of those visits were concentrated on only 1 per cent of the industry’s websites, and Brazilians spent over 11 billion US dollars on online betting in 2023. 

As in other jurisdictions, bettors can gamble on just about every sport and football match - from the Armenian table tennis festival on 1XBet Brasil to São Cristóvão - Fc Rio São Paulo on Esportes da Sorte and the U-17 World Cup in Indonesia on a vast number of websites. 

The betting brands present themselves as Brazilian. Betnacional’s slogan ‘the bet of Brazilians’ is accompanied by smiling brand ambassador and Real Madrid star Vinicius Jr.

Meanwhile, famous TV commentator Galvão Bueno, Flamengo legend Zico, and football stars Hulk and Cassio all promote Pixbet, and Matheus Cunha, Rodinei, and Joao Gomes, all active players, are brand ambassadors for Esportes da Sorte. 

Other brands seek to reach new audiences through influencers. With 3.5 million followers on Instagram, Diogo Defante broadcast his adventures during the Qatar World Cup for Estrelabet. Craque Neto, with 2.9 million Instagram followers, has teamed up with Bet7k. 

17 of the betting operators operating in Brazil, also sponsor professional clubs in Brazil’s Serie A and Serie B. In the 2022-23 season, 39 of 40 professional clubs in the two top divisions had a betting sponsor. Fourteen of these seventeen operators held a licence from Curaçao, while Betfair, Betano and Novibet held a licence from Malta. 

Naive gamblers have little legal protection

The plethora of Curaçao-licenced operators leaves the Brazilian bettor with little legal protection. 

One of them, Itamar Melo, claims that Pixbet has not paid him: 

“PIXBET didn't pay the two bets I won, the first was R$ 490 and the second was R$ 543,70. I didn’t get what I was owned. I criticise Galvão Bueno who is their ambassador.” 

A Play the Game source described Pixbet as a Ponzi scheme, where the operator moves the money of bettors, and the source questioned if Pixbet has sufficient net gaming revenue to honour their commercial commitments. 

Senator Jorge Kajuru from the Brazilian Sociality Party (PSB) has requested the federal police to investigate Pixbet. 

“I heard Pixbet has committed serious mistakes and crimes, but without the evidence, I don’t judge,” comments Kajuru. 

The problem for Brazil and many other countries around the world is that they were unprepared for the explosion of internet betting that coupled with the increasing proliferation of smartphones has made betting so easy to both do and advertise.

“The market is immature with a general population that is naive and disconnected from the gambling industry around the world,” explains Marcio Mansour, general counsel of 10Bet and previously a tax lawyer.

“Some operators exploit this. They employ basic techniques to attract bettors with welcome bonuses. To the Brazilian bettor, the difference between licences in Curaçao, Malta or [the] Isle of Man matters little.”

Curaçao - a haven for unregulated betting companies

The Caribbean island of Curaçao is at the heart of this invasion where offshore betting operators descend on countries where betting is illegal. 

In Turkey, betting is only permitted with the state operator but betting operators like superbahis.com and 1XBet are popular there. Both have Curaçao licences. In Morocco, blanket advertising from 1XBet led many to believe that betting on the website was legal until the government intervened. 

Curaçao has become a haven for unregulated online gambling because of low taxation, easy access to the banking system, light-touch regulation on online gambling websites and opaque corporate structures. It is not the only source of these offshore operator licences but is probably the largest.

Most of these offshore operator licenses have swathes of mirror licences that users are taken to automatically if a site that is operating illegally is taken down. 

SBGOK, the Foundation for Representation of Victims of Online Gambling, estimates that including mirror websites Curaçao-licenced operators could be responsible for up to 20,000 betting websites around the world.

A 2019 BBC podcast ‘How gambling interests bought a country’ portrays Curaçao as an outpost where lawmakers allow offshore bookmakers a free run. 

Mansour, the general counsel for 10BEt, describes Curaçao like this:

“It’s very loose from a compliance perspective, from a responsible gambling perspective, etc. You can do whatever you want. You could be a newbie without the minimal knowledge of how to operate like a sports bookie and you could simply do it from Curaçao because nobody is going to ask you anything.”

Sublicenses blur the issue further

The problems are further compounded by so-called sublicenses. 

In Curaçao, four companies hold master licenses today: CEG, Antillephone, Gaming and e-Management. Those master licence holders then issue sublicenses to B2C (“business to customers”) operators, even though no explicit provisions in Curaçao’s laws or ordinances allow holders of master licences to exploit their gambling licences in this way. 

However, the system of sublicences has gone unchecked and today hundreds of sublicences exist, lending a semblance of legitimacy to thousands of websites. 

Those sublicenses also allow these betting operators access to the global financial system through a little-noticed loophole. Play the Game has copies of agreements between Curacao-licenced betting operators and payment providers, which ask the former for copies of a financial services licence or a gaming licence. 

The small word ‘or’ is crucial as this allows these shady betting operators to sign a contract gaining access to the global financial system solely with a betting licence. 

The legislation that governs betting operators licensed in Curaçao does not make it legal to take bets in other jurisdictions, and that lack of legality in other jurisdictions also applies to sublicenses. 

“As sports betting continues to globalise, it becomes harder for local gambling regulators and also consumers to differentiate between online legal and illegal betting,” explains Martin Purbrick of the Asian Racing Federation. 

“Illegal betting operators often purchase licences in jurisdictions that do not confer legality beyond that jurisdiction, creating a grey area for consumers and regulators.”

“The question of sublicenses suggests that such status confers the legal right for an operator to accept bets from consumers in jurisdictions in Asia, Europe, or anywhere else outside of Curaçao. Such a licensing regime is fundamentally flawed as it effectively facilitates illegal betting in other countries,” says Purbrick.

Betting operators owe bettors millions of euros

SBGOK helps bettors with claims of non-payment by opaque betting operators, but it is very difficult to hold the operators to account because of weak legislation and the impenetrable nature of the corporate structures involved. 

The foundation currently represents 175 people with claims for more than 12 million euros. So far, 52 have been repaid 3.1 million euros in unpaid winnings. Another 80 are involved in court cases on the island with over 5.5 million euros in outstanding bets.

“There’s so many people that have not been paid it’s incredible. This is the tip of the iceberg,” says Nardy Cramm from the SBGOK. 

“We have claims coming in every day. It’s more likely a thousand times bigger than this because we don’t market ourselves. It’s heart-breaking but we have to choose those with the best chance of success as we only have limited capacity.”

“The whole point of a Curaçao licence is to keep the money under the radar using the sub-licence system and not to identify these people behind the companies. So these people feel invincible because they cannot be sued by the Curaçao government because the Curaçao government does not know who they are. It’s rotten down to the core,” Cramm says.

The failed attempt to change the laws in Curaçao 

Under pressure from the Netherlands, the Curaçao government sought to introduce a new gambling law in 2023 to align with international standards and reform the system of master licences. 

The new law abbreviated as LOK is seen as a way to generate more tax revenue for the government, even if it claims to impose more control and oversight by a new state regulator, the Curaçao Gaming Board (CGB), which will be solely responsible for issuing licences.

The proposed legislation includes multiple reforms: betting operators need a minimum capital of 100,000 euros, player protection is increased and there are new rules for advertisement of online games. 

In addition, an application needs to include personal declarations that reveal the identity of the main stakeholders as well as the wealth of any shareholder with more than a 10% stake. The licences would include strict conditions on anti-money laundering (AML) and responsible gaming.

But expectations that the new legislation will solve all problems are not high.

“The oversight is still precarious,’ says Brazilian sports lawyer Filipe Rodrigues who is a member of the Brazilian sports law institute.

“Even so, it is getting better and now even the sublicences would require a profile on the site of the GCB and adhere to the terms of use of the sublicense. If there is a violation, you can lose the sublicense. Integrated into the local law, the terms of sublicences are quite substantial.” 

In a scathing editorial, leading newswebsite Curaçao.nu questioned the new ordinance and predicted problematic implementation and enforcement as major issues: 

“The LOK contains stipulations aimed at preventing crime and protecting players, but the effectiveness of these measures depends on its execution. And it’s precisely on this point that it looks like there is a lack of decisiveness and transparency. It seems you do oversight the way you have been doing it since 1996, namely: not at all.”

In January, Curaçao’s Parliament rejected the draft of the LOK, calling for substantial amendments. That was not a surprise. In August, Curaçao’s ‘Raad van Advies’ (advisory board) highlighted major shortcomings in the draft including the lack of financial independence of the GCB and compliance with recommendations from the global watchdog, the Financial Action Task Force. 

When reform in Curaçao looked likely to happen, other jurisdictions began to explore the potential for offering licences, including East Timor, Anjouan in the Comoros, Laos and the Tobique First Nation in Canada. 

The subtext seemed clear. There could be a gap in the market for ‘international betting licences’ where few questions are asked of operators. 

The derailing of reforms in Curaçao suggests that for the time being the island will remain one of online offshore gambling’s favourite regions, facilitating what Purbrick describes as “illegal betting operators who claim to be ‘licensed betting operators’ because they have purchased licences from certain jurisdictions which specialise as offshore licensing havens.” 

Chris Kronow Rasmussen, director of governance at compliance consultants Advisense, adds: “They are just postponing their work so they can say we will do something in 2030 or whenever. It’s a never-ending story.”

Brazilian reform may not stop dubious betting operators

In Brazil, legislative reform will render Curaçao licences irrelevant. At the end of 2023, President Luiz Inacio ‘Lula’ da Silva passed a new bill that legalises online sports betting and closes the loophole that lets offshore companies, predominantly with licences from Curaçao, operate in Brazil without regulation or paying tax. 

Lula and his government see the legislative reform as a means to generate tax income which raises questions about the preparedness of institutions to properly enforce the bill and monitor the industry. 

“The motive for the legislation was that, during the Bolsonaro government, for four years, the betting operators made billions and didn't pay a single cent in tax,” says Brazilian senator Jorge Kajuru. 

“I tried to be fair. Let them pay the 18 per cent tax, which is less than what the majority of Brazilian people pay, which is 27.5 per cent deducted from salary.” 

Now, betting operators in Brazil will be taxed 12 per cent of their gross gaming revenue while bettors pay a tax of 15 per cent on net winnings. Bettors will be covered by Brazilian consumer protection laws and Procon – a complaint mechanism of the consumer protection and defence agency. 

“This isn’t just about tax, it is about much more than tax,” contends José Francisco Manssur, a special advisor to the executive secretary of the Brazilian Ministry of Finance. 

“We are dealing with lots of issues that we have never dealt with before. There will be regulation for issues like addiction, responsible advertisement, and tools against money-laundering.” 

The Brazilian government estimates that between 40 and 80 bookmakers will operate in the country. Within the next six months, the Ministry of Finance will set the standards for a Brazilian licence. At present, 134 companies are interested in a licence, including controversial operators 1XBet, Melbet, which has links to 1XBet, and OceanBet. 
 
“Congress said that it would be protecting the Brazilian market,” says Manssur. “Companies in Curaçao or any jurisdictions like that will not be able to provide services in our country.” 

Declining to comment on the individual case of 1XBet, Manssur adds: “I can assure you that it will be very tough [to enter the Brazilian market].” 

However, regulating access to the Brazilian market may not prevent dubious betting operators from deploying operations in the country. As in other jurisdictions, the ultimate beneficial owner of a licence might never be known because operators can circumvent ownership requirements by appointing a front office that defeats the government's due diligence. 

“We won’t see the real owner of Ocean88 or 1XBet because 1xBet Brazil will come with a nominee that they might find in Russia who they trust with gambling experience,” believes Mansour of 10Bet. 

“Then they are going to get a local Brazil partner and apply this to their corporate structure.”  

This is in fact the way 1XBet operates in Nigeria where local company Beaufort Bet acquired a licence in their name and acts there as their franchisee. 

“You cannot expect the authorities to assume that these are not the real officers of the company if they pass the scrutiny, meaning they have a source of wealth, source of funds and gambling experience,” adds Mansour. 

“The betting operator will make a statement that this is the local partner, the owner of the company - and that's my application. Who can say otherwise? It's very difficult for authorities. They cannot work based on speculation.” 

The new bill will compel betting operators to report suspicious betting, which can indicate match-fixing. For too long, Brazil has neglected the fight against match-fixing, not aided by a chronically crisis-stricken CBF, the Confederation of Brazilian Football,  that considers the issue a matter for the authorities. A fraction of the new tax revenue will go to the federal police to combat match-fixing.

Data from Sportradar suggests that incidences of match-fixing are among the highest in the world in Brazil. Sportradar is FIFA’s ‘integrity partner’ -  and also provides live data to the sports betting industry - and it identified 130 suspicious games in Brazil in 2022. Sportradar passed that data on to the CBF, but the governing body didn’t act. 

Both the ministries of sports and finance have already sounded out Sportradar as a potential integrity partner. Antonio de Medeiros, the executive secretary of the Ministry of Sport, says his ministry is not aware of Sportradar’s double role as data collector and integrity monitor. 

It doesn’t bode well for the future. Matches like São Cristóvão - FC Rio São Paulo merit a red flag.