Major Brazil operation exposes billion-dollar illegal betting scheme

On Thursday, the Federal Revenue Service launched Operation Conto da Sorte, a joint action with state Public Prosecutors’ offices that revealed an illegal betting scheme involving 37 companies and an estimated financial movement of BRL50 billion ($9.7 billion).

The information was confirmed by the Minister of Finance Dario Durigan and by official statements from the federal government. He stated that there is zero tolerance for illegal bets.

The operation executed 14 search and seizure warrants in Pernambuco, Ceará and São Paulo. The focus was on collecting documents and media, and verifying the actual structure of the companies under investigation. In addition, the court ordered the freezing of up to BRL145 million in assets. This amount may be used to compensate for damages resulting from the illegal activities.

Scheme operated using shell companies and ‘front men’

Investigations indicate that the group created dozens of companies involved in gambling, betting and payment processing. Many of these were formally transferred to third parties without the economic capacity to operate. Some of these individuals were even recipients of emergency aid, while financial control remained with the scheme’s leaders.

Some of the companies didn’t even physically exist, serving only as mules for banking transactions. Investigators identified money laundering, tax evasion, acquisition of real estate with illicit funds and failure to transfer net betting revenue – an obligation stipulated in the legislation regulating the sector.

Origin of the fraud: Irregular accreditation in a municipality in Rio Grande do Norte

The scheme gained momentum after the Bodó (RN) City Hall created the LOTSERIDÓ autonomous agency, which began to accredit betting companies irregularly. Even after the agency was shut down, the companies continued to operate without authorisation from the SPA. The case was taken to the Supreme Federal Court, which confirmed that municipalities do not have the authority to authorise gambling and betting.

Government strengthens fight against illegal betting.

Dario Durigan stated that the operation is part of the government’s zero-tolerance policy against illegal betting. He highlighted the strengthening of partnerships with Public Prosecutor’s offices to increase the rigour of the actions.

The Brazilian Federal Revenue Service reiterated that it will continue working to combat fraud involving shell companies, tax evasion and failure to pay taxes.

Operation Conto da Sorte marks one of the biggest blows ever dealt against the illegal betting market in the country, revealing a sophisticated scheme with national reach and a billion-dollar impact on public finances.