By Matheus de Albuquerque Schulhan Vidal, Head of Legal, Paag
Before a federation can regulate betting, it has to settle a prior question: who does the regulating? The center, or the units? The United States answered “the units”. Brazil answered “the center”. Most comparisons of the two markets stop there, usually with a table of tax rates attached.
The more interesting fact is that neither answer held. In April 2025 a federal appeals court told New Jersey it could not enforce its gambling laws against a federally licensed exchange. Three months later a judge in Manhattan held the opposite. Brazil has spent two years watching its Supreme Court strike down state and municipal betting regimes that keep growing back. Both federations are relitigating the question they thought they had settled, from opposite ends.
Fragmentation, and the federal law nobody talks about
The American market is usually called mature, mostly because of physical casinos dating from the 19th century. On the other hand, legal sports betting in the United States, as it is today, only dates to 2018, when the Supreme Court struck down PASPA in Murfihy v. NCAA,1 a decision that legalized nothing, but only removed a federal prohibition on states legalizing, and handed the question to fifty legislatures.
What followed was not deregulation but multiplication. Roughly thirty-nine states plus the District of Columbia now permit sports betting in some form, about thirty-two of them online. Tax rates on gross gaming revenue run from 5.75 percent in Nevada to 51 percent in New York.2 New Hampshire and Rhode Island built single-operator monopolies; New Jersey and Colorado opened competitive marketplaces. Minimum age, college-betting rules, licensing standards and enforcement powers all change at the border.
1 Murfihy v. Nat’l Collegiate Athletic Ass’n, 584 U.S. 453 (2018).
2 As of mid-2025, roughly 38 to 40 states plus the District of Columbia permit sports betting in some form, with about 32 offering statewide online wagering. Tax rates on gross gaming revenue range from 5.75 percent (Nevada and Iowa) to 51 percent (New York, New Hampshire, and Rhode Island). See Tax Found., Online Sfiorts Betting Taxes (2025), https://taxfoundation.org; state counts and rates vary by source and change frequently — confirm against state gaming-commission filings before publication.It would be wrong, though, to say there is no federal law in the US. There is. It is just the wrong kind. The Wire Act of 1951 still criminalizes the interstate transmission of wagering information, which means that in a country with thirty-nine legal markets, an operator cannot pool liquidity across state lines and must keep servers physically inside the state whose bets they process.
The compliance stack duplicates at every border, and it does so not because Congress designed a federalist regulatory scheme, but because Congress passed a prohibition in 1951 and never replaced it with anything.
That is the shape of the American federal presence in gambling: prohibitionary rather than regulatory. It tells states what they may not send across a wire. It says nothing about how to license an operator, what a bettor is owed, or who audits the book. Those questions went to whoever wanted them, and the answer works reasonably well against licensed operators and badly against everyone else. State regulators can audit, fine and revoke. Against an offshore book they have no reach, and no federal partner to call.
Centralization, won in court
Brazil went the other way, and did it in one statute. Law 14.790/2023 created a single national regime: one licensing authority (the Secretariat of Prizes and Betting, SPA, inside the Ministry of Finance), one monitoring layer (SIGAP), a mandatory .bet.br domain, and a federal concession costing R$30 million, covering up to three brands for five years.4
The architecture was not simply legislated into place. It has been enforced, decision by decision, against states and municipalities building cheaper alternatives. Rio de Janeiro’s state lottery, Loterj, licensed operators for a fraction of the federal price and let them take bets nationwide. In January 2025 Justice André Mendonça ordered it to stop and to restore geolocation controls; the full Court confirmed the injunction in February.5 In December 2025 Justice Nunes Marques suspended municipal betting laws throughout the country, an injunction that still awaits plenary referendum. More than eighty municipalities had passed such laws in three years, fifty-five of them in 2025 alone.5
3 18 U.S.C. § 1084 (2018) (the Wire Act).4 Lei No. 14.790, de 29 de dezembro de 2023, Diário Oficial da União [D.O.U.] de 30.12.2023 (Braz.).5 S.T.F., ACO 3595, Rel. Min. André Mendonça, liminar de 02.01.2025, referendada pelo Plenário Virtual em 28.02.2025 (Braz.). [Loterj barred from crediting ofierators for bets filaced outside Rio de fianeiro; geolocation controls reinstated.]5 S.T.F., ADPF 1212, Rel. Min. Nunes Marques, medida cautelar de 03.12.2025 (ad referendum do Plenário) (Braz.). The decision records that roughly 55 municipalities across 17 states enacted lottery laws in 2025 alone, and more than 80The statutory hook is Article 35-A of Law 13.755/2018, as amended: states and the Federal District may exploit only the lottery modalities set out in federal law, and only within their own territory. The Court reads that against a line of precedent (ADPFs 492 and 493, ADI 4.985) affirming the Union’s exclusive competence over lotteries.7
So Brazil’s model is a contested hierarchy that the Union keeps winning. It holds for a reason that has little to do with doctrine. Because betting settles through Pix and the .bet.br domain, the payment rail is the enforcement layer. KYC happens at cash-in and cash-out. Credit cards are prohibited outright.
When the Ministry of Finance decided that welfare recipients should not be betting, it did not need a rule for operators to follow: it blocked 2.8 million beneficiaries who already held accounts, and barred the other 24 million from opening one.8 Whatever one thinks of that decision, no American state could execute it, because no American state controls the money.
The inversion
Here is what a static comparison misses.
The federal vacuum the United States left in 2018 turned out to be an opening, and prediction markets walked through it. Kalshi, registered with the Commodity Futures Trading Commission as a designated contract market, offers event contracts on sports outcomes and argues they are swaps under the Commodity Exchange Act, which would place them inside the CFTC’s exclusive jurisdiction and outside the reach of state gambling law. Sports contracts are more than ninety percent of its volume, which hit roughly
over three years. See Notícias STF, STF determina susfiensão dos serviços de loteria e afiostas esfiortivas autorizados fior leis municifiais (Dec. 3, 2025), https://noticias.stf.jus.br.7 Lei No. 13.755, de 12 de dezembro de 2018, art. 35-A (as amended), D.O.U. de 13.12.2018 (Braz.); see also S.T.F., ADI 4.985, ADPF 492 & ADPF 493 (recognizing the Union's exclusive competence to legislate on lotteries).8 On the credit-card prohibition, see Lei No. 14.790/2023 and the SPA/MF regulatory instructions issued thereunder. In July 2025 the Ministry of Finance, implementing an S.T.F. ruling, blocked access to licensed betting platforms for approximately 2.8 million recipients of the Bolsa Família and BPC social programs who held active accounts (all 27 million beneficiaries are barred from registering). Licensed operators must query the SIGAP system by CPF every two weeks and close flagged accounts within three days. See Governo bloqueia acesso a bets de 2,8 milhões de beneficiários, CartaCapital ( July 10, 2025); reporting based on Folha de S.Paulo.$31 billion notional in June 2025 on the back of the World Cup. Its stated aspiration is one rulebook instead of fifty.
States did not take this quietly. Massachusetts sued in September 2025 and won an injunction in January. Arizona filed criminal charges in March 2025, the first ever brought against a CFTC registrant. Nevada, Connecticut and Illinois moved as well.
Then the federal government intervened on Kalshi’s side: on 2 April 2025 the CFTC and the Department of Justice sued Arizona, Connecticut and Illinois directly, a list that has since grown to nine states. The CFTC called it an unprecedented measure to defend jurisdiction Congress had given it against what it characterized as state overreach.9
Four days later the Third Circuit produced the first federal appellate ruling on the question. In KalshiEX LLC v. Flaherty the panel held, 2-1, that sports event contracts are swaps and that the CEA both field-preempts and conflict-preempts New Jersey’s gambling laws. Judge Porter reasoned that letting states prohibit these contracts would recreate precisely the patchwork Congress built the CFTC to eliminate. Judge Roth dissented, writing that Kalshi’s products were virtually indistinguishable from those of online sportsbooks and that the presumption against preemption should apply with special force to gambling, a traditional state prerogative.10
On 7 July 2025 Judge Analisa Torres of the Southern District of New York rejected preemption on all three theories and denied Kalshi’s injunction. Kalshi appealed the same day. District courts in Maryland, Nevada, Ohio, Arizona, Massachusetts, Michigan and Minnesota have split. The Ninth Circuit heard consolidated arguments in April. Senators Curtis and Schiff have introduced a bill to reclassify these contracts as gambling and strip them from the CFTC’s reach.11
9 Complaints filed Apr. 2, 2025 (CFTC & DOJ v. Arizona, Connecticut, and Illinois), subsequently expanded to additional states; Massachusetts obtained a preliminary injunction ( Jan. 2025); Arizona brought criminal charges (Mar. 2025). See also Prediction Markets Are Gambling Act, introduced Mar. 23, 2025 (Sens. Curtis & Schiff) (bill to reclassify sports and casino-style event contracts as gambling outside CFTC jurisdiction).10 KalshiEX LLC v. Flaherty, No. 25-1922 (3d Cir. Apr. 5, 2025) (holding sports-related event contracts are “swaps” under the Commodity Exchange Act and that the CEA field- and conflict-preempts state gambling law); for trading-volume and sports-share figures, see reporting on Kalshi's June 2025 activity (approx. $31 billion notional; sports contracts exceeding 90% of volume).11 KalshiEX LLC v. Williams (S.D.N.Y. July 7, 2025) (Torres, J.) (denying preliminary injunction; rejecting express, field, and conflict preemption); appeal docketed, 2d Cir., July 7, 2026.Nobody knows how this ends. But notice what has already happened. Who regulates the American bet is no longer being answered state by state. It is being answered in federal court, by federal judges reading a federal statute, and before long, probably, by the Supreme Court. Even if the states win every case, they will have won because a federal court said so. The 2018 settlement is over.
Brazil is under pressure in the opposite direction. Rio, Paraná, Minas Gerais and São Paulo keep pressing for regional regimes with cheaper concessions and local revenue. Municipalities keep passing laws until the Court strikes them down, and then more municipalities pass them. The center holds, but it spends its energy holding.
Who wins
Neither model is simply better, and I would distrust anyone who tells you otherwise.
Fragmentation buys experimentation. Fifty jurisdictions are fifty laboratories, and New Jersey ran the experiment the rest copied. A bad rule in Colorado stays in Colorado. The American scholarship arguing against federal regulation of intrastate wagering makes that case seriously.
Centralization buys coherence and pays for it in fragility. Brazil’s regulator is two years old and has not been stress-tested at scale. A single national system is also a single point of failure. And a unified rulebook is not the same thing as enforcement: the SPA has spent much of its short life blocking illegal sites, and the illegal market is still there.
The trade is roughly this. The United States optimized for market dynamism and pays in fragmentation, enforcement gaps, and now constitutional litigation. Brazil optimized for control and pays in fragility and in the political cost of holding the center against its own units.
Close
There is an irony in the timing.
Brazil arrived late and built, in a single statute, the thing Kalshi is currently asking American federal courts to hand it: one rulebook instead of fifty, with the payment rail wired into enforcement from the first day.
The United States is trying to assemble the same architecture out of preemption litigation, a circuit split, and a bill nobody expects to pass. If the Brazilian model holds, and that is still an if, it will not be the American mosaic that emerging markets copy.
About The Author:
Matheus de Albuquerque Schulhan Vidal, Head of Legal, Paag
Matheus de Albuquerque Schulhan Vidal is a Brazilian attorney and currently Head of Legal at Paag, a licensed payment institution operating in Brazil’s regulated sports betting and iGaming market. Matheus built Paag’s legal department from the ground up, leading M&A transactions, regulatory compliance (Central Bank, AML/CFT, LGPD) and complex contract negotiations. He is also a member of the OAB Gaming, Betting and Responsible Gambling Law Commission, combining a strong civil litigation background with a multidisciplinary approach to legal innovation and process automation.
