When Legalization Precedes Regulation: Regulatory Timing and the Development of Sports Betting Markets

Governments increasingly face the challenge of regulating newly legalized markets while simultaneously protecting consumers and mitigating social harms. While existing research has focused primarily on the design of regulatory instruments, comparatively little attention has been devoted to the consequences of delaying regulation after legalization. This article develops a regulatory sequencing perspective to examine how the timing of regulation may influence market development and consumer behavior. Drawing on the legalization of fixed-odds sports betting in Brazil, where a comprehensive regulatory framework was implemented several years after legalization, this article argues that delayed regulation shaped the market environment policymakers inherited. It identifies three mechanisms through which this occurred: the normalization of betting and the diffusion of consumer beliefs before the implementation of effective consumer protection measures; the widespread adoption of high-engagement product and platform design features in the absence of regulatory constraints; and the reduced capacity of regulatory institutions to influence market dynamics after commercial practices and industry structures had become established. Rather than treating regulatory timing as a procedural detail, this article argues that it constitutes an important determinant of policy effectiveness in newly legalized markets. Beyond the Brazilian case, the analysis contributes to broader debates on gambling regulation by highlighting how the sequencing of legalization and regulation can shape both market trajectories and the effectiveness of subsequent regulatory intervention.