Brazil’s fixed-odds betting market, now in its second operational year, faces possible regulatory and financial shifts as new tax reforms loom. The market, which saw substantial contributions to public revenue in 2025 and includes 83 licensed operators with 29.4 million active users, is confronting a potential tax burden increase. A study by LCA Consultoria, commissioned by the Brazilian Institute of Responsible Gaming (IBJR), suggests that current tax rates could rise from 32% to 42% by 2033. This development is a result of Brazil’s ongoing tax reform efforts and poses significant concerns for stakeholders due to existing high entry costs, such as the R$ 30 million licensing fee.
The tax reform process involves replacing current taxes like PIS/Cofins and ISS with new levies under the Tax on Goods and Services (IBS) and Contribution on Goods and Services (CBS). Eric Brasil of LCA Consultoria highlights that these changes could elevate the tax burden by 14 percentage points above the Finance Ministry’s proposed baseline of 28%. Additionally, the social contribution rate on sector revenues might see an increase from 13% to 15%. These adjustments raise questions about the economic feasibility of the betting sector in Brazil, as emphasized by Plínio Lemos Jorge, the president of the National Association of Games and Lotteries (ANJL). He stresses the importance of regulatory stability, warning that continuous tax hikes could make operations unsustainable and erode the industry’s foundational trust.
A potential consequence of heightened taxes on operators is the risk of directing consumers toward unlicensed platforms. Higher operational costs might be transferred to users, who could then seek out illegal alternatives. André Gelfi, director and co-founder of IBJR, notes that formalizing the market by 5 percentage points could generate approximately R$ 1 billion in revenue, indicating the need for regulatory focus on curbing illegal betting activities within Brazil.
Further complicating the landscape is the anticipated introduction of a Selective Tax in 2027, often referred to as a “sin tax.” This levy is designed to increase the cost of operating in Brazil. Gelfi argues that this approach misrepresents the betting industry, which operates with lower profit margins and higher operational expenses compared to state lotteries. Applying similar fiscal logic to betting operators could misalign with their economic reality.
As Brazil refines its regulatory and financial structures, it faces the challenge of maximizing revenue without destabilizing the market. While the betting industry has proven economically viable, excessive taxation could drive legitimate operators out and inadvertently bolster the illegal market. In the coming years, Brazil’s ability to sustain a competitive and regulated environment while optimizing revenue will be critical to the industry’s future. The response of the market and potential adjustments to these reforms will be pivotal as Brazil navigates these changes.
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