On November 5, 2025, the Brazilian Institute for Responsible Gambling (IBJR) issued a strong warning about the country’s burgeoning illegal gambling market, which continues to undermine potential revenue gains. As policymakers search for viable solutions to bolster public finances, the IBJR emphasizes that clamping down on the illegal gambling sector, rather than escalating taxes on legal operations, is the key to increasing state revenue.
The scope of Brazil’s illegal gambling market is staggering. Current estimates from research conducted by the Locomotiva Institute and LCA Financial Consulting reveal that nearly half of Brazil’s iGaming market is unregulated, resulting in an annual turnover of approximately R$38 billion (US$7 billion). This figure translates into a significant loss of R$10.8 billion (US$2 billion) in potential tax revenue every year, a gap that the IBJR insists cannot be ignored.
The presence of these unlicensed platforms siphons off essential state resources and leaves consumers vulnerable in an unprotected environment, as stated by the IBJR. With the absence of regulatory mechanisms such as ID checks, facial recognition, and restrictions on credit card use, players are exposed to risks that proper regulation aims to mitigate. Furthermore, the lack of enforcement opens the door to money laundering, sports manipulation, and the non-payment of winnings, all while doing little to curb gambling addiction.
In response to suggestions of increasing taxes on licensed operators, the IBJR contends that such measures would exacerbate the very issues they seek to address. André Gelfi, co-founder of the IBJR, underscored the importance of strengthening oversight and maintaining a competitive environment as the sustainable path to revenue generation and market regulation. Gelfi remarked on the necessity of not burdening legal operators with higher taxes, which could drive them, along with consumers, towards the unregulated market.
Licensed operators in Brazil currently pay a 12% tax on Gross Gaming Revenue (GGR), yet the government’s consideration to double this rate is met with concern by the IBJR. The organization cautions that higher taxes would undermine the viability of legal operations, creating an incentive for migration to the underground economy and ultimately compromising the goal of increasing government revenue.
The IBJR’s position is backed by data suggesting that even a modest reduction in the size of the illegal market could yield substantial revenue gains. For instance, curtailing the clandestine market by merely 5% could generate an additional R$1.1 billion (US$205 million) annually, surpassing the projected financial benefits of raising taxes on the already regulated sector. This insight reinforces the argument that fiscal responsibility and player protection are interconnected, proposing a tax system that rewards compliance and supports investment in Brazil’s regulated market.
As the Brazilian government deliberates between raising taxes or tightening enforcement, the question remains: will the country opt for the immediate financial relief of higher taxes, or commit to the more challenging path of effectively dismantling the illegal gambling sector? To some, the latter offers a more sustainable and ethical approach to revenue generation and market health.
Nonetheless, there are differing opinions on the matter. Some market analysts argue that raising taxes could still provide a short-term boost to public finances, possibly allowing for reinvestment into enforcement measures. This perspective suggests that incremental tax increases, coupled with dedicated resources to improve regulatory frameworks, might bridge the gap between immediate revenue needs and long-term market stability.
Critics of this approach, however, highlight the risk of alienating compliant operators who have invested in legal structures and adhered to regulations. There is a palpable concern that an aggressive tax strategy could erode trust and deter future investments in the Brazilian iGaming market, ultimately benefiting the very operators it seeks to penalize.
The debate continues as stakeholders from various sectors contribute to the discussion, each weighing the potential outcomes of these policy decisions. In the meantime, the IBJR remains steadfast in its advocacy for a balanced approach that prioritizes the dismantling of illegal operations.
This situation underscores the complexities faced by governments in regulating rapidly evolving industries like iGaming. As Brazil navigates its path forward, the lessons learned could serve as a blueprint for other nations grappling with similar challenges, illustrating the delicate balance between regulation, taxation, and market vitality.
Sarah Thompson is a seasoned writer specializing in casino gaming and online gambling. With over a decade of experience in the industry, Sarah brings in-depth knowledge and a keen eye for detail to her work at CasinoNoDeposits.com. Her expertise lies in uncovering the latest no deposit bonuses and providing comprehensive reviews of online casinos. Passionate about helping players maximize their gaming experience, Sarah combines her analytical skills with a flair for engaging storytelling.
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