As of 2025, Brazil’s betting market has been on an impressive growth trajectory. The nation saw an influx of new companies entering the scene, while players increasingly migrated to licensed platforms, spurred by a burgeoning confidence in the potential for a stable, enduring system. However, this growth narrative is now at risk, undermined by a new tax proposal that could stifle the industry’s development and shift momentum back towards illegal operations that have stubbornly refused to fade away.
At the forefront of this issue is the Brazilian Institute of Responsible Gaming (IBJR), which has raised alarms about the potential consequences of increased taxation. The institute has maintained that if tax rates rise excessively, the formal market could find itself unable to sustain its current progression.
In a market still finding its footing under a new regulatory framework, operators already face substantial costs. Currently, companies are required to pay a hefty BR30 million to secure authorization to operate. Beyond this initial cost, they are subjected to a 12% Gross Gaming Revenue (GGR) tax, compounded by other national taxes and social security contributions, bringing the effective tax load to nearly 25%. The proposed legislative change, encapsulated in PL 5.473/2025, seeks to elevate the main tax rate to 24%, which would, according to the IBJR, increase the total tax burden by an alarming 45.4%.
Such an increase could compel operators to reassess their strategies in Brazil. The timing of this proposed tax hike is also troubling, given that the market is still in its nascent stages of regulation. The IBJR cautions that these conditions might deter long-term investments and could destabilize the growth trajectory that the regulated market has been following.
The illegal betting market in Brazil, which remains robust, complicates matters further. Despite regulatory efforts, over 51% of online betting activities are still conducted through unlicensed operators who evade taxes and compliance requirements, operating with little to no oversight. The IBJR estimates that this illicit sector processes around BR38 billion annually, a figure that underscores the competitive disadvantage faced by legitimate operators. The institute warns that higher taxes on the regulated market could inadvertently drive more business to these unlicensed platforms, exacerbating the issue and potentially leading to greater revenue losses for the public.
Public coffers are already seeing a deficit of BR10.8 billion due to unlicensed activities, reinforcing the argument that the regulated market cannot compete on even footing if the cost gap continues to widen. The IBJR presents a scenario where reducing the illegal market’s share by a mere five percentage points could generate an extra BR1.1 billion annually, a sum that surpasses the anticipated gains from doubling the GGR tax rate.
Beyond the immediate financial implications, there are broader policy challenges at play. The future of Brazil’s public funding and consumer protection initiatives hinges on keeping operators within the regulated framework. The contributions of the betting market are vital for various sectors, including sports, tourism, education, security, and social programs. The IBJR warns that increased costs might lead operators to cut back on investments or even withdraw from the formal market altogether, a shift that would weaken oversight and heighten risks for consumers, who could be exposed to fraud, unsafe platforms, and inadequate support.
As the debate over the proposed tax increase unfolds, the IBJR advocates for a tax system that promotes channelization rather than hinders it. This tension between fiscal objectives, political pressures, and market realities remains a core issue in Brazil’s regulatory discourse. As Congress prepares to deliberate on the new tax rate, the industry is bracing itself, understanding that the decisions made now could define the landscape of both regulated and illegal betting in Brazil for years to come.
On the other side of the debate, some lawmakers argue that the increased tax revenue is necessary to fund essential public services. They contend that the current tax rates do not adequately reflect the profitability of the betting industry. Proponents of the tax hike believe that with proper enforcement, the shift to unlicensed operators can be minimized while still achieving the financial goals necessary for public investments.
As the regulatory environment evolves, stakeholders must navigate these complex challenges to ensure the sustainability and integrity of Brazil’s betting market. The coming months will be pivotal, with the potential to set a precedent for how Brazil balances its economic ambitions with the realities of market competition and consumer protection.
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