Brazil’s betting industry pushes back against proposed tax hike, says could jeopardize legal market

A coalition of Brazil’s major betting and gaming associations has issued a joint statement denouncing a potential government move to increase the tax burden on licensed operators.

The statement, signed by six key industry bodies, comes in response to the government’s consideration of a higher tax on legal betting as a way to compensate for fiscal shortfalls following a possible rollback of Decree No. 12,466, which raised the IOF tax on international remittances.

The statement was signed by the Brazilian Association of Gaming and Lotteries (ABRAJOGO), the Association of Bets and Fantasy Sports (ABFS), the International Gaming Association (AIGAMING), the National Association of Gaming and Lotteries (ANJL), the Brazilian Institute for Responsible Gaming (IBJR), and the Brazilian Legal Gaming Institute (IJL).

The trade bodies expressed “deep concern and vehement disagreement” with the notion of shifting the country’s tax imbalance onto the regulated betting sector. They warned that additional levies could destabilize the legal market and undo progress made under the country’s new regulatory regime.

Under current rules, licensed operators in Brazil are subject to a combined tax burden that already approaches 50% of gross gaming revenue. This includes a 12% gaming tax, 9.25% in PIS/COFINS contributions, municipal ISS tax of up to 5%, a 34% corporate tax on net profits, and monthly regulatory fees that can total up to R$2 million (US$350,000) per operator. 

Additionally, with the upcoming shift to a new tax framework, replacing PIS/Cofins and ISS with CBS and IBS, operators expect their gross tax load to increase by a further 13%.

“This casts serious doubt on the economic viability of a regulated online gaming market in Brazil,” the signatories warned, emphasizing that the legal betting market remains in a delicate phase of regulatory consolidation.

The industry has invested heavily since the enactment of Law No. 14,790/2023, with 79 licensed operators contributing over R$2.4 billion (US$420 million) in licensing fees alone. Projected tax and social contributions from the sector for 2025 are expected to exceed R$ 4 billion (US$700 million), supporting public initiatives in health, education, tourism, public security, and sports.

The associations argue that piling additional taxes onto an already overburdened sector could backfire by encouraging a shift toward illegal platforms, which operate without oversight, evade taxes, and expose users to fraud and addiction. The statement highlights that while the regulated market handled R$3.1 billion (US$542 million) monthly in Q1 2025, the illicit sector is estimated to process between R$6.5 billion (US$1.14 billion) and R$7 billion (US$1.22 billion) per month.

Drawing on international examples, the statement warns that excessive taxation in new markets, as seen in Italy and Spain, often drives consumers and operators back into the shadows, weakening regulatory frameworks and slashing public revenues.

The associations stressed that operators entered the Brazilian market based on clear fiscal and legal conditions. Any drastic changes to these assumptions, they said, could prompt litigation, deter future investment, and lead companies to exit the market, further undercutting the government’s goals of creating a legal, responsible, and revenue-generating betting environment.

The signatories called on the government to pursue structural fiscal reforms and long-term solutions rather than targeting a sector that has shown compliance, invested heavily, and continues to contribute significantly to public coffers.