In Brazil, the proposal to double the tax rate for gambling operators from 12% to 24% has ignited significant debate and concern, with industry expert Elvis Lourenço labeling the plan as “insane” and warning it could lead to a market collapse. Lourenço, a prominent voice in the Brazilian iGaming sector and managing partner at EX7 Partners, argues that such dramatic tax hikes could have dire consequences for the industry. However, he maintains that there is still room for negotiation to reach a more sustainable rate.
The initial proposal for an 18% tax rate was part of Brazil’s first sports betting bill passed in December 2023. Despite this, the rate was eventually settled at 12% of the operator’s gross gaming revenue (GGR). “The first bill that they proposed back in the day was 18%,” Lourenço recalls, reflecting on the early legislative intentions. He suggests that a rate between 15% and 18% might be a more realistic compromise, but doubling it to 24% could be devastating. “But 24% is insane. It’s insane and it will collapse the market.”
As of today, Brazil’s gambling tax landscape remains uncertain, plagued by ongoing discussions and political maneuverings. The government’s attempts to increase the tax rate stem from concerns over the social and financial impact of betting on the population since the market’s regulation on January 1. Earlier this month, a provisional measure to raise the rate to 18% did not pass through Parliament, nor did a proposal to introduce retrospective taxes for gambling activities prior to regulation.
In the wake of these setbacks, a new bill, PL 5,076/2025, was introduced by Lindbergh Farias, a leader in Brazil’s Chamber of Deputies. This bill seeks to establish a 24% tax rate on GGR and has been given urgent status. The timing for a vote remains unclear, leaving the industry in a state of anxious anticipation.
The looming increase in gambling taxes seems to be politically motivated. With an election on the horizon, President Lula’s government appears to be focusing on increasing taxes in sectors like betting to satisfy the conservative population’s demands. Lourenço believes that the embarrassment of the failed provisional measure has led the government to use the gambling sector as a political bargaining chip. “This becomes an election agenda,” he explains, “because this is good for the audience and the public to get votes because we are a conservative country in some ways.”
The Brazilian regulated market, still relatively young, faces significant challenges, with tax increases and new advertising restrictions causing uncertainty. Many industry players are frustrated by the push for higher taxes so soon after regulation. “They [the Brazil government] need to collect [taxes] with some industry, and unfortunately we are the industry at target,” Lourenço notes, highlighting the vulnerability of the newly regulated market to such fiscal policies.
Furthermore, Lourenço criticizes comparisons between Brazil and other gambling markets, pointing out that such comparisons often ignore the additional taxes Brazilian operators must pay. Besides the 12% GGR tax, operators are burdened with a 9.25% PIS/Cofins levy and municipal taxes reaching up to 5%. They also face a combined corporate income and social contribution tax of about 34%. Brazil is transitioning to a new tax structure, replacing PIS/Cofins with a dual system that could push the total tax burden on operators beyond 50%.
Lourenço and others in the licensed sector express frustration with the government’s focus on targeting legal operators rather than addressing the black market, which is estimated to account for over half of the gambling market’s revenue. The current approach, which focuses on increasing taxes for regulated operators, seems to inadvertently benefit those operating outside the law. Lourenço suggests that a more effective strategy would be to curb illegal gambling activities, which could, in turn, make licensed operators more amenable to moderate tax increases. “They are targeting to increase the taxes but they are not targeting to combat illegal gambling,” he states, urging the government to redirect efforts toward reducing the black market.
By tackling the black market, the government could potentially redirect funds to essential services like health and education. “The distribution of the money is too low for the security, for the enforcement,” Lourenço observes, emphasizing the importance of strengthening enforcement to ensure that more revenue is channeled towards public welfare. The discourse on Brazil’s gambling tax rate remains contentious, with significant implications for both the industry and broader socio-economic outcomes. As stakeholders await further developments, the balance between market sustainability and fiscal policy continues to hang in the balance.
4.1/5
