High tax burden may undermine the future of Brazil’s regulated betting market
The same week Brazil’s federal government announced a 50% increase in the betting revenue tax rate — jumping from 12% to 18% — a discussion at the BiS SiGMA South America Brazilian iGaming Summit 2025 had already anticipated the risks of such a move. In one of the event’s most anticipated legal panels, experts were unanimous: raising taxes at this early stage of regulation threatens both future revenue and the credibility of the legal market.
The debate brought together prominent figures in the industry, including Bárbara Teles (Stake), Paulo Reales (Sterling Corp), Pedro Lameirão (BBL), and Udo Seckelmann (Bichara e Motta), who addressed the key ongoing regulatory challenges. The core message was clear: predictability is the main incentive for serious operators to transition to legality — and this relies heavily on a well-balanced tax policy.
Tax Hike Without Consultation or Transition
Around two months after the event concluded, the federal government announced an increase in the GGR rate, raising the tax on net betting revenue from 12% to 18% — without any prior consultation with the industry. The official justification was to offset revenue losses caused by the reduction of the IOF on credit operations. In practice, it is a short-term fiscal measure with the potential for deep and lasting consequences for the structure of Brazil’s legal betting market.
While the adoption of Gross Gaming Revenue (GGR) taxation, as set out in Law No. 14,790/2023, was initially well received for being aligned with international models, the abrupt increase in the rate, combined with a 15% income tax on bettors’ winnings and mandatory contributions (to the Ministry of Sport, Public Security Fund, and Social Security), creates an effective tax burden of over 30%.
“We are faced with a choice: build a regulated, competitive, and healthy market — or stifle a nascent sector with poorly calibrated taxes. Over-taxing at this stage would be repeating the same mistake made by other countries, which Brazil could still avoid,” warned Paulo Reales during the panel.
Brazil: Taxing More Can Mean Collecting Less
Bárbara Teles also highlighted the illusion of immediate fiscal gains:
“The sector’s fiscal sustainability is not measured solely by direct revenue, but by the ability to attract licensed operators and retain bettors within the regulated environment.”
Similarly, Pedro Lameirão was clear in stating that the current scenario — combining legal uncertainty with increased taxation — discourages new investment and risks undermining the formalisation cycle that is only just beginning to take shape.
Panel moderator Udo Seckelmann stressed that taxation must reflect market realities:
“An abrupt increase, before the sector is even fully structured, creates systemic risk: you drive away serious operators and open the door for rogue or illegal ones. Ultimately, it’s the State that loses.”
When Excessive Taxation Undermines Public Policy
The government expects to raise BRL 1.6 billion with the new rate. However, this projection ignores a key factor: displacement effects. A significant portion of bets may return to the unregulated market, where there are no taxes, no integrity rules, and no commitment to public policy goals.
The narrative that regulation aims to protect consumers also weakens when legal operation becomes economically unfeasible. Bettors, in turn, are likely to revert to offshore platforms, drawn by better odds and fewer restrictions.
Dialogue and Rationality Are Still Possible
The panel at BiS SiGMA South America made it clear that the industry is ready to collaborate — to engage in dialogue, invest, and comply with regulation — as long as the environment is at least rational.
“Raising taxes before the regulated market is even fully operational is like charging council tax on a house that hasn’t been built yet,” one panellist summed up.
The risk is real: a formal market that is costly, bureaucratic, and uncompetitive, while the informal market remains cheap and readily accessible. It’s a familiar equation — one that invariably ends in tax evasion, loss of regulatory control, and, eventually, the collapse of the very policy designed to protect the public.
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