Brazil gambling assocations unite against potential new tax burden
In light of Brazil’s Senate recently approving new advertising restrictions, the gambling sector may soon face additional challenges, including proposed tax increases that could greatly impact its viability.
In a united front, six prominent gambling trade associations in Brazil have issued a statement expressing their concerns over the government’s potential plans to raise industry taxes.
The Brazilian Institute of Responsible Gaming (IBJR) and the National Association of Games and Lotteries (ANJL) articulated their objections to a Senate bill suggesting an increase in the financial transactions tax (IOF) from 0.38% to 3.5% on credit and foreign transactions. This tax can be implemented swiftly, posing immediate implications for operators.
The government introduced Decree No. 12,466/2025 on May 22, proposing this tax change. However, since then, mounting pressure from Congress has indicated a possibility of revoking the decree. Nevertheless, National Bank for Economic and Social Development President Aloizio Mercadante has suggested enhancing the tax burden on the Brazilian gambling sector to offset revenue losses resulting from the IOF decree cancellation.
Reports indicate that the Ministry of Finance would need to collect approximately 77% of the current monthly revenue generated by gambling operators in Brazil to cover the BRL20 billion (around $3.5 billion) it aims to recover from the proposed IOF increase.
In their joint statement, the associations warned that further tax burdens could jeopardize the sustainability of regulated online operators. “Entities representing the betting sector in Brazil voice deep concern and strong disagreement regarding the potential increase in the tax burdens imposed on operators legally established in the country,” the statement declared.
Currently, the 79 licensed operators have contributed over BRL2.4 billion in authorization fees and are projected to exceed BRL4 billion in tax and social contributions in 2025. “In this context, imposing new tax burdens on a sector already heavily taxed is unjustifiable from any technical, economic, or public policy viewpoint,” the statement continued.
Understanding Brazil’s Gambling Tax System
At present, gambling operators in Brazil face a 12% tax rate on Gross Gaming Revenue (GGR) in addition to a 9.25% PIS/Cofins tax and municipal taxes that can reach 5%. Furthermore, operators are taxed on roughly 34% of their profits, which includes a 25% corporate income tax and a 9% social contribution tax.
Brazil is in the process of transitioning to a revised tax framework, which will replace the PIS/Cofins with a dual tax system focusing on goods and services. While this approach aims at increased efficiency, associations estimate it could raise the overall tax burden by an additional 13% on gross revenue.
Furthermore, discussions around a proposed consumption tax—often referred to as a “sin tax”—could escalate the industry’s total tax burden to nearly 50%. “Brazil currently has a historic opportunity to establish a robust regulatory model for gambling that supports fiscal revenue, market integrity, and consumer protection,” the joint statement emphasized. “Avoiding irreversible setbacks is of utmost importance.”
According to João Rafael Gandara, a tax specialist lawyer at the Brazilian law firm Pinheiro Neto Advogados, these proposed measures align with the government’s goal of achieving a zero deficit by 2025. With general elections scheduled for next year, Gandara suggests that the IOF increase may be a politically motivated tactic by President Luiz Inácio Lula da Silva to secure fiscal goals, despite the emerging pressure to withdraw the IOF hike.
Risk of Empowering the Illegal Market in Brazil
Similar to the legislative response to the Senate’s recent advertising restrictions, industry leaders caution that increased taxes may threaten the sustainability of online operators while inadvertently bolstering the black market.
Associations have pointed to international precedents in Italy and Spain, where excessive taxation of regulated markets has led to the flourishing of illegal operations, ultimately resulting in decreased government revenue and weakened market regulations.
“Implementing measures that jeopardize legal operations tends to produce the opposite of the intended effect, empowering clandestine platforms that evade tax obligations,” they remarked. “In Brazil, this risk is already manifest: while the regulated market transacted approximately BRL3.1 billion monthly in the first quarter of 2025, the illegal market generated estimates between BRL6.5 billion and BRL7 billion monthly—figures well beyond the State’s control.”
Exploring Land-Based Legalization as an Alternative
Despite the successful launch of Brazil’s regulated online betting sector on January 1, the timeline for potential land-based legalization remains ambiguous.
Brazilian Minister of Tourism Celso Sabino had previously suggested that a Senate vote on land-based gambling might occur in the first half of this year; however, that window is closing quickly. Gandara posits that land-based gambling could provide a fruitful avenue for generating the tax revenue the government seeks.
“For gambling companies, particularly amid discussions about land-based casinos, this represents a promising opportunity,” Gandara notes. “At the SiGMA Americas Summit in São Paulo this past April, a senator presented a bill aimed at permitting casino operations in Brazil, positioning it as a compensatory measure for certain taxes. This could indeed be the timely solution that many operators are hoping for.”
