Brazil Government Considers Raising Sports Betting Tax
Brazil’s government is contemplating a significant increase in taxation on online betting operators, sparking considerable debate throughout the industry.
Finance Minister Fernando Haddad has proposed raising the Gross Gaming Revenue (GGR) tax on sports betting from the current 12% to 18%. This initiative is met with strong resistance from trade associations that represent various stakeholders within the gambling sector. Collectively, they describe the proposal as “unjustifiable from any technical, economic, or public policy perspective.”
This taxation strategy aims to augment national revenues, particularly following the government’s decision to retract plans to elevate the Financial Transactions Tax (IOF).
Since the regulation of Brazil’s gambling market in January this year, the country has generated R$755 million (approximately $135 million) in taxes from online betting between February and April alone. However, the Brazilian tax framework is intricate: it comprises a 12% GGR tax, a 9.25% social tax, a potential local tax of up to 5%, and a substantial 34% corporate income tax. Consequently, an increase to 18% could elevate the overall tax burden on betting companies to as much as 50-56% of their revenue.
### Industry Responses to the Proposed Tax Increase
A cohesive stance was articulated through a joint statement issued by six prominent trade associations advocating for Brazil’s betting industry, which include:
– Brazilian Institute of Responsible Gaming (IBJR)
– Brazilian Association of Games and Lotteries (ABRAJOGO)
– Betting and Fantasy Sports Association (ABFS)
– International Gaming Association (AIGAMING)
– National Association of Games and Lotteries (ANJL)
– Brazilian Institute of Legal Gambling (IJL)
Prominent members of the IBJR encompass major global betting entities such as Bet365, Entain, Flutter, Betsson, and LeoVegas. Together, these operators account for approximately 75% of Brazil’s regulated betting market. They expressed their concerns through an official statement on their website, articulating that imposing new taxes on an already heavily taxed sector would be undeserved.
The IBJR emphasizes that data from markets such as Italy and Spain demonstrate that excessive taxation in newly regulated environments tends to foster the growth of the illegal gambling sector. This, in turn, diminishes potential revenue and undermines regulatory efforts.
Regulatory responses in Italy and Spain have been proactive, with Italy’s gambling authority (ADM) shutting down 9,800 unlicensed websites in 2023. Meanwhile, the Spanish gambling authority (DGOJ) enforced fines totaling €65 million (roughly $74 million) in late 2024 for penalizing 15 unlicensed operators.
### The Discrepancy Between Regulated and Unregulated Markets
The IBJR highlighted the stark contrast in revenue generation between regulated and unregulated markets. In the first quarter of 2023, licensed betting companies generated R$3.1 billion (approximately $560 million) per month, while unregulated gambling operations are estimated to yield around R$6.5 billion (nearly $1.1 billion).
Since late 2024, authorities in Brazil have blocked over 2,000 offshore gambling sites; however, approximately 83% of these blocked sites remain accessible through workarounds such as VPNs or mirror domains. The betting industry argues that the proposed tax increase will further impede the crucial transition of players from unregulated to regulated platforms.
The proposal will soon be discussed in Brazil’s Chamber of Deputies and the Senate, alongside the government’s economic strategy team.
### Conclusion
As Brazil navigates its burgeoning gambling landscape, the proposed tax increases cast a shadow over the potential for continued growth in the regulated segment. The ongoing dialogue within legislative bodies will be crucial in determining the future trajectory of the industry, balancing state revenue needs with the health and sustainability of its betting market.
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Adam Roarty
Adam is a seasoned writer with a deep-seated knowledge of the gambling industry, accrued over five years as a content writer and editor for prominent platforms such as Oddschecker, CoinTelegraph, and Gambling Industry News. He specializes in emerging trends in the dynamic betting landscape, focusing on regulatory changes and innovations in sports betting and online gaming.
