Brazil's regulated sports betting sector is - predictably - opposing a proposed tax measure that industry representatives say could harm the legal market and give unlicensed operators a significant competitive advantage.
The Brazilian Institute for Responsible Gaming (IBJR), representing major sports betting companies operating in Brazil, has condemned the National Confederation of Industry's proposal to implement a 15% levy on each wager placed in the regulated market. The trade group argues that the proposed tax would discourage compliance by penalizing licensed operators and players while giving an advantage to the unregulated market.
André Gelfi, Director and Co-Founder of IBJR, said: "In practice, a 15% tax on each bet is equivalent to giving an inverted 15% bonus to the illegal market. It would reward those who evade taxes and punish those who comply with the law."
The proposal comes as Brazil's developing regulated betting industry already shoulders what the IBJR characterizes as one of the world's highest tax burdens for the sector. Licensed operators currently face a 12% tax on gross gaming revenue, plus additional PIS (Social Integration Program) and Cofins (Contribution for the Financing of Social Security) contributions, federal taxes applied to gross revenue to fund social security and welfare programs, along with the ISS (Service Tax), a municipal tax on the provision of services that typically ranges between 2% and 5%.
Combined, these charges bring total consumption taxes to around 25%. The organization disputes claims that the industry "enjoys any special tax treatment", describing it instead as a struggling market fighting to compete against untaxed illegal platforms.
IBJR's economic argument reflects a broader regulatory concern: when legal betting becomes too costly, consumers tend to turn to unregulated alternatives. The institute cites data indicating that illegal platforms already account for around half of all betting activity in Brazil, operating entirely outside the country's tax framework.
The confederation's revenue projections compound the problem, according to IBJR. The CNI estimates the CIDE-Bets tax would generate BR8.5bn ($1.5bn), but the trade group argues this figure ignores predictable consumer behavior.
Research from LCA Consultoria suggests a different path forward: reducing the illegal market share by just five percentage points could generate approximately BR1bn annually in additional public revenue without raising taxes on compliant operators.
The IBJR has pledged to continue advocating for tax policies that strengthen the regulated market and combat illegal gambling, rather than policies that inadvertently subsidize criminal enterprises while squeezing legitimate businesses.
Retroactive rollercoaster
The proposal follows ongoing debates in Congress about betting taxation, amid efforts by the Ministry of Finance and the Secretary of Prizes and Betting to stabilize the regulatory framework, where lawmakers rejected the Government's earlier plan to raise the betting tax to 30%.
The setback exposed divisions within the Chamber over how to balance fiscal recovery with maintaining a competitive environment for licensed operators.
Congress also rejected a tax provision earlier this year that sought to raise the betting tax rate from 12% to 18%, part of the Government's broader fiscal recovery plan.
Brazil President Lula has reaffirmed his Government's bid to increase betting tax, arguing that operators currently earning large profits should contribute more to public finances
