IBJR warns Senate tax could fuel illegal betting

The Brazilian Institute for Responsible Gaming (IBJR) has once again cautioned that proposals to increase tax rates on licensed betting platforms could drive growth in the illegal market.

The institute acknowledged the Senate Committee on Economic Affairs' focus on combating unauthorized operators but argued that raising taxes on compliant companies would reduce their competitiveness and push consumers toward illegal platforms. The organization warned this approach could ultimately harm both tax collection efforts and consumer protection measures.

According to research from LCA Financial Consulting, between 41% and 51% of bets in Brazil currently take place on unauthorized platforms, generating approximately BR40bn ($7.42bn) annually and resulting in an estimated BR10.8bn in lost tax revenue. The study suggests that for every 5 percentage points of market formalization, Brazil could collect approximately BR1bn in additional revenue.

IBJR emphasized that regulation has introduced crucial safeguards, including integrity standards, transaction traceability and debt prevention measures that do not exist in the unregulated market. The illegal sector not only deprives the government of tax revenue and exposes consumers to risks but also channels funds to illicit activities and organized crime networks.

The organization emphasized that enforcement efforts should focus on unauthorized platforms rather than increasing financial pressure on licensed operators. Policies that weaken the regulated environment benefit illegal operators and undermine efforts to dismantle criminal networks that exploit regulatory gaps.

The institute concluded that strengthening the formal market through legal certainty, regulatory compliance and competitive conditions represents the most effective strategy to increase government revenue and protect Brazilian consumers.