TLDR
- Brazil’s regulated betting market now has 83 licensed operators, 29.4 million active users, and R$ 37 billion in public revenue
- A new study warns tax rates on betting operators could rise from 32% to 42% by 2033 due to ongoing tax reform
- Industry leaders say changing tax rules mid-game could make operations unviable for companies that entered Brazil under a defined framework
- Higher taxes could push consumers toward illegal betting sites, costing the government potential revenue
- A proposed “sin tax” set for 2027 could add further costs, though critics say it misapplies lottery logic to a different business model
Brazil’s regulated betting market is heading into a potential tax crisis that could reshape the industry within the next decade.
The sector, now in its second year of legal operations, has posted strong numbers. There are currently 83 licensed operators, 29.4 million active users, and R$ 37 billion in public revenue.
But a new study from LCA Consultoria, commissioned by the Brazilian Institute of Responsible Gaming (IBJR), warns that the good times may not last if tax rates keep climbing.
The report projects that the tax burden on betting operators could jump from 32% to 42% by 2033. The increase is tied to Brazil’s broader tax reform, which is replacing older taxes like PIS/Cofins and ISS with newer ones.
The new taxes include IBS (Tax on Goods and Services) and CBS (Contribution on Goods and Services). These changes could add 14 percentage points above the Ministry of Finance’s proposed 28% baseline rate.
The social contribution rate on the sector’s revenues may also rise from 13% to 15%, according to the study.
Industry Leaders Warn of Breaking Point
Operators already paid steep license fees of R$ 30 million to enter the Brazilian market. Now they face the prospect of steadily rising costs on top of that initial investment.
Plínio Lemos Jorge, president of the National Association of Games and Lotteries (ANJL), said regulatory stability is essential for the market to survive.
“If the rules don’t change, things can continue as they are, because that was the premise under which companies entered Brazil,” he said.
He added a clear warning about where things are headed. “If taxes keep increasing by 1% or 2%, at some point operations will no longer be viable. Companies entered Brazil based on a defined framework, changing the rules mid-game breaks that trust.”
The concern is not just about profit margins. It’s about whether the legal market can compete with unlicensed operators who don’t face the same costs.
André Gelfi, director and co-founder of IBJR, pointed to data showing that formalizing the market has clear financial benefits. “The study showed that for every 5 percentage points increase in market formalization, the country could generate approximately R$ 1 billion in additional revenue,” he said.
In other words, pushing users toward illegal sites through higher taxes could actually reduce government revenue.
The “Sin Tax” Question
Another layer of pressure is coming in 2027 with the introduction of a proposed Selective Tax. This is commonly referred to as a “sin tax” and would apply additional costs to betting operators.
Gelfi criticized the approach, saying it reflects a misunderstanding of how the industry works.
“Out of lack of understanding, they want to apply the same logic used for state lotteries to betting operators,” he said.
Fixed-odds betting operates on a different model than traditional lotteries. Profit margins are lower and operating costs are higher, making direct tax comparisons between the two misleading.
Brazil’s betting operators entered the market under specific financial assumptions. The IBJR study warns that the proposed Selective Tax, combined with the broader tax reform, could push the total burden to levels that threaten the viability of legal operations by 2033.
