Brazil Betting Tax Crisis: ANJL Warns of Market Collapse

Brazil’s regulated betting market faces a critical challenge as the government implements a series of tax increases that industry leaders warn could undermine the sector’s viability. Plínio Lemos Jorge, president of the National Association of Games and Lotteries (ANJL), has raised concerns that authorities are exploiting the gambling sector as a fiscal solution rather than supporting its long-term development.

Government Using Gambling as Fiscal Band-Aid

Speaking about the government’s approach throughout 2025, Lemos Jorge expressed alarm at how the betting sector has been treated as a convenient revenue source for budgetary shortfalls.

“Throughout [2025], the sector was treated at various times, as a kind of ‘quick fix’ for the country’s budgetary challenges, which raised an important red flag,” Lemos Jorge stated. “Initiatives of this nature, when poorly calibrated, jeopardise precisely the objective of regulation: to strengthen a transparent, safe and economically viable market. It is a contradiction to weaken the regulated market precisely at the moment when it is beginning to structure itself.”

Brazil’s gambling market officially launched on 1 January 2025, making it one of the newest regulated markets globally. However, operators are now facing a staggered tax increase that will see the GGR-based rate climb to 13% later this year, rising to 14% in 2027 and reaching 15% from 2028 onward.

Tax Burden Could Reach 50% of Revenue

The gaming tax represents only one component of the financial obligations facing Brazilian operators. Companies must also pay a 9.25% PIS/Cofins levy and municipal taxes up to 5% of each player deposit. When combined, the total tax burden could reach approximately 50% of operator revenue.

Lemos Jorge argues that the timing of these tax increases is particularly problematic, coming as licensed operators work to establish themselves and comply with new regulatory requirements in a market less than two years old.

Illegal Market Poised to Benefit from Tax Pressure

The ANJL president identified excessive taxation as one of the primary threats to the regulated market’s sustainability, warning that overly burdensome levies could drive players back to unlicensed operators.

“We have reiterated that excessive taxation produces exactly the opposite effect to that intended: it encourages bettors to migrate to illegal platforms – many of them operated by criminal organisations with international reach – reduces revenue and weakens companies that have opted for legality,” Lemos Jorge explained.

Adding to industry concerns is the government’s proposed Anti-Faction Bill, which would create an additional 15% tax on player deposits to licensed operators. The CIDE-Bets tax proposal is expected to face a vote in the coming months.

“Although the project’s stated objective is to combat criminal organisations, the over-taxation of the regulated market tends to produce the opposite effect,” Lemos Jorge noted.

Smaller Operators Face Existential Threat

Approximately 80 companies currently hold licenses to operate in Brazil’s regulated betting market, but Lemos Jorge warns that the impact of tax increases will not be evenly distributed across the sector.

“Large operators tend to have a greater capacity to absorb cost increases, medium-sized companies will need to work much harder to remain competitive and the smallest companies run a serious risk of not surviving,” Lemos Jorge said.

The concentration of market power among a handful of large operators could undermine the competitive landscape that regulation was designed to create.

“An excessively concentrated environment, with a very small number of authorised companies, goes against the objectives of regulation,” Lemos Jorge added. “Having only a few operators in the regulated market in 2026 weakens competition, reduces innovation and may even compromise the credibility of a regulation that was carefully and technically constructed.”

Legal Certainty Under Question

Beyond immediate financial pressures, Lemos Jorge identified a broader concern about legal certainty in the Brazilian market. Rapid changes to the tax framework while companies are still establishing operations could damage investor confidence and lead to divestment.

The ANJL president emphasized that the most sensitive aspect of the current situation is that tax obligations are increasing during the market’s formative stage, when stability and predictability are essential for building a sustainable regulated sector.

As Brazil’s betting market enters its second year of regulated operation, the tension between government revenue objectives and industry sustainability remains unresolved, with the upcoming vote on the CIDE-Bets tax likely to prove a decisive moment for the sector’s future structure.

Source: iGB