Last Wednesday (8), the Chamber of Deputies dealt one of the most symbolic defeats to President Lula’s administration by rejecting Provisional Measure 1,303/2025, known as the IOF MP. This measure aimed to restore the 2026 budget and support the balance of public accounts. The MP’s rejection resulted from an alliance between opposition governors, segments of the financial business sector, and centrist lawmakers who rallied to defend producers and oppose tax increases.
This defeat goes beyond the technical realm of revenue collection; it reflects strong resistance to any attempt at tax adjustments in high-profit sectors such as sports betting and online gaming—activities regulated by Law No. 14,790/2023, which amended Law No. 13,756/2018, and which only recently began to be taxed as of January 1. The increase in the tax burden on betting companies would have devastating consequences for the gaming industry in Brazil.
In the first eight months of 2025, tax revenue from sports betting reached R$ 5.62 billion (US$1.05bn), according to data from the Federal Revenue Service. This figure—still underestimated—demonstrates the sector’s importance for public coffers and highlights its growth potential.
With regulation, approximately 17.7 million Brazilians placed sports bets in the first half of 2025, reflecting an expanding market, according to the Ministry of Finance.
However, higher taxes will inevitably push legalized companies back into informality, where illegal gambling thrives. This misguided policy not only harms tax collection but also exposes consumers to risks such as fraud and lack of protection. The best way to combat illegal gambling is through regulation, which ensures a safe and controlled environment for bettors.
Moreover, the concept of cooperative federalism could be key to increasing revenue and improving the efficiency of lottery oversight. By allowing other federative entities to operate these services in healthy competition with the Union, it is possible to create a more robust and integrated system, maximizing revenue and ensuring more effective supervision.
This approach not only strengthens legal certainty but also promotes collaboration between different levels of government. The legal uncertainty caused by constant changes in tax legislation can also discourage new investments.
The betting sector is highly competitive, and companies seeking to expand their operations may choose to invest in countries with more stable and favorable regulations. This could result in a significant loss of opportunities for Brazil.
Therefore, the premature increase in taxation on betting companies not only undermines legal security but could also backfire on the government. Instead of generating more revenue, this strategy may lead to a decline in tax collection, as companies may opt to operate underground, outside the reach of oversight and taxation.
It is imperative that the government reassess its approach and seek solutions that promote regulation and formalization of the sector, ensuring a safe environment for consumers and a prosperous future for Brazil’s gaming industry.
Regulation and cooperation—rather than excessive taxation—are the keys to building a robust and sustainable sector that benefits both society and the economy.
Paulo Horn
President of the Special Committee on Lottery Gaming Law of the OAB/RJ, founding partner of Paulo Horn Advocacia, member of the Gaming Law Committees of the OAB/DF, OAB/SP, and the Federal Council of the OAB, and Legal Consultant for Analome – the National Association of State and Municipal Lotteries, as well as Legal Director of Associação Jogo Positivo.
