The increase in taxation on betting houses has dominated debates in the National Congress in recent days. The government's proposal was to raise the tax on gross revenue from betting from 12% to 18%, but the idea was abandoned during discussions with lawmakers and industry representatives.
In contrast, a tax regularization program is being discussed for operators who operated in the country between 2014 and 2024, before the sector was regulated, while simultaneously strengthening measures against illegal websites.
On Tuesday (14) this week, Finance Minister Fernando Haddad participated in a public hearing at the Senate's Economic Affairs Committee (CAE) on income tax exemption and commented on the government's position regarding betting. He said the intention is not to "demonize" the companies, but to demand that they "contribute to the country." Executives linked to the betting industry advocate for "balanced" taxation to maintain regulated operations and combat the spread of illegal betting houses.
Bernardo Cavalcanti Freire, partner at Betlaw and legal advisor to the National Association of Games and Lotteries (ANJL), recalls that the debate that took place earlier this year set the contribution on fixed-odds bets at 12%, in addition to other taxes that are common to any Brazilian economic activity, which could raise the effective rate to over 40%.
"In other words, ten months later, before analyzing the effectiveness of the tax, it would indeed be inconsequential to increase it. No one is talking about an increase after decades, as is the case with other points of the provisional measure. The discussion is about an increase after just ten months. Would that make sense? What legal certainty is there?" asked Freire.
For Nickolas Ribeiro, partner and founder of Grupo Ana Gaming—the holding company for the 7K, Cassino, and Vera brands—the decision to maintain betting taxes at the current level demonstrates a sensible stance by Congress, recognizing the importance of consolidating the regulated market before imposing further tax increases.
"The sector is still in the structuring phase, with significant investments in compliance, technology, and job creation," he said.
"Tax balance is essential to ensure competitiveness, attract responsible operators, and prevent consumers from migrating to unregulated platforms, as has already occurred in other countries that have moved forward with stable and predictable regulation," Ribeiro added.
Fostering the illegal market?
Alex Rose, CEO of InPlaySoft—an international company that creates and develops platforms and providers for betting houses—cited countries like Spain and Italy as examples of where excessive taxes have strengthened the illegal market, "to the detriment of player protection and the very reason for regulating the sector."
"Therefore, we hope Brazil finds the right balance for all stakeholders," Rose stated.
For Igor Sá, CMO and COO of HiperBet, taxes on betting revenue are very important for the country's revenue, but a balance must be found.
"A high tax burden, in addition to hindering operations that have been planned for months based on a lower rate, could foster the illegal market, which unfortunately represents a large portion of the sector. The main focus should be combating clandestine operations, which cause significant fiscal losses," he stated.
Fellipe Campos, Managing Partner of Luck.bet, said the decision is important because it guarantees predictability and legal certainty for companies in the sector, in addition to fostering the sustainable growth of the betting market in Brazil.
"We understand that balanced policies, combining clear regulation, fair taxation, combating the illegal market, and encouraging formalization, are essential to consolidating a segment that drives the country's economy and generates thousands of jobs," the executive emphasized.
Combating illegal websites and revenue collection
Fifteen thousand illegal betting websites were blocked by the National Telecommunications Agency (Anatel) in the first half of this year. This figure is part of the report recently released by the Ministry of Finance's Prizes and Betting Secretariat (SPA-MF) on the first six months of the regulated online betting market, which has 78 authorized and monitored companies—responsible for 182 websites and applications.
From January to June, the SPA collected approximately R$2.2 billion (US$401m) in authorization fees paid by authorized operators and approximately R$50 million (US$9.15m) in inspection fees also paid by companies in the sector.
During this period, 17.7 million Brazilians placed fixed-odds bets, with revenue of R$17.4 billion (US$3.2bn) for betting companies. On average, the average spend per active bettor was R$164 (US$30) per month.
Source: BRAZIL ECONOMY
