One of today’s main debates is the proposed increase in taxation on the regulated online betting sector. It is essential to take a deeper look at this topic to understand that what may appear beneficial for the country could have serious social and economic implications.
Some claim that companies authorized and regulated by the federal government face a 12% tax rate, which is inaccurate. This 12% levy applies only to the Gross Gaming Revenue (GGR)—the amount collected by operators after paying out winnings. Beyond this, operators also pay PIS/COFINS and ISS, resulting in an overall tax burden of around 25%, not counting corporate taxes such as IRPJ and CSLL.
According to government data, by the end of September these companies had already contributed around R$7 billion (US$1.3bn) to the economy, with legally earmarked funds directed to sports, public security, health, and other areas. In addition, companies that chose to invest in Brazil paid a R$30 million (US$5.5m) licensing fee and may pay around R$2 million (US$372,000) per month in regulatory fees. These companies protect consumers, generate state revenue, and create thousands of jobs while returning 90–95% of wagered amounts to players—far higher than other lottery formats.
The risk of a substantial and sudden tax increase, less than a year after regulation, is clear from international experience: it leads to a rise in illegal betting, exposing Brazilians to greater risks and ultimately reducing government revenue. Higher taxes make regulated operators—those compliant with Brazilian law—less competitive than unlicensed, often offshore, platforms. Because of their regulatory and fiscal obligations, legal operators may quickly become less attractive, especially to lower-income bettors, who are then driven to the illegal market.
Another effect is that legal operators tend to offer less appealing payouts compared to illegal ones. Small and mid-sized companies face greater operational challenges, potentially shutting down and creating more room for unlicensed competitors to lure regulated players away.
Illegal betting, which already accounts for about 51% of Brazil’s market, exposes citizens to a sector with no government oversight and significant social risks. Unlicensed operators are not required to follow rules on responsible gambling, consumer protection, child safeguarding, sports integrity, or financial transparency with oversight bodies such as COAF and the Ministry of Finance.
Economic risks also follow this pattern. In the Netherlands, for instance, when the government raised betting taxes by roughly 4% to increase revenue, the result was a drop in tax collection due to a surge in illegal gambling.
These social and economic consequences could easily be replicated in Brazil if the discussion on betting taxation lacks rationality. It is crucial to remember: if bettors are not within the regulated market, they can turn to the illegal one with a single click — creating negative outcomes not only for themselves but for society as a whole.
Brunno Calado
Senior Manager of Regulatory & Government Affairs at Kaizen Gaming (Betano Brazil) and Director of the IBJR (Brazilian Institute for Responsible Gaming). He previously worked in the Brazilian Congress as part of party leadership, thematic committees, and parliamentary offices. He holds an MBA in Government Relations from Fundação Getulio Vargas (FGV) and a specialization in Regulatory Law from the State University of Rio de Janeiro (UERJ).
