It’s been almost a year since Brazil officially opened its doors for dozens of companies to operate in a regulated betting market. In January, the country took a major step toward transforming a sector known for chaotic, triple-digit annual growth into a highly structured and globally competitive market.
Regulation has already generated billions in taxes, attracted heavyweight international players and—perhaps most importantly—moved millions of users from obscure offshore platforms to safe, transparent, Pix-powered environments.
But the fact that progress has been rapid doesn’t mean it’s permanent. Far from it. And if the focus remains solely on increasing short-term revenue, Brazil risks jeopardizing the legitimacy it has just built—right at the moment when it should be reinforcing it.
Today, 51% of betting activity in the country is still illegal. Even so, rather than directing regulatory pressure toward this half of the market, current proposals focus on raising the tax on Gross Gaming Revenue (GGR) from 12% to as high as 18% for those already regulated and complying with the law. Clearly, the R$ 7.9 billion (US$1.45bn) collected so far is an impressive number, but that cannot be an automatic justification for raising taxes without considering the impact on the ecosystem.
This is why industry and regulators need to work together to combat the illegal market—which is not only larger than the regulated one but continues to grow. Without a coordinated strategy of enforcement, payments, and compliance, every tax increase only opens more room for the other side. Consolidating the market requires solid rules, yes, but also joint efforts and information-sharing among authorities, operators, and payment providers.
Acting in the opposite direction—prioritizing short-term fiscal gains at the expense of consolidating the regulated market—may be the biggest risk to the sector’s future, for two reasons.
First: Higher taxes reduce the competitiveness of licensed operators. These companies have already incurred significant investments in technology, compliance, and payment infrastructure. None of that exists in the illegal market. When profitability in the regulated sector drops, the country loses twice: it slows growth and reduces future tax revenue, whether the GGR rate is 12%, 15%, or 18%.
Second: Increasing taxes without strengthening enforcement fuels the illegal market. With higher costs, regulated operators have less room to compete, and price-sensitive bettors naturally migrate to unlicensed sites offering better odds, fast withdrawals, and zero oversight. In other words, more money flows into the same criminal networks Brazil has committed to combating.
The past year has shown that regulation works when applied consistently. When we play responsibly, everyone wins: operators, players, and the entire payments system. The sector has already adopted rigorous KYC and anti–money laundering processes, strengthened by Pix’s real-time traceability—an effort in which providers and operators work side by side. On the government side, thousands of illegal websites have already been blocked, demonstrating both capability and willingness to act. This means the sector’s foundations are solid and ready.
That is why stability is essential at this moment. A sudden tax increase acts as an anti-consolidation mechanism: it strains the very operators investing the most in security, transparency, and responsibility. And when they lose the capacity to grow, reinvest, and compete, illegal actors gain ground.
For legislators, the strategic choice is clear. The government can consolidate a sustainable and globally competitive market with a stable tax regime; or it can pursue an immediate revenue boost that risks eroding the legitimacy built over the past year and, indirectly, strengthening the criminal chain of unregulated operators.
If Brazil wants a sector capable of generating jobs, investments, and billions in predictable long-term tax revenue, the priority must be completing the consolidation agenda—not restarting a cycle of instability. The next 12 months should bring more enforcement, consumer protection, and the full migration of players into a licensed and transparent ecosystem.
The country cannot allow the sector to become a victim of its own early success. The progress of the past 12 months was hard-won and remains fragile. Treating this progress as guaranteed, rather than as a foundation that requires stability, would be a strategic mistake. The market must be fully built before raising the cost for those already playing by the rules.
Edward Chandler
Global CEO of OKTO
