The federal government has signaled its intention to increase the tax burden on fixed-odds betting operators and legalized online gaming in Brazil, which has generated significant concern among authorized operators in the sector. This possibility must be carefully assessed, as it involves considerable risks both to the business environment and to the effectiveness of the newly implemented regulatory model.
1. Breach of the principle of equality
A crucial and noteworthy point is that such a measure, if approved, constitutes a violation of the principle of equality among the different lottery modalities operated under the Federal Government. All are equally defined as public services of the Union, but the proposed tax increase targets only fixed-odds betting, leaving the taxation of traditional lotteries, such as Mega-Sena, unchanged. This is an unequal treatment that lacks reasonable technical or legal justification.
2. Disincentive to investment and adherence to the legal model
The proposal comes at a sensitive time, shortly after the enactment of Law No. 14.790/2023, which regulated the sector and established a formalized environment. Since then, various companies have made significant investments to operate legally in the country. These investments include:
* Payment of authorization fees;
* Establishment of financial reserves;
* Structuring of qualified teams;
* Marketing campaigns;
* Robust technological investments in information security, Responsible Gaming mechanisms, KYC (Know Your Customer) processes, and anti-money laundering compliance.
An increase in taxes under these circumstances weakens legal certainty and compromises the expected return on these investments, undermining confidence in the newly established regulatory environment.
3. Unfair competition with illegal operators
The regulated sector already faces predatory competition from illegal operators who operate in Brazil without licenses, without tax control, and without meeting the compliance obligations required of authorized operators. These platforms often offer artificial advantages, such as aggressive bonuses and zero taxation for bettors, which distorts competition. Increasing the tax burden on legal operators, without ensuring effective action against illegal ones, will only exacerbate this imbalance.
4. Weak oversight capacity
The government’s current capacity to monitor and enforce sanctions remains limited. Even after federal regulation, the illegal market continues to grow. A tax increase in this context may encourage the migration of operators and consumers to the informal or unlicensed market, resulting in losses in revenue and state oversight.
5. Regulatory fragmentation in the country
Several states and municipalities have promoted their own regulations, with lower requirements and costs compared to the federal model. This creates a competitive regulatory environment, disorganizing the sector and compromising the development of a strong, predictable, and sustainable national market.
6. Legal challenges and regulatory uncertainty
Maintaining unequal tax treatment among game modalities managed by the same federative entity may lead to legal challenges based on the constitutional principles of equality, legal certainty, and legitimate expectations. Operators who invested based on the current regulations may seek contractual rebalancing and compensation for potential losses.
Conclusion
The increase in the tax burden on regulated fixed-odds betting and online gaming, as currently being discussed, represents a considerable risk to the consolidation of the legal market. By compromising equality, generating competitive distortions, discouraging adherence to the federal model, and favoring the illegal market, this measure is likely to produce effects contrary to the objectives of regulation: control, revenue collection, and consumer protection.
It is essential that any change to the sector’s tax burden be discussed technically, transparently, and in dialogue with regulated stakeholders, respecting constitutional principles and fostering a stable, competitive, and sustainable environment.
Waldir Eustáquio Marques Júnior
Chairman of the Board at Aigaming and Director of Regulatory Affairs at WA.Technology.
Graduated in Law, with university extension at the University of Nevada, Las Vegas UNLV (Essentials of Gaming Law & Regulation Course) and University of Nevada, Reno (Strategic Perspectives in the Gaming Industry). He worked at the Ministry of Finance (2007-2022), participating as a member of ENCCLA - National Strategy to Combat Corruption and Prevent Money Laundering and at the Financial Activities Control Council (Coaf). He was president of Caixa Loterias and undersecretary of Regulation of Prizes and Draws, of the Secretariat for Evaluation of Public Policies, Planning, Energy and Lottery of the Special Secretariat of Finance of the Ministry of Economy.
