It is inevitable that regulatory efforts around a new industry provoke resistance. Recent accusations from the retail sector blaming sports betting for “food insecurity” in Brazil and a supposed R$103 billion (US$18.5bn) loss in retail sales in 2024 go well beyond reasonable arguments and demand a data-driven response.
First, such claims ignore official figures. IBGE reported 4.7% growth in retail in 2024, directly contradicting the notion that betting caused a decline in the retail industry. There is no genuine competition between the sectors, just misleading rhetoric.
Second, many of these arguments stem from flawed premises. A Central Bank study estimated PIX-based betting volumes between R$ 18–21 billion per month in 2024 (US$3.25bn - US$3.75bn), amounting to over R$200billion (US$36bn) for the year. From that, it is falsely assumed that R$103billion (US$18.5bn) were siphoned off from retail.
However, bet transaction volume is not the same as revenue—or profit. Under regulations set by the Ministry of Finance, operators with accredited certifications must return at least 85% of all wagered funds to players (Section 6.2, Annex I, SPA/MF Ordinance No. 300/2024).
So, out of every R$ 100 (US$18) bets, a maximum of R$15 (US$2.7) stays with operators; at least R$ 85 (US$15) returns to players. Even if we accept the Central Bank’s transaction volumes and assume the minimum 85% return, operators would keep at most R$30 billion (US$5.4bn) —not R$103 billion (US$18.5bn) — before deducting operational costs. Therefore, the claim of a R$103 billion diversion from retail is completely unfounded.
Another narrative advanced by retail is that legalization merely facilitated money laundering. Ironically, the opposite is true.
Since July 2024, with the issuance of Ordinance MF 1.143/24, the Federal Government has intensified its fight against financial crimes, mandating that all betting operators adopt robust AML/CTF programs. These include enhanced identity verification (biometric live checks), 24/7 monitoring of suspicious transactions, reporting to COAF, and sophisticated compliance frameworks.
Legal betting operators are equipped with safeguards often more advanced than those used by traditional financial institutions.
Only traceable payments are permitted in the regulated market. Operators must be headquartered in Brazil, have a minimum executive presence locally, and at least 20% of their capital must be held by nationals. This transparency facilitates regulatory oversight. What propels illegal activity is, in fact, the lack of regulation and oversight in the unlicensed market.
Retailers still insist on baselessly arguing that the government is granting a "tax exemption" to 'Bets'. They falsely claim that the betting sector pays no taxes or very low taxes. Well, let's look at the numbers once again, since facts are futile. Check out what's already charged to bookmakers below:
- 12% gaming tax on gross revenue
- 9.25% PIS/COFINS on gross revenue
- Up to 5% ISS on service charges
- 34% combined IRPJ and CSLL on corporate profits
- Monthly oversight fees that can reach up to R$2million (US$358,000)
All this precedes the pending Tax Reform, which will consolidate PIS, COFINS, and ISS into the CBS and IBS taxes—and add a new Selective Tax on betting. Combined, and with tax reform, betting in Brazil could approach an astonishing 50% effective tax rate, making it one of the most heavily taxed markets in the world.
To portray betting as synonymous with evasion, money laundering, or economic disruption overlooks the fact that regulated betting already creates tens of thousands of jobs in Brazil—especially in technology, customer support, compliance, marketing, and development. It is estimated that the legal betting sector will generate between 150,000 and 200,000 direct and indirect jobs by 2025.
More than attacking the sector, it's necessary to seriously address the risks of tax overload. A recent example is Denmark, which increased taxes on operators' gross revenue from 20% to 28%, leading to a flight of operators to the illegal market. The same could happen in Brazil. Operators are already signaling that they may return licenses and reduce investments if Provisional Measure 1303/2025 – which proposes increasing the Gaming Tax from 12% to 18% – is approved by the National Congress.
This scenario aligns with the Laffer Curve principle: beyond a certain point, higher tax rates do not increase revenue—they depress economic activity, encourage tax avoidance, and push users to unregulated alternatives.
China offers a cautionary example. Despite formal prohibitions and enforcement, it's estimated to host roughly 50% of the world’s illegal betting volume, moving about US$1.7trillion annually, according to international outlets such as South China Morning Post and the Reuters Institute. This illustrates how repression without regulation and balanced taxation can backfire.
Retail’s generalized claims not only lack technical foundation—they also pose political danger. They shift the debate toward a false antagonism (retail vs. 'Bets') and, crucially, divert attention away from what truly matters: dismantling the clandestine market that pays no taxes, follows no rules, and exposes consumers to risk while draining revenue from both retail and regulated operators.
One must ask: who benefits from strengthening the illegal market at the expense of a transparent, regulated, and tax-compliant ecosystem?
Rafael Marchetti Marcondes
President of the Brazilian Association of Bets and Fantasy Sports (ABFS) and Chief Legal Officer at Rei do Pitaco. Professor of Sports, Entertainment, and Tax Law. PhD and Master’s in Tax Law from PUC-SP. MBA in Sports Management from ISDE, Barcelona/Spain. MBA in Sports Betting Management from University of Ohio, USA.
