International experience reveals that, when regulating the betting market, defining the tax equation is one of the most sensitive and decisive points for the success of public policy. In Brazil, the situation is no different. On the one hand, there is the state's legitimate desire to expand its revenue sources, the collection of which, under Law No. 14,790/2023, is primarily allocated to social security, the promotion of sports, and the financing of education. On the other, excessive tax burdens threaten the very economic sustainability of regulated operations and, paradoxically, can strengthen the illegal market that the regulatory regime itself set out to weaken.
Given this tension, the following question arises: what is the balance point capable of keeping the market attractive for investment, protecting consumers, and, at the same time, ensuring fair and sustainable revenue for the state?
It was precisely with this balance in mind that the legislature originally established a Gaming Tax equivalent to 12% of Gross Gaming Revenue (GGR). In June 2025, however, Provisional Measure No. 1,303/2025 increased this rate to 18%, which is still pending enactment into law. In addition to the Gaming Tax, other corporate taxes—IRPJ and CSLL—are added, as well as contributions to PIS/COFINS (Social Security Tax), ISS (Service Tax), as well as regulatory funding, including a R$30 million grant (every 5 years) and a R$5 million financial reserve.
In practice, the total burden on operating agents (including taxes, transfers, and fees) could exceed 50%, which is likely to worsen if the increase to 18% is confirmed and with the imminent selective tax from the tax reform. But what are the concrete risks this situation poses for the Brazilian market?
The first—and most significant—risk is the loss of competitiveness of authorized operators. With reduced margins, these companies are limited in their ability to offer competitive odds, attractive bonuses, and high-quality experiences—fundamental resources for attracting and retaining bettors. In this context, bettors tend to migrate to unauthorized platforms, which, because they do not bear the same burdens, can offer seemingly more advantageous conditions.
The data confirms this concern. Recent research reveals that many bettors don't even identify which brands are authorized, and in 2025, the Locomotiva Institute reported that 73% of bettors have used illegal websites at least once. Finally, another alarming fact: considering that approximately 180 brands are currently authorized by the SPA/MF to operate in Brazil and more than 18,000 illegal betting sites have been blocked by ANATEL, it can be concluded that, since the regulation of the sector, only approximately 1% of the betting sites made available to Brazilians are authorized.
In terms of the channeling rate (i.e., the percentage of Brazilian bettors who bet with authorized operators), industry estimates indicate that the illegal market still represents between 41% and 51% of the total betting market in Brazil. In other words, when few bettors migrate to the formal market, the government's expected revenue is frustrated and consumers are exposed to risks that regulation sought to mitigate, such as the lack of guaranteed prize payouts, the absence of Responsible Gaming policies, and greater susceptibility to fraud.
According to a study conducted by Copenhagen Economics for the Swedish government, rates between 15% and 20% on the GGR tend to maintain a high channeling rate, keeping the regulated market competitive and revenue at sustainable levels. When the tax burden exceeds this level—as occurs in Brazil, due to the cumulative incidence of other taxes—there is a simultaneous decline in channeling and tax revenue, as licensed operators lose competitiveness against the illegal market.
Therefore, seeking a balance goes beyond mere tax discussions: it is an essential condition for guaranteeing the survival and free competition of the regulated market and ensuring effective consumer protection.
Given this potential increase in the Gaming Tax in the first year of the regulated market, it is entirely reasonable for authorized operators, who paid millions to begin operating in Brazil, to begin studying the feasibility of taking appropriate legal action against the Union to "return the authorization" and refund part of the amount paid for the federal concession.
The central argument lies in the breach of the legitimate expectation built at the time the concession was granted, when economic conditions were different. For these operators, the sudden increase in the tax burden substantially alters the economic and financial equation that underpinned their business plans and investments in Brazil, initiating a relevant and necessary legal discussion: would these operators be entitled to seek redress or compensation in the face of this change?
Part of the legal doctrine maintains that, since the instrument for delegating the public fixed-odds betting service at the federal level is granted through authorization (1), these operators are not granted a subjective right to economic and financial balance. From this perspective, the authorization — due to its discretionary and precarious nature — allows economic conditions, including those of a tax nature, to be modified unilaterally by the Public Administration, without this constituting a state duty of compensation.
Nevertheless, a growing trend argues that granting a license to operate fixed-odds betting constitutes a qualified authorization (2), distinct from a simple authorization. Based on this framework—and also considering the significant private interest component in the sector—the argument is made for applying, by analogy, the logic of economic and financial balance typical of concession contracts, allowing claims for adjustment or compensation in light of the increase in the Gaming Tax from 12% to 18%.
This debate is likely to intensify in the coming months, with the potential to generate litigation and spur the search for regulatory solutions capable of mitigating the effects of Provisional Measure No. 1,303/2025. More than a controversy over tax rates, what is at stake is defining the limits of the State's regulatory power and the degree of stability necessary for the private sector to invest and operate safely within the country.
Udo Seckelmann
Attorney. Head of the Betting and Cryptoassets Department at Bichara e Motta Advogados. He holds an LLM in International Sports Law from the Institute of Law and Economics (ISDE) in Madrid, Spain. He is a professor at the CBF Academy. He is a member of the National Academy of Sports Law (ANDD-Labs). He is a member of the Special Committee on Sports, Lottery, and Entertainment Law of the Rio de Janeiro Bar Association (OAB/RJ).
Pedro Heitor
A law student at PUC-RJ, he has worked in the areas of Cryptolaw and Gambling Law at Bichara e Motta Advogados since 2022. As an analyst, researcher, and enthusiast, he focuses on the legal dynamics related to the regulation of cryptoassets, decentralized finance (DeFi), betting, and gaming.
(1) Hely Lopes Meirelles defines a public service authorization as “the discretionary and precarious administrative act by which the Government makes it possible for the applicant to carry out a certain activity, service, or use certain private or public assets, which the law conditions to the acquiescence of the Administration.” Brazilian Administrative Law, 14th ed., São Paulo: Revista dos Tribunais, 1989, p. 164 (1st ed. 1964).
(2) The grant may be with a fixed deadline (qualified authorization) or with an unfixed deadline (simple authorization). CRETELLA JÚNIOR, José. Definition of Administrative Authorization. Revista dos Tribunais, v. 92, n. 813, Jul. 2003, p. 755.
