Brazil to raise betting tax to 15% by 2028 for revenue growth

President Luiz Inácio Lula da Silva has officially signed a new law that will increase taxation on betting companies operating within Brazil, marking a significant development in the country's regulated gambling sector. The legislation stipulates that the tax on gross gaming revenue (GGR) will rise from the current rate of 12% to 15% by 2028, reflecting the government’s effort to balance revenue generation with sector growth and regulatory stability.

The measure applies directly to gross gaming revenue, which is calculated as the total revenue generated by operators minus the prizes paid to bettors. This adjustment comes shortly after Brazil emerged as the fifth largest sports betting market globally in its first year since the legalization of sports betting, underscoring the rapid expansion and economic significance of the sector.

The Ministry of Finance emphasized that the tax increase is intended to provide both predictability and stability in fiscal planning. In a statement, officials noted that the measure will help ensure sustainable revenue collection without stifling market development. By gradually increasing the rate to 15% over the next few years, the government aims to avoid sudden disruptions for operators while enhancing long-term regulatory oversight.

Legislative process and future tax proposals

The tax hike follows a decision by the Brazilian Senate earlier this month to approve the 15% rate, which represents a compromise between industry concerns and revenue targets. Prior to the Senate vote, proposals had suggested raising the tax as high as 18%, but this level was ultimately considered excessive given the potential impact on legal operators. Nonetheless, discussions around the higher 18% rate continue in Brazil’s legislative bodies, suggesting that further adjustments may be possible in the future.

The phased implementation of the tax is intended to allow operators time to adapt to the new fiscal requirements. Analysts note that while the rate increase is moderate compared with initial proposals, it could have meaningful implications for operators’ profit margins, particularly smaller companies that are still establishing their presence in the Brazilian market.

Financial impact and market performance

According to data from the Secretariat of Prizes and Betting, Brazil’s federal government collected R$3.32 billion (approximately €506 million) in gambling-related taxes through the first nine months of the current year. Legalized operators collectively handled R$27.7 billion in transactions during this period, illustrating both the scale and the rapid growth of the market since its formal establishment.

Despite these figures, industry observers caution that a substantial portion of betting activity continues to occur in the unregulated market. Recent studies indicate that approximately 55% of gambling revenue in Brazil is still absorbed by illegal operators, highlighting the ongoing challenge of enforcing compliance and preventing market leakage.

Concerns over potential migration to illegal platforms

Industry associations and responsible gaming bodies have expressed concern that the new tax measure, while intended to strengthen state revenue, could inadvertently push some operators or players toward unlicensed platforms. This migration would undermine regulatory objectives, potentially exposing consumers to unmonitored risks and perpetuating the illegal gambling economy.

The Brazilian Institute for Responsible Gaming (IBJR) specifically highlighted these risks in a statement issued in October. The institute noted that regulated operators are subject to strict rules designed to protect both players and the state, including mechanisms for integrity, traceability and debt prevention. In contrast, illegal platforms operate without oversight, often financing organized crime and other illicit activities.

Regulatory integrity and consumer protection

“The regulation of the sector represents progress precisely because it establishes clear rules for integrity, traceability and debt prevention – aspects that are absent in the illegal market, which not only harms the state and consumers but also finances illicit activities and organised crime in various forms,” the IBJR statement said.

The institute emphasized that efforts to combat illegal gambling should remain a priority for policymakers. Measures that weaken the regulated environment may benefit illegal operators and make it more difficult to dismantle criminal networks exploiting gaps in enforcement. The IBJR argued that strengthening the legal market, rather than imposing excessive tax burdens, is the most effective way to increase compliance, protect consumers and generate sustainable revenue.

Industry response and economic implications

Responses from industry stakeholders have been mixed. Larger operators with established infrastructure have generally expressed confidence in their ability to absorb the moderate tax increase. However, smaller companies have raised concerns that the additional tax pressure could limit their competitiveness and operational sustainability.

Some analysts warn that if the regulated sector becomes less attractive due to taxation, a larger share of the market could revert to illegal operators. Such a shift would reduce the effectiveness of consumer protection measures, compromise state oversight and diminish the government’s overall tax collection potential. The Ministry of Finance and regulatory authorities will therefore need to monitor the market closely to ensure that the intended benefits of the legislation are realized without unintended consequences.

Strategic goals behind tax reform

Brazil’s tax reform strategy in the betting sector appears to have multiple objectives. First, the government seeks to increase fiscal revenue in a predictable and structured manner. By applying taxes to gross gaming revenue rather than net profits, authorities can establish a stable revenue base regardless of operators’ individual profitability.

Second, the reform aims to strengthen the legitimacy and credibility of the legal market. Clear rules, compliance mechanisms and progressive taxation encourage operators to remain within the regulatory framework, discouraging illegal activity and promoting transparency.

Finally, the government intends to create an environment that supports long-term investment in technology, responsible gaming initiatives and customer protections. By ensuring that operators comply with licensing conditions and maintain robust financial practices, Brazil can continue to grow its betting sector while protecting public interests and minimizing social risks.

Global context and comparison

Brazil’s decision to increase betting taxation comes at a time when many countries are reviewing their gambling regulations and fiscal strategies. Globally, governments are balancing the economic benefits of a growing gambling sector with the need to prevent illegal activity, protect consumers and ensure financial oversight.

Brazil’s tax strategy, gradually rising to 15%, positions the country as moderately aligned with international standards. In comparison, some European jurisdictions impose rates ranging from 20% to 30% on gross gaming revenue, reflecting different regulatory priorities and market dynamics. By adopting a phased and moderate approach, Brazil aims to achieve a balance between attracting investment and generating government revenue without destabilizing the emerging market.

Looking ahead

The Brazilian government will continue to evaluate the sector’s development and may adjust taxation levels if necessary. Legislative discussions regarding the previously proposed 18% rate remain ongoing, leaving the possibility of further modifications in the future. Operators, regulators and industry bodies are likely to engage in continued dialogue to ensure that the regulated market remains competitive, responsible and sustainable.

The legal betting market in Brazil has experienced substantial growth since its introduction, providing both economic benefits and employment opportunities. Maintaining regulatory integrity while gradually increasing taxation is expected to enhance the sector’s credibility and ensure that Brazil continues to attract reputable operators and investors.

Conclusion

Brazil’s decision to raise taxes on betting operators to 15% by 2028 reflects a careful balancing act between generating government revenue and sustaining sector growth. While concerns over illegal gambling and market migration remain, the phased approach, regulatory oversight and engagement with responsible gaming bodies aim to create a stable and secure environment for both operators and consumers.

The IBJR’s guidance underscores the importance of strengthening the legal market as the primary tool for consumer protection and effective taxation. By implementing measured reforms and promoting compliance, Brazil seeks to establish a mature betting market that contributes meaningfully to the national economy while safeguarding public interests.

FAQs

What is the new betting tax rate in Brazil?
The new law sets the betting tax rate at 15% of gross gaming revenue, gradually increasing by 2028.

How is gross gaming revenue calculated?
Gross gaming revenue is calculated as total revenue minus prizes paid to bettors.

Why did Brazil increase the betting tax?
The tax increase aims to boost government revenue, ensure predictable collection and maintain sector stability.

What concerns do industry bodies have?
Some bodies worry the higher tax could push operators or players toward unlicensed platforms.

What role does the IBJR play in Brazil?
The Brazilian Institute for Responsible Gaming promotes consumer protection and highlights risks from the illegal gambling market.

How much tax revenue has Brazil collected from gambling so far?
Up to September, Brazil collected R$3.32 billion in federal taxes from legalized operators.

What percentage of the Brazilian gambling market remains illegal?
Reports suggest approximately 55% of betting revenue in Brazil is still handled by illegal operators.

Are further tax increases expected?
Legislative discussions about raising the tax to 18% are ongoing, but no final decision has been made.

How does Brazil’s tax compare internationally?
Brazil’s 15% rate is moderate compared with some European countries that tax gross gaming revenue at 20% or higher.

What is the long-term goal of Brazil’s gambling regulation?
The goal is to strengthen the legal market, protect consumers, ensure regulatory compliance and promote sustainable sector growth.