The plans to double the tax rate on Brazil gambling operators are “insane” and risk collapsing the market, according to expert Elvis Lourenço.
Elvis Lourenço, a Brazilian iGaming expert and managing partner at EX7 Partners warns doubling the current gambling tax rate could have catastrophic consequences for the sector.
However, he suggests there may be room to negotiate the newly proposed 24% rate. He believes with intervention from the sector the rate could edge closer to 18%.
The tax 18% rate was previously proposed in Brazil’s initial sports betting bill which was passed into legislation in December 2023. However it was later brought down to 12% of operator GGR.
“The first bill that they proposed back in the day was 18%,” Lourenço tells iGB. “We all know that.
“So if you look for the best worst scenario, it is 15% at least, 18% maximum because that was on the first agenda.
“But 24% is insane. It’s insane and it will collapse the market.”
Where does Brazil’s gambling tax rate stand today?
Discussions over taxation on gambling in Brazil continue to plague the market, with the government determined to increase the rate amid concerns over the social and financial impacts of betting on the population since regulation launched on 1 January.
A provisional measure to increase the rate from 12% to 18% failed to pass through Parliament earlier this month, as did plans to introduce retrospective taxes for pre-regulation gambling activities.
Just a day after the provisional measure was withdrawn, a new bill (PL 5,076/2025) was presented by Lindbergh Farias, leader of the Workers’ Party in Brazil’s Chamber of Deputies, which seeks to double the tax rate to 24% of GGR.
PL 5,076/2025 received urgent status last week and, while it is still unclear when exactly the Chamber of Deputies president Hugo Motta will put the bill to a vote, the industry is once again left nervously awaiting developments.
Gambling being used for political motivations
The Brazil government seems dead set on increasing the tax burden on gambling, with a policy of introducing new taxes on the three Bs – billionaires, banks and betting.
With an election coming up next year, Lourenço suggests President Lula’s government is trying to appease the significant conservative section of the population by increasing taxes on betting operators.
This, according to Lourenço, has been expedited by the humiliation for the government of its failed provisional measure to increase the rate from 12% to 18%, with the gambling sector being used as a “currency of trade” by politicians.
“That’s the main reason that they struck back so fast, because it was embarrassing for them,” Lourenço explains.
“This becomes an election agenda, because this is good for the audience and the public to get votes because we are a conservative country in some ways. So, to put this on their agenda, ‘we increase the taxes of the billionaires, of the gambling world’, it is good for the speech of the actual government.”
Unfair comparisons with other markets
Brazil’s regulated sector has endured a mixed start, with hesitant optimism weighed down by lingering concerns over tax rises and new ad restrictions.
Many are frustrated by the threat of tightening regulations so early into the regulated market. Lourenço argues the fact that the licensed sector is still so new is in fact the reason it’s being targeted for tax increases.
“They [the Brazil government] need to collect [taxes] with some industry, and unfortunately we are the industry at target,” Lourenço says. “If they choose retail, commodities, banking, the lobby is too strong.
“So unfortunately, we are the target because we are new, with new regulation, and the conservative country says, ‘they can pay more’.”
Unfair comparisons to other markets
Lourenço also highlights the comparisons some are making to other jurisdictions, with such comparisons ignoring the other taxes that operators in Brazil are mandated to pay.
At present, in addition to a 12% tax on GGR, operators are subject to a 9.25% PIS/Cofins levy and municipal taxes that can reach up to 5%.
They are also taxed on approximately 34% of their profits, comprising 25% corporate income tax and a 9% social contribution tax.
Brazil is also transitioning to a new tax system, with PIS/Cofins being replaced with a dual tax system that Lourenço predicts could raise the total burden on operators to an excess of 50%, if further GGR-based taxes are also added.
Government targeting the wrong side of legality
Another point of frustration for Lourenço and much of the licensed sector is the government’s emphasis on targeting legal operators, rather than their black market alternatives.
Somestakeholders have estimated over half of the Brazilian gambling market’s revenue is generated by the black market, claiming the government’s focus on restricting licensed operators is hugely benefitting operators that act outside of regulation.
With the government seemingly desperate to generate more tax revenue from gambling, Lourenço suggests it should instead focus on bringing more betting onshore rather than simply raising the burden on licensed operators.
If the government can effectively reduce the black market, Lourenço says operators would be more inclined to reluctantly accept lesser tax increases.
“They are targeting to increase the taxes but they are not targeting to combat illegal gambling,” Lourenço adds. “So you have more than 50% in the black market and they’re doing nothing to get this money that is circling through.
“Guys, let’s try to get some money from here [illegal gambling]. If we can lower 50% to 30%, well it’s done.
“And the distribution of the money is too low for the security, for the enforcement. So we know that most of the money must go to health and to health programmes in Brazil and education as well. But you need to fight against the illegal market and you need to get the enforcement strong. But, it’s not happening.”
The latest push to raise gambling taxes in Brazil has sparked warnings from leading industry figures.