Brazil’s President Luiz Inácio Lula da Silva (Lula) has approved a rise in gambling tax in the country. The new rate will increase in stages, up to 13% this year, then to 14% next year, before a final rise to 15% in 2028.
The final rate of 15% is less than the previously proposed increase from the current 12% to 18%. The Senate’s Committee of Economic Affairs approved the 18% rate, but its legislative progress stalled and eventually expired without becoming permanent.
The more modest rise is a compromise to the betting industry that opposed the increase. Opponents warn that high tax rates will drive users to offshore betting platforms, undoing the work the country has done to establish a regulated industry.
Lula gave his final approval to Complementary Law No 224 at the end of December, with the new law also cutting federal tax benefits for several sectors by 10%.
The changes aim to finance R$300 billion ($55 billion) for social spending in 2026.
Betting Lobby Group Has Partial Success
The Brazilian Institute of Responsible Gaming (IBJR) warned that a tax increase to as much as 18% would grant illegal operators “the greatest competitive advantage the market has ever seen”.
Brazil passed new laws that came into effect in January last year to regulate the gambling industry.
It subsequently approved esports betting in April, and the regulated industry attracted 17.7 million bettors in the first six months of the new regulations.
As part of the newly regulated market, the country has tightened its oversight of offshore platforms, shutting down approximately 15,000 websites since October 2024.
A spokesperson for the IBJR, which comprises Brazil’s leading betting companies, stated that even a tax rate of 15% will likely incentivize players to return to offshore sites.
The group stated, “By taxing the bettor’s deposit at 15%, the state decrees that BRL100 is only worth BRL85 in companies that follow the law.”
“In the black market, however, the same BRL100 is worth the full amount. This is a direct incentive to migrate to the illegal market.”
Operators Given Time To Adjust To New Rates
Under the new law, companies will have time to adjust to the 15% rate. Brazil’s constitution dictates that any new or increased taxes are subject to a 90-day waiting period from the date of publication before taking effect.
Operators will therefore have a short reprieve before the 13% rate applies, and can prepare for higher rates to come next year and in 2028.
The previous proposal would have made the rate 15% this year and 18% in 2028. There have, however, also been calls for a retrospective tax on gambling companies.
The RERCT Litígio Zero Bets proposal would see operators pay tax on gambling activities between 2018 and 2024, before the new regulations took effect in 2025.
The proposal has been sent back to the Chamber of Deputies, where it will face further analysis.