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The Brazilian Institute of Responsible Gaming (IBJR) reaffirmed its opposition to the proposed increase in online gambling taxes in Provisional Measure (MP) 1.303, currently under analysis in the National Congress. For the entity, the measure destroys the activity of legally licensed operators, generates legal uncertainty, and can even jeopardize government revenue.
IBJR emphasizes that the companies that are already in the regulated market have invested a lot already. All of the licensed operators have paid approximately BRL 30 million (USD 5.56 million) for a five-year license, which has amounted to over BRL 2.3 billion (USD 426 million) for the government. These investments highlight the necessity of having a stable regulatory environment to promote continued market growth and investor confidence.
Concerns over Market Stability and Legal Certainty
The proposed tax adjustment would raise the contribution to 18% from 12%, a 50% hike just seven months after the regulation came into effect. IBJR representatives assert that such a rapid increase disrupts the security of legal operations, undermining trust in the regulatory system. Punishing licensed operators, the institute argues, does not mend the structural flaws of taxation nor effectively combat the illegal market, which accounts for approximately 50% of all gambling in Brazil.
IBJR reiterates that the government policy needs to be in the direction of enforcement of compliance and protection for bettors rather than imposing disproportionate fiscal fees on compliant operators. The institute opines that regulatory stability is necessary to underpin long-term investments within the industry because abrupt policy changes could inhibit local and international operators from entering the market.
Government Justification and Public Hearing
In a public hearing with the National Congress before the mixed commission responsible for examining new regulations for taxation of financial investments and virtual assets on August 12, Finance Minister Fernando Haddad defended MP 1.303. Speaking to the mixed commission, the minister mentioned gaps in law that had increased fiscal expenditure from 2% to 6% of Brazil’s GDP. According to Haddad, the government needed to address this problem in order to guarantee public account stability and fiscal fairness.
He further noted that previous administrations had no full control over the betting business, resulting in huge volumes of transactions not being taxed. Haddad proposed streamlining online gambling along the lines of tobacco and liquor, subjecting the industry to controlled taxation to reduce any potential public health concerns concerning problem gambling.
IBJR Calls for Balanced Solutions
The IBJR is clear that increasing taxes on legal operators is not the solution to the country’s revenue issues. Instead, the institute urges firm enforcement action against illegal operators while maintaining a regulatory framework that is consumer-protective and pro-responsible gambling. By introducing predictability in tax and licensing regimes, Brazil can stimulate the growth of the regulated market and discourage illegal market activity.
The to-and-fro between government officials and the IBJR underscores the tightrope that policymakers must tread with regard to generating revenue, encouraging legal market participation, and addressing social ills. As MP 1.303 makes its way through the legislature, stakeholders across the gambling value chain are paying close attention to potential impacts on both licensed operators and state coffers.
The IBJR’s opposition to the proposed tax increase reflects broader concerns about providing a healthy and transparent regulatory framework for online gambling in Brazil. The institute calls for a more strategic approach that prioritizes legal certainty, investor confidence, and public protection over near-term fiscal gains. The ruling on MP 1.303 will have long-term implications for the country’s rapidly evolving iGaming industry.
Source: YogoNet
