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Brazil’s highly regulated fixed-odds betting market maintains its impressive momentum as it enters its second year of operations. The sector has continued from the success of 2025, currently comprising 83 licensed operators, 29.4 million active users, and R$ 37 billion in public revenue.
However, new projections point to a looming challenge in the sector. According to a recent study by LCA Consultoria, commissioned by the Brazilian Institute of Responsible Gaming (IBJR), the tax burden on the sector may increase from 32% to 42% by 2033 due to the tax reform currently in progress in Brazil.
This new trend has sparked fears in the minds of stakeholders in the sector. This is because the sector has already seen high upfront costs in the form of license fees of R$ 30 million.
Tax Reform and Its Impact on Operators
This increase in tax burden is primarily due to the replacement of existing taxes, such as PIS/Cofins and ISS, with new taxes, such as IBS (Tax on Goods and Services and CBS) Contribution on Goods and Services.
As noted by Eric Brasil, director at LCA Consultoria, the tax burden may increase by 14 percentage points above the proposed 28% baseline tax by the Ministry of Finance. Additionally, the social contribution rate on the sector’s revenues may increase from 13% to 15%.
This increase in tax burden may negatively affect the economic sustainability of the sector. According to Plínio Lemos Jorge, president of the National Association of Games and Lotteries (ANJL), “regulatory stability is critical.”
“If the rules don’t change, things can continue as they are, because that was the premise under which companies entered Brazil.”
He then went on to warn of what might happen if taxes continue to rise incrementally: “If taxes keep increasing by 1% or 2%, at some point operations will no longer be viable. Companies entered Brazil based on a defined framework, changing the rules mid-game breaks that trust.”
Risk of Driving Users to the Illegal Market
The other factor to consider is how it might affect consumers. The increased taxes might be passed on to consumers, who might then turn to illegal betting sites as an alternative.
André Gelfi, director and co-founder of IBJR, explained how this might be an issue for consumers and operators alike: “The study showed that for every 5 percentage points increase in market formalization, the country could generate approximately R$ 1 billion in additional revenue.”
This is to say, it might be more beneficial for the country to look at ways to stop illegal betting operators from operating within Brazil.
The Role of the “Sin Tax” and Future Outlook
The other point of contention is how the proposed Selective Tax, which is set to be introduced in 2027, might impact betting operators. This is referred to as a “sin tax” and is intended to further add to the costs of operating within Brazil.
Gelfi explained how this is an incorrect approach to how betting operators should be taxed, as it is based on a lack of understanding of how the industry operates. “Out of lack of understanding, they want to apply the same logic used for state lotteries to betting operators.”
Unlike in the case of traditional lotteries, where the state takes a large share of the earnings, fixed-odds betting is based on a different economic model with lower profit margins and higher operating costs.
Balancing Revenue and Market Sustainability
As Brazil continues to develop its regulatory and financial framework, there will be a challenge to balance revenue generation with market sustainability.
While the industry has clearly demonstrated its economic viability, over-taxation may undermine formal market players and inadvertently benefit illegal operators. The coming years will be telling in determining whether Brazil can maintain a competitive and regulated market while reaching maximum revenue potential.
Source: iGaming Brasil
