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The previous government proposal to raise the IOF (Financial Operations Tax) has recently been met with vigorous opposition from the private sector and Congress alike. In a different vein, some government officials and economists have discussed raising taxes on online betting sites as an alternative. However, an analysis of market trends shows that to counterbalance the projected R$20 billion from the IOF hike, the government would need to increase nearly 77% of today’s revenue from betting sites—a measure deemed economically absurd by experts and industry players.
Current State of the Betting Market in Brazil
According to data collected through Brazil’s Access to Information Law, the combined revenue of betting sites in Brazil is approximately R$2.16 billion every month. That is approximately 7% of users’ combined wagers per month, totaling an estimated R$30 billion by the Central Bank. The remaining 93% are typically paid to users as winnings in the form of prizes.
Besides being in a highly controlled market, betting companies are already subject to an advanced tax regime. Already, they contribute around 42% of their revenue under the semblance of service fees (ISS, PIS, Cofins, and corporate income tax), a monthly regulatory fee, and a further 12% for social reasons, which is channeled to a myriad of public establishments.
The Fiscal Gap and the 77% Proposal
To balance the R$20 billion in revenue that the IOF increase will generate, the government would need to collect R$1.67 billion every month from the betting industry alone. That is equivalent to taxing 77% of the industry’s gross revenue—nearly twice the amount operators pay today. Not only is it unrealistic, but also economically unfair, argues the National Association of Games and Lotteries (ANJL).
Breakdown of Existing Contributions
From February to May 2025, federal government revenues from gaming operators averaged R$259 million per month. Those funds are spent in all areas:
- Ministry of Tourism – 22.4%
- Ministry of Education – 10%
- Ministry of Health – 1%
- Embratur – 5.6%
- Ministry of Sport & Sports Bodies – 36%
- Public Security – 13.6%
- Other social and civil society funds
The Ministry of Tourism alone collected between R$41 million (February) and R$75 million (May), which is a sign of a growing sector revenue in 2025.
The monthly supervision regulatory fee paid to the Secretariat for Prizes and Betting (SPA) also increased, from R$6.78 million in February to R$9.36 million in April. Since the fee is a function of revenue bands, the increase reflects rising sector revenues as well as a rise in the number of approved operators.
Escalating Pressure and Industry Pushback
Economists such as Aloizio Mercadante (President of BNDES) and entrepreneurs such as Ricardo Alban (President of the National Confederation of Industry) have suggested that taxing big techs and bets is a more effective fiscal policy than the real economy suffering IOF hikes. No specific plan, however, on how to proceed with such a move has been presented.
At the same time, trade associations like the ANJL and the Brazilian Institute for Responsible Gaming (IBJR) caution that additional taxation could send customers into the off-radar sector. Estimates indicate that more than 50% of the aggregate amount gambled in Brazil—about R$30 billion per year—is directed through illegal gambling websites that do not contribute taxes and are free from regulation.
The present laws also create a tax imbalance for the consumers. State lottery winners like Mega-Sena are taxed 30% income tax on the prize money that they win, while online betting winnings are taxed at 15%. An amendment that was tabled by Congress exempted profit amounts less than R$2.112, but was vetoed by President Lula.
While this is a benefit, the IBJR counters that the tax burden on operators is already excessive. In 2023, the industry prevailed in keeping new levies at bay, with threats of overcharging driving illegal platforms and compromising the legal market.
Conclusion: Sustainability Over Short-Term Fixes
The temptation to heavily tax online betting as a stopgap measure to solve the problem of federal budget balancing is politically enticing, but it has dire implications for the sustainability and legitimacy of the business. As an increasingly regulated market is already contributing billions into public coffers and setting the standard for revenue distribution, overloading it could reverse the progress made to date.
Instead, industry voices call for a balanced approach—one that answers the call for reducing illegal activity, enhancing regulation, and leveraging current revenues without punishing taxation that can harm the industry’s long-term viability.
Source: BNL Data
