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The city of Recife, capital of Brazil’s state of Pernambuco, is pulling out all the stops to support the burgeoning sports betting industry by offering substantial tax incentives. The Mayor, João Campos (PSB), spearheaded a legislative change that drops the ISSQN tax on betting services from 5% to 2%, with the long-term aim of attracting investment and encouraging economic development in this emerging sector.
Tax Code Changes to Support Betting Companies
The new law, approved in an emergency regime by the City Council of Recife, amends the- Tax Code of the city (Law No. 15.563/1991) through Project of Law 02/2025. It reduces the ISSQN (Tax on Services of Any Nature) charged over services related to the sale and distribution of lottery tickets and gambling products such as bingo cards, betting slips, coupons, draws, and prize promotions.
By lowering the tax to 2%, Recife places the betting sector on equal footing with the Information Technology companies at Porto Digital, which is one of the area’s largest technology centers. The tax reduction is a move by the municipal administration to attract and retain investment in the new market of sports betting in Brazil.
Economic Growth vs. Social Concerns
The tax exemption is justified by the economic potential of the betting industry and the usefulness of the industry as a generator of municipal income. The decision was not made without controversy, however. City councillors were concerned with the social cost of internet gambling addiction and the damage it could cause to the community.
Despite this, the tax reduction is specific to betting services, and all other economic activity in Recife continues to be charged the standard ISSQN rate of 5%. Most of the council welcomes the incentive as a measure of spurring business development and positioning Recife at the frontline of the sports betting sector.
Betting Companies Sponsoring Recife’s Football Clubs
The bookmakers’ presence can already be felt in Recife’s vibrant football culture. The three largest local clubs all have current agreements with bookmakers, which also benefit from the recent tax incentives.
- Sport Club do Recife, now competing in Brazil’s top-flight Serie A, has Betnacional as its primary uniform sponsor.
- Clube Náutico Capibaribe, a Serie C side, is sponsored by Esportes da Sorte.
- Santa Cruz Futebol Clube, a club in Serie D, has Bet dá Sorte on their jerseys.
In addition to club sponsorships, the Pernambuco Football Federation (FPF) also has a deal with Betnacional, which was the 2025 Pernambuco State Championship sponsor.
Outlook and Implications
With this tax incentive in place as of April 2, 2025, Recife is setting an example of forward-thinking city management geared towards leveraging the economic benefits of the sports betting industry. The move may see other cities in Brazil taking a cue to attract businesses in this emerging industry.
While the equilibrium of economic interest and social responsibility remains a challenge, Recife’s action is evidence of the further integration of sports betting into the local economy and culture. As the market continues to grow, ongoing discussions on regulation, addiction management, and taxation policy will be essential to ensure sustainable development.
The prospects for Recife’s betting sector look promising as it embraces innovation and synergy with local sport, aligning economic interests with the city’s identity and growth ambitions.
Source: iGaming Brasil
