Brazil’s highly regulated fixed-odds betting market has entered its second year of official operations with significant momentum, currently boasting 83 licensed operators, 29.4 million active users, and generating R$ 37 billion in public revenue. However, a new study by LCA Consultoria, commissioned by the Brazilian Institute of Responsible Gaming (IBJR), warns of a looming fiscal challenge, the total tax burden on the sector could surge from its current 32% to a staggering 42% by 2033 as the nation’s broader tax reform takes full effect.
The Mechanics of the Reform
This projected increase is driven by the phased replacement of existing levies like PIS/Cofins and ISS with a dual-VAT system: the federal CBS (Contribution on Goods and Services) and the sub-national IBS (Tax on Goods and Services). According to Eric Brasil, director at LCA Consultoria, these new rates, combined with social contributions rising from 13% to 15%, could push the sector well beyond the government’s proposed 28% baseline tax.
Plínio Lemos Jorge, President of the National Association of Games and Lotteries (ANJL), emphasized that regulatory stability is the industry’s lifeblood:
“If the rules don’t change, things can continue as they are, because that was the premise under which companies entered Brazil… 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.”
The Danger of the “Sin Tax” and Grey Markets
Adding to the complexity is the proposed Selective Tax, or “sin tax,” scheduled for 2027. Intended to disincentivize activities with negative social externalities, the tax has been met with sharp criticism from industry leaders. André Gelfi, Co-founder of IBJR, argues that applying lottery-style tax logic to high-volume, low-margin betting operations is a fundamental misunderstanding of the business model.
Gelfi warns that over-taxation will inevitably drive consumers back to illegal offshore platforms:
“Excessively taxing the legal sector is, in practice, handing the Brazilian consumer over on a silver platter to pirate websites that finance organized crime. For every 5 percentage points increase in market formalization, the country could generate approximately R$ 1 billion in additional revenue.”
As Brazil balances its revenue goals with the need for a sustainable, competitive market, the coming implementation phase will determine whether the legal sector can survive this unprecedented fiscal pressure.
