Sports Betting Sector Faces Charges That Could Reach 42% of GGR Under Tax Reform

A new study by LCA Economic Consulting, in partnership with IBJR, shows that the tax burden on the regulated market has already exceeded BRL 10 billion and is expected to rise by ten percentage points by 2033.

São Paulo, February 9, 2025 — The month of January marked the completion of the first full year of the fixed-odds betting sector under Brazil’s new regulatory framework, enabling—for the first time—an accurate assessment of the economic burden placed on the activity. According to data from the Secretariat of Prizes and Betting (SPA) of the Ministry of Finance, the segment generated BRL 37 billion in revenue over the past year. Of this total, public revenue allocated to government coffers, including federal and municipal taxes, exceeded BRL 10.7 billion.

However, a detailed technical study conducted by LCA Consultoria Econômica and commissioned by the Brazilian Institute of Responsible Gaming (IBJR) warns that the sustainability of this model is under severe threat. According to the report, the federal tax incidence on betting operators’ revenue is, for example, six times higher than that imposed on the telecommunications sector and 1.6 times greater than on other technology-intensive services.

The analysis shows that the total tax and regulatory burden currently absorbs 31.9% of Gross Gaming Revenue (GGR), which represents the gross revenue of licensed operators. This structure is composed of 19.4% in direct consumption taxes and social earmarks, 4.5% in income taxes (Corporate Income Tax and Social Contribution on Net Profit), 4.9% in sector-specific regulatory charges, and 3.1% in indirect taxes across the production chain.

With the transition to the new Tax Reform (IBS/CBS) and the gradual increase in social earmarks—from 12% to 15% by 2028—the overall tax burden is expected to rise to 32.7% in 2026 and reach a critical 42.0% by 2033. According to IBJR, this fiscal pressure creates an unsustainable competitive imbalance. While licensed operators comply with tax obligations and invest in safety mechanisms such as facial recognition, time and deposit limits, illegal betting platforms—which already account for 51% of the market—operate with zero tax burden.

“Raising taxes on those who comply with the law is a direct incentive for the illegal market, which already drains BRL 10.8 billion from the Brazilian economy without offering any protection to citizens,” said André Gelfi, director, board member, and co-founder of IBJR. “Overtaxing the regulated sector effectively hands Brazilian consumers over to pirate websites that finance organized crime,” he added.

According to Eric Brasil, economist and director at LCA, the recurring increases in the tax burden on licensed betting operators increasingly distance Brazil from the group of countries that are able to maintain a highly channeled market—that is, with low participation of illegal betting. “Several studies highlight the importance of a competitive tax burden as part of a strategy to combat illegal activity. Our priority should be reducing the illegal market, protecting consumers and, as a result, increasing tax revenue through regulated operators. Instead, we are choosing the opposite path,” he said.

Beyond the fiscal burden, the LCA study also underscores the sector’s socioeconomic relevance. The betting industry employs 15,500 people directly and indirectly. With an average monthly salary of BRL 7,000—118% higher than the national average—the sector has become a source of high-quality employment and a major driver of Brazilian sports, as it is currently the largest sponsor of clubs in the country’s top-tier football league (Serie A).

“Gambling has always existed and always will. The only real choice is between a market controlled by the State—one that protects consumers and generates revenue—or an illegal market that fuels crime,” Gelfi emphasized. For IBJR, maintaining a balanced tax burden is the only effective tool to ensure market channeling toward a safe and legal environment.

About IBJR

The Brazilian Institute of Responsible Gaming (IBJR) was founded in 2023 and brings together leading betting companies from Brazil and around the world. Its mission is to build an online betting ecosystem that is ethical, sustainable, and responsible, while consistently advocating for a regulated market.

The organization’s work is based on two core pillars: combating the illegal betting market and promoting responsible gaming. IBJR believes that effective regulation is essential to drive sector growth, strengthen the economy, and ensure safety for both bettors and operators. To this end, it actively works to confront illegal betting platforms that operate outside the law, harm the industry, and pose risks to society as a whole.

IBJR’s members include the following operators: A2FBR, bet365, BandBet, BetBoom, BetMGM, Betsson Group, Entain (Sportingbet and Betboo), Flutter Brazil (Betfair and Betnacional), Kaizen Gaming (Betano), KTO Group, Novibet, Skill on Net (Bacana Play and PlayUzu), Todos Querem Jogar (Bet do Milhão); and associate members: Better Collective, Clever Advertising, OKTO, OneKey Payments, and Único.