Key Moments:
- Senator Angelo Coronel opposed a plan to double the tax on licensed betting operators from 12% to 24% during a Senate committee session on November 4.
- 81 licensed operators have collectively paid BRL 30 million (USD 5.57 million) in concession fees and face a total tax burden surpassing 50%.
- Ongoing disagreements among senators reflect a deeper split between promoting regulated market growth and raising tax revenues from the betting sector.
Ongoing Dispute Over Betting Market Taxes
The discussion surrounding taxation in Brazil’s regulated betting sector intensified as Senator Angelo Coronel (PSD–BA), the rapporteur of the national sports betting law introduced in 2023, openly criticized the suggested tax increase on licensed operators. Coronel voiced concerns that such a move could undermine the compliant sector while fueling illegal gambling, a sentiment increasingly prevalent within the industry.
Senate Hearing Highlights Over-Taxation Concerns
During the Senate’s Economic Affairs Committee (CAE) meeting on November 4, Senator Coronel dismissed a proposal from Senator Renan Calheiros (MDB–AL) to raise the tax rate on gross gaming revenue (GGR) from 12% to 24%. The vote on the matter was deferred after a heated exchange.
“It’s neither plausible nor honest to increase the tax burden on those who are legalized while ignoring the fight against illegal gambling”, Coronel declared. “This is an absurdity against which the Senate must raise its voice.”
Coronel indicated that increasing taxes for regulated operators could drive more activity to unlicensed platforms. Data from the Brazilian Institute of Responsible Gaming (IBJR) show that between 41% and 51% of bets in Brazil are currently placed on unregulated sites, underlining the substantial size of the illegal market.
Complex Taxation Structure for Licensed Operators
Senator Coronel drew attention to the fact that existing licensed betting companies face a broader array of taxes than just the 12% GGR rate. He highlighted that 81 operators have paid a combined BRL 30 million (USD 5.57 million) in concession fees and are also subject to PIS, Cofins, ISS, Corporate Income Tax, and Social Contribution on Net Profit (CSLL).
“When you sum it all up, the total tax burden goes over 50%“, he said. “Most people in Brazil think that betting companies pay only 12%, but that is a big misunderstanding. They are subject to the same taxes as any other business in Brazil.”
Coronel referenced the experiences of other countries, stating: “in countries like Germany and Portugal, increasing taxes too aggressively led to market flight“, noting that operators either left or were replaced by unregulated alternatives.
Calls for Regulatory Balance Stir Division
The issues raised by Coronel found mixed responses. Senator Soraya Thronicke (Podemos–MS) echoed the necessity to intensify crackdowns on illegal gambling operations but disagreed with Coronel regarding the tax rate’s appropriateness. She contended that betting operators, when compared to other sectors with social risks, are still taxed less heavily.
“Do the betting operators really believe 50% is too much, claiming unfair competition?” Thronicke asked. “Unfair competition exists with cigarettes and alcohol. They must follow the rules, and we must demand that the Federal Government enforce them properly.”
This exchange highlights a legislative divide, with some lawmakers prioritizing support for regulated market expansion while others view increased taxation as vital for boosting public revenues and fostering social responsibility.
Market Viability and Future Prospects
The postponement of the vote signals that further discussion and negotiation are required to strike a balance between fiscal goals and maintaining a viable legal betting industry. Industry stakeholders worry that a significant rise in the tax rate may drive operators out of the regulated space or keep new entrants away, contradicting efforts to maximize government income. As Brazil continues the rollout of its regulated betting system, the debate on appropriate taxation stands out as a pivotal factor shaping both the market’s evolution and the broader regulatory environment in Latin America.
| Item | Detail |
|---|---|
| Current GGR Tax Rate | 12% |
| Proposed GGR Tax Rate | 24% |
| Number of Licensed Operators | 81 |
| Concession Fees Paid | BRL 30 million (USD 5.57 million) |
| Estimated Total Tax Burden | Over 50% |
| Share of Bets on Unregulated Sites | 41% – 51% |
- Author
Daniel Williams
