The Federal Government expects to raise around R$20 billion with the increase in the IOF (Tax on Financial Transactions). To do this, in addition to what it already collects in taxes and fees from betting sites, the Ministry of Treasury would have to collect 77% of the current revenue from sportsbooks to offset this amount. This is if the amounts declared by betting sites remain at the current average until the end of the year.
Government officials and other economists cited higher taxation on betting sites as a possible reason for a pullback in the IOF increase, which is under attack from Congress and the private sector.
Government data, released by Folha de SP and obtained through the Access to Information Law, indicate that the average monthly revenue of betting sites is around R$2.16 billion. The amount is equivalent to 7% of the amounts spent by users on the platforms – this rate is the reference for the sector, and the rest is distributed in prizes, according to the platforms.
“Taxing bets to compensate for IOF is a measure without economic basis”, says ANJL
The revenue figure is in line with data from the Central Bank, which indicates that Brazilians spend, on average, R$30 billion per month on online gambling.
Therefore, to offset the R$20 billion in IOF, it would be necessary to collect around R$1.67 billion per month from bets. Thus, this amount would represent 77% of their monthly revenue. Today, sites already pay 42% of their revenue in fees.
“Taxing bets to compensate for IOF is a measure without economic basis”, according to a note from the National Association of Games and Lottery (ANJL).
The president of the National Confederation of Industry (CNI), Ricardo Alban, suggested that the government tax bets and big techs and spare the productive sector. The entity, however, did not detail what the proposal would be to implement the plan.
Ministry of Treasury has not yet commented
When contacted, the Treasury Ministry said it would not comment. Under the current online gambling law, those who bet on online games have a tax advantage over traditional lottery bettors.
Income tax on any profits from sports betting is 15%, compared to the 30% charged on those who win the Mega-Sena lottery, for example. The bill approved by Congress established an exemption for profits up to R$2,112.
In addition to the typical taxes in the service sector —ISS, PIS, COFINS and corporate income tax—, companies pay a monthly inspection fee to the Treasury’s Prize and Betting Secretariat (SPA) and allocate 12% of their revenue to the Treasury to fulfill social obligations.
Requests for access to information show that companies transferred, on average, R$259 million per month to the Treasury between February and May.
This amount is divided between the Ministries of Health (1%), Education (10%) and Tourism (22.4%), Embratur (5.6%), the Ministry of Sports and other sports entities (36%), the Public Security area (13.6%), in addition to other funds and civil society groups.
The Ministry of Tourism, the biggest beneficiary, received amounts between R$41 million in February and R$75 million in May, indicating that betting revenue has been on the rise since the beginning of the year.
IBJR argues that sportsbooks already have high taxes
ANJL defends the current collection model. “The model for allocating revenues collected from regulated bets is a reference for other countries, especially due to the efficient way in which resources are allocated, which are used to benefit the public interest.”
In a note, the IBJR (Brazilian Institute of Responsible Gaming) assessed that sportsbooks “already suffer high taxation”.
Last year, industry entities took action with Congress. The goal was to avoid additional tax charges. The industry argued that the surcharge favored illegal websites that operate without a license or tax collection.
Thus, the sector estimates that the parallel market receives more than 50% of the gambling spending in Brazil. In other words, approximately R$30 billion additional per year, over which there is no control.
“Fighting the illegal market can, in addition to increasing tax collection, bring a positive social impact by protecting gamblers and reducing fraud and financial crimes,” said the IBJR.
