Provisional Measure (MP) 1,303 , which proposes an alternative to the increase in the Financial Transactions Tax (IOF), is scheduled to be voted on this Tuesday (7) in the Joint Committee. The measure needs approval in Congress by Wednesday (8), when it will expire.
This proposal raises taxation on bookmakers from 12% to 18%, which has been heavily criticized by the legal market in Brazil. Regulation of online betting came into effect on January 1, 2025, and the new increase is seen as a setback for the sector.
Exclusively, Fellipe Fraga , Director of Business and Institutional Relations at EstrelaBet, analyzes this scenario and explains how the industry is dealing with this potential change just ten months after regulation.
“The increase in the GGR tax rate to 18% so soon after regulation raises great concern. The current burden is already significant when we add other sectoral taxes and contributions. Changing this balance before a full fiscal cycle is complete is risky. Consolidation of the legal market requires stability to allow for planning, investment, and competitiveness. ”, says Fraga.
Fraga warns that excessive taxation could compromise legal operations and encourage illegal gambling in the country. “Excessive taxation pushes operators and bettors to unauthorized platforms that don’t collect taxes or follow security regulations. This compromises the effectiveness of regulation and revenue collection “.
Therefore, the EstrelaBet executive emphasizes that technical dialogue with all stakeholders is essential for any adjustments to the legislation.We believe that institutional dialogue is the most effective path to industry development, and we recognize that the Secretariat of Prizes and Bets has always been open to listening to the market. The exchange between the regulator and the private sector was crucial to clarifying technicalities and aligning expectations, building a more robust regulatory framework. ”.
According to Fellipe Fraga, there are also discussions with Congress, with the aim of expanding understanding of the operational and economic specificities of the industry.There’s a significant lack of understanding about the gambling market in various sectors of society, and we face the challenge of explaining it on several fronts. Successful regulation depends on a competitive, legally stable, and attractive environment for legal operators. ”.
Full interview with Fellipe Fraga, Business and Institutional Relations Director at EstrelaBet:
iGaming Brazil: We’re in the tenth month of the regulated online betting market in Brazil. How do you assess this period after the adjustments made at the beginning of the year?
Fellipe Fraga: This first cycle of the regulated market confirmed the great potential of our industry. Revenue has already exceeded R$2 billion, allocated to strategic areas such as sports, tourism, and public safety, demonstrating the sector’s positive impact on the country.
At the same time, it was a period of institutional development, during which reputable operators, such as EstrelaBet, adapted their operations to the SPA/MF requirements, established robust responsible gaming policies, and strengthened governance, consumer protection, and compliance practices. This is a historic milestone that needs to be consolidated with legal certainty and predictability.
iGaming Brazil: We recently received news that the rapporteur of the bill on alternatives to the IOF (Tax on Financial Transactions) maintained the increase in the rate for the betting sector from 12% to 18%. How do you view this tax change so soon after the regulation?
Fellipe Fraga: The increase in the GGR tax rate to 18% so soon after regulation is a cause for great concern. The current burden is already significant when we add other taxes and sectoral contributions. Changing this balance before a full fiscal cycle is complete is risky.
The consolidation of the legal market requires stability to enable planning, investment, and competitiveness. Sustainable revenue comes from a strong, transparent environment with clear rules. Increasing tax rates in markets that are still emerging could increase the flow of tax to the illegal market, as we have seen in jurisdictions such as Italy and the Netherlands.
iGaming Brazil: Experts and organizations representing the sector warn that this change creates tax uncertainty, which could impact regulated operations and foster the illegal market. Do you believe there will be immediate consequences?
Fellipe Fraga: Yes. The risk is immediate. A recent study by LCA Consultoria, commissioned by the IBJR, shows that the illegal market still dominates over 70% of bets in the country. Excessive taxation pushes operators and bettors to unauthorized platforms that don’t collect taxes or follow security regulations.
This compromises the effectiveness of regulations and revenue collection. Therefore, we emphasize the importance of a technical dialogue with all stakeholders to make adjustments and avoid creating the opposite effect to the desired one.
iGaming Brazil: Furthermore, authorities are already considering the possibility of retroactive charges related to the period some brands operated in the country before the regulation. How is EstrelaBet dealing with or preparing for these potential changes?
Fellipe Fraga: We closely monitor the various projects and legislative proposals under discussion. It’s crucial that any debate involves all stakeholders (operators, regulators, legislators, and civil society) to ensure the maintenance of the regulated market.
It’s crucial that the legal market, which has organized itself to follow all regulations and invested in compliance, not be penalized by the regulatory vacuum. The focus must be on legal certainty, predictability, and strengthening the regulated environment. This is precisely the way to increase revenue, protect consumers, and combat the illegal market.
iGaming Brazil: Is the regulated market taking steps to avoid or minimize these tax increases? What can regulated companies, or EstrelaBet itself, do in this scenario?
Fellipe Fraga: From the very beginning of the regulation, we’ve believed that institutional dialogue is the most effective path to industry development, and we recognize that the Secretariat of Prizes and Bets has always been open to listening to the market. The exchange between the regulator and the private sector was crucial for clarifying technicalities and aligning expectations, building a more robust regulatory framework.
There is also a dialogue with the National Congress, seeking to broaden understanding of the sector’s operational and economic specificities. There is a significant lack of understanding about the gambling market in various sectors of society, and we face the challenge of explaining it on several fronts. The success of regulation depends on a competitive, legally stable environment that is attractive to legal operators.
iGaming Brazil: When we consider international examples, there are countries that have adopted high taxation and now face high rates of illegal gambling. Is this a real risk for the Brazilian market in the short term?
Fellipe Fraga: There are several ongoing discussions in Brazil. The fact is that countries like Germany and France show that excessively high tax burdens result in tax evasion for illegal platforms. Brazil already has a significant illegal market, as research by the Locomotiva Institute shows.
If we make the regulated environment more expensive, we make the legal game less competitive. This threatens not only revenue collection but also consumer protection and money laundering prevention mechanisms. Calibrating the tax burden is a strategic decision for the success of public policy.
iGaming Brazil: Finally, do you believe that direct dialogue with Congress would help improve this situation? Events are taking place or are planned to take place in Brasília, such as BiS Brasília, in the coming weeks. Do you think this is a valid step for the regulated industry to demonstrate its practices to lawmakers?
Fellipe Fraga: This dialogue between the sector and Congress, as well as with other spheres of society, is ongoing and essential. The regulated industry has much to offer, such as consistent sports integrity practices, responsible gaming policies, robust compliance systems, customer service channels, and cutting-edge technology that ensures the integrity of operations.
Events like BiS Brasília are essential for bringing many people closer to the realities of the sector. They are opportunities to explain, clarify, present concrete data, and demonstrate our commitment to the country’s social and economic development. I will also be present at the event as a panelist because I understand that this is our role: to educate, engage in dialogue, and build bridges with all sectors of society, always with institutional responsibility.