The vote on the project that provides for the increase of the tax on the Gross Gaming Revenue rate, the GGR, from 12% to 18%, for sportsbooks, takes place this Tuesday (30). The proposal, has as rapporteur the federal deputy Carlos Zarattini, and the vote takes place in the joint committee of Congress and will then proceed to consideration in the plenary sessions of the Chamber and the Senate.
According to the project, among other measures, the extra revenue will be allocated to the health sector. If approved, the new tax will come into effect in October.
The Government presented the measure as part of the alternatives found by the Minister of Treasury, Fernando Haddad, to compensate for the loss of revenue from the review of the Tax on Financial Transactions (IOF).
The announcement was met with deep concern in the betting industry, as operators already operate under challenging conditions. Through August alone, the regulation generated R$5.6 billion in taxes, demonstrating the activity’s importance to the economy.
Furthermore, businesspeople and representatives of industry-related entities warn that a tax increase could lead to a decrease in investment in advertising, sports sponsorships, and cultural events. It could also encourage players to migrate to illegal platforms.
Industry experts and executives are concerned about the tax hike
Bernardo Freire, legal consultant for the National Association of Games and Lotteries (ANJL), says the measure could mean “the destruction of the sports betting sector in Brazil,” in addition to creating legal uncertainty for companies that have just set up shop in the country.
The associations representing sportsbooks argue that the tax burden is already high. In addition to the 12% GGR rate, companies pay R$30 million in concession fees to operate for five years, in addition to traditional taxes. However, the total tax burden amounts to approximately 36% of revenue.
According to Marcos Sabiá, CEO of Galera Bet, the government should prioritize combating the black market. “This alone would have the potential to double tax revenue, in addition to eradicating illicit activities that harm society,” he states.
For Igor Sá of HiperBet, high taxation could encourage illegal gambling, which already represents a significant portion of the sector. Rodolfo Maia of Start Bet also states that betting houses are now an important driver of the economy, generating jobs, driving technology, and sustaining national sports.
Marcus Dutra, from Luck.bet, however, argues that the growth in revenue proves the correctness of the regulation, but demands predictability and clear rules.
The illegal market’s figures legitimize the sector’s concerns. Despite the blocking of more than 15,000 illegal websites, it is estimated that this segment generates between R$6.5 billion and R$7 billion per month.
Combating the illegal betting market should be a government priority
Experts estimate that illegal activities already account for 40% of the country’s industry. For reference, in the United Kingdom, one of the most mature markets, illegal activities account for 13% of the market.
The National Association of Gaming and Lotteries projects that, if approved, the new tax rate will have a limited impact of up to R$680 million per month. Therefore, it could also cause a R$2.8 billion decline due to new companies abandoning operations in Brazil.
For Fellipe Fraga of EstrelaBet, the competitive environment would become even more vulnerable to unauthorized platforms. Responsible gaming expert Daniel Fortune points out that illegal platforms expose players to financial risks and fraud, without any protection.
International examples are also used as a warning. Alex Rose, CEO of InplaySoft, cites Spain and Italy, where excessive tax increases have strengthened the illegal market. In Brazil, economist Itanielson Cruz and ANJL president Plínio Lemos Jorge emphasize that the measure comes at a sensitive time in the regulatory framework, opening the door to legal action.
As the issue is being discussed in Congress, the market emphasizes that this moment calls for balance. For companies, the focus should be on relentlessly combating illegal platforms, where players find fertile ground for problems such as significant loss of personal income.
