Brazil scraps 18% betting tax hike plan following industry pressure

• Chamber of Deputies withdraws Provisional Measure 1,303/2025, blocking government proposal to raise gambling tax from 12% to 18% of gross gaming revenue
• Industry groups had warned higher tax rates could drive players back to illegal betting platforms, undermining Brazil’s newly regulated market
• Government faces £6.5 billion budget impact after failing to secure parliamentary support for broader fiscal package

Brazil’s Chamber of Deputies has withdrawn Provisional Measure 1,303/2025, effectively blocking the government’s plan to increase the tax on gambling operators from 12% to 18% of gross gaming revenue.

The decision, which came after extensive parliamentary negotiations, means Brazil’s gambling tax will remain at its current 12% rate.

The proposed increase had faced fierce opposition from industry representatives since it was first introduced in June 2025, just months after Brazil’s regulated gambling market officially launched in January.

Licensed operators and trade associations argued the 50% tax hike would undermine market stability and discourage investment in the country’s newly regulated sector.

Industry wins political battle

The Brazilian Institute of Responsible Gaming (IBJR) had led the charge against the tax increase, warning it could push consumers back to illegal betting platforms.

According to the IBJR, the black market already accounts for approximately 50% of all gambling activity in Brazil, with estimates suggesting this could rise to 60% or higher under increased tax pressure.

The organisation emphasised that operators had entered the regulated market based on the original 12% tax framework, paying R$30 million for five-year licences and generating over R$2.3 billion in public revenue.

Government faces budget deficit

Finance Minister Fernando Haddad had defended the proposed increase as necessary to address Brazil’s R$20 billion budget deficit, arguing that betting operators should contribute proportionally to social programmes.

Government projections suggested the tax hike could generate R$284.94 million in extra revenue this year and approximately R$1.7 billion annually from 2026 onwards.

The withdrawal of the measure represents one of President Luiz Inácio Lula da Silva’s biggest defeats in Congress, with the government now facing a negative impact of R$46.5 billion on the budget through next year. This includes R$31.6 billion in lost revenue and R$14.9 billion in spending cuts.

Deputy Carlos Zarattini, the measure’s rapporteur, had attempted to secure support by removing the betting tax increase and instead proposing a retroactive tax collection programme targeting companies that operated without regulation between 2014 and 2024.

With the tax increase now off the table, operators can continue operating under the established regulatory framework. The government must now explore alternative revenue sources, with Senator Randolfe Rodrigues suggesting potential budget freezes and cuts to parliamentary amendments reaching R$10 billion.