Brazil’s Senate Economic Affairs Committee (CAE) approved a bill to gradually raise the gambling operator tax rate on Gross Gaming Revenue (GGR) from 12% to 18% by 2028, aiming for fiscal targets despite fears of boosting the illegal market.
Brazil’s government is pushing hard to secure new revenue streams, and the regulated gambling sector is firmly in its sights. The Senate Economic Affairs Committee (CAE) has approved a landmark bill, PL 5.473/2025, that establishes a gradual increase in the tax rate applied to licensed gambling operators’ Gross Gaming Revenue (GGR), signaling a determined effort to meet national fiscal targets ahead of an approaching election year.
The Gradual Ascent: From 12% to 18%
The approved bill establishes a structured tax increase over three years, moving away from an initially proposed, and harshly criticized, jump to 24%.
Step-Up Tax Schedule
The new tax framework sets a clear path for regulated operators’ GGR contributions:
The bill received strong backing in the CAE with a decisive vote of 23 to one. Once published, the new rates are scheduled to take effect from the first day of the fourth month following publication.
Social Security Priority
The additional revenue generated by this tax hike is earmarked for social security, with the health sector being designated as the top priority. Furthermore, between 2026 and 2028, the federal government maintains the flexibility to reallocate a portion of these increased resources to individual states, the federal district, or municipalities.
Industry Concerns: The Shadow of the Black Market
While the government celebrates the prospect of increased public funds, the industry remains wary. The initial proposal of a flat 24% tax was met with staunch opposition, with critics successfully arguing that such a high rate would severely undermine the regulated market.
Senator Eduardo Braga was a key voice against the steep increase, arguing that abruptly doubling the current percentage would “harm already legalised companies, while irregular ones will continue to operate with impunity.”
The Incentive Issue: The primary concern for operators is that high taxation shrinks their margins, forcing them to offer less competitive odds and bonuses compared to illegal offshore betting sites. This differential creates an incentive for bettors to migrate their activity back to the black market, defeating the purpose of regulation and tax collection.
Political Determination Drives the Tax Agenda
The push for this tax increase is deeply interwoven with Brazil’s current political and fiscal environment. Facing pressure to stabilize the nation’s finances, President Lula’s government has prioritized raising taxes.
An Election Year Agenda
The government’s determination follows a recent, embarrassing defeat where a provisional measure seeking a sharp 50% increase in the gambling tax was rejected. Analysts view the swift introduction of the phased 18% rate as a strategic response to that setback.
Political Framing: According to Brazilian iGaming analyst Elvis Lourenço, this drive to tax the industry aggressively has become part of the political narrative, strategically positioning the government as increasing taxes on the “gambling world” and “billionaires”—a theme that resonates well with the country’s conservative public ahead of next year’s general election.
The Next Hurdle: Following its approval by the CAE, the bill must now proceed to the Chamber of Deputies for final legislative approval before it can be enacted.
This gradual tax rise marks a critical point in the development of Brazil’s iGaming market. Operators must now plan for steadily increasing costs, while regulators face the difficult task of ensuring the regulated tax burden does not ultimately strengthen the illegal market it was designed to combat.
