Brazil's tax reform: 42% tax burden & illegal gambling boost
A study commissioned by the IBJR projects a ten-point increase in the tax burden by 2033. They warn that fiscal suffocation will make competition against offshore operators who do not pay taxes unfeasible.
The euphoria over the regulation of the Brazilian market is beginning to clash with the reality of the numbers. While the country advances in its general tax reform, the online gambling sector has raised alarms: if projections are not revised, legal companies will end up paying one of the highest tax bills in the world, handing users on a silver platter to the black market.
A technical report prepared by the consultancy LCA for the Brazilian Institute of Responsible Gambling (IBJR) puts numbers to the entrepreneurs' fear. According to the document, the effective tax burden, which currently hovers around 32% (in 2025), will progressively climb to nearly 42% by 2033, when the new tax system is fully in force.
A decade of staggered increases
The analysis breaks down how the replacement of taxes will impact the balance sheets. Currently, the sector already allocates one-third of its gross revenue to public coffers. In 2025, the first year of the regulated market, the industry generated gross gaming revenue (GGR) of about R$ 37 billion (USD 7.09 billion), leaving more than R$ 10.7 billion to the State in direct taxes and regulatory charges.
The problem lies in the transition. From 2027, taxes such as PIS and Cofins will disappear to give way to the Contribution on Goods and Services (CBS). Later, in 2033, local taxes (ICMS and ISS) will be absorbed by the new Goods and Services Tax (IBS). Far from simplifying and reducing costs, the LCA study warns that this fiscal engineering will end up inflating operating costs by ten percentage points.
A gift to the gray market
The IBJR’s concern is not only accounting but existential. André Gelfi, director of the institute, was categorical in pointing out the contradiction of state policy: "Increasing taxes on those who comply with the law is a direct incentive to the clandestine market."
The argument is simple: if the legal operator has costs of 42% on their revenue, they will have to offer less attractive odds and lower bonuses to be profitable. The illegal operator, who does not pay licenses or taxes in Brazil, will be able to offer better prizes, attracting the mass of players and draining billions from the formal economy without offering consumer protection.
The report closes with a harsh comparison for the sector: while betting platforms are heading toward suffocating tax pressure, sister industries such as information technology and telecommunications enjoy considerably lower tax burdens, a disparity that the Brazilian Congress will have to address if it wants its regulation to be a success and not just a dead letter.
Tags: Brasil, Brazil betting taxes, online gaming taxes