Brazil's regulation under pressure: Government raises tax burden
The sports betting market continues to face turbulent times in Brazil. In a short span of time, two decisions by the federal government have cast doubt on the coherence of the ongoing regulatory process. On one hand, President Luiz Inácio Lula da Silva has publicly defended raising the tax burden on online betting. On the other, Anatel (the national telecommunications agency) has announced it no longer has the resources to continue blocking illegal websites—one of the key strategies outlined in the new law to protect the regulated market.
Though independent of each other, these statements and budgetary setbacks point in the same direction: the regulated sector is under increasing pressure, while the illegal market continues to operate with relative freedom.
Lula Wants More Revenue — and Betting Operators Are the Target
In an interview published last week on the Mano a Mano podcast, President Lula stated that the betting industry contributes too little to public finances. “Bets are taxed at 12% [on gross gaming revenue]. We want them to pay 18%,” he said. Lula also defended increasing the IOF (Tax on Financial Operations) as an alternative to cutting funding from essential areas such as healthcare and education.
His comments followed Decree No. 12.227/2024, which raised the IOF on international card transactions — a measure that directly impacts bets placed on foreign sites. In response, Brazil’s lower house of Congress approved an urgent vote on a bill aiming to overturn the increase. Nevertheless, the rise in taxation on licensed operators appears to be moving forward with executive support.
Anatel Suspends Fight Against Illegal Gambling Due to Budget Constraints
At the same time, the National Telecommunications Agency (Anatel) announced it had temporarily suspended efforts to block illegal betting websites due to a lack of funding. According to specialised reports, the budget supporting these enforcement actions was frozen by the Ministry of Finance, making it impossible to pursue new initiatives against unlicensed platforms.
This interruption comes just as more than 70 operators are already active under provisional authorisation granted by the government. These companies continue to invest in compliance, social responsibility, and regulated advertising. Meanwhile, illegal sites — many of them based overseas — remain easily accessible to Brazilian consumers, paying no taxes and adhering to no domestic regulations.
The Warning Was Already Raised at BiS SiGMA Americas 2025
The imbalance between fiscal demands and regulatory enforcement is nothing new — and it was a central topic of discussion at the “Unravelling the Tax Complexity of Bets in Brazil” panel, held during BiS SiGMA Americas 2025. Experts warned that a system which penalises those operating legally while ignoring those acting outside the law undermines the integrity of the regulatory framework.
One of the strongest remarks came from tax lawyer Juan Manuel Mendes, partner at VPN Advogados:
“The modulation of effects [in tax rulings] ends up penalising the party who complied and paid everything properly. […] In situations where someone didn’t pay, because of the modulation, they also end up not having to pay.”
Originally aimed at the legal uncertainty of tax rulings, Mendes’ comment now resonates strongly in the context of the betting market: companies playing by the rules face new costs and stricter oversight, while illegal operators remain shielded by institutional inaction.
Regulatory Backsliding Becomes a Real Risk
Building a regulated betting market in Brazil requires more than just tax collection. It is essential to ensure competitive fairness, tax predictability, and effective enforcement mechanisms. When tax increases are not matched by the government’s ability to enforce the law, the risk is clear: discouraging formalisation and fuelling informality.
The newly established regulatory framework itself could be eroded if incentives become misaligned. The result is a perverse one: the legal market retreats, while the illegal one advances.
Conclusion
The Brazilian betting industry is not opposed to regulation — it demands it. But what it expects in return is balance. A heavier tax burden, unaccompanied by effective measures against the illegal market, weakens the business environment, erodes trust, and threatens the progress made so far.
As experts pointed out at BiS SiGMA South America 2025, the sustainability of the market depends less on taxing more — and more on regulating better.
Missed This Panel Live?
Don’t miss the full discussion featuring some of the leading legal experts in Brazil’s betting industry. View panels and keynotes held during BiS SiGMA South America 2025, available in full on our YouTube channel.
