Brazil Debates How to Tackle Illegal Betting Market Growth

Brazil is wrestling with how to balance sports betting regulation and enforcement. Lawmakers, industry voices, and regulators agree that the biggest issue is not the legal market, but the billions of reais flowing through illegal betting platforms every year.

Good to know

• Unregulated operators in Brazil earn around BRL 35 billion ($6.4 billion) annually.
• Licensed firms already pay BRL 2.3 billion in concession fees plus a 21.9% tax load.
• A proposal in Congress would raise the tax rate on gross gaming revenue from 12% to 18%.

During a public hearing in Congress, the Permanent Subcommittee on Sports Betting Regulation placed revenue loss from the illegal sector at the center of the discussion. The session featured the Brazilian Institute for Responsible Gambling (IBJR), government officials, and regulated operators.

Fernando Vieira, Executive President of the IBJR, explained why the industry is worried:

“While the regulated sector employs people, pays taxes, and protects bettors, the illegal market is free to grow. It makes no sense to penalize those who follow the law while not allocating collected resources to tackle illegality.”

According to him, Brazil could raise an additional BRL 1 billion in tax revenue every year if even five percentage points of the illegal market shifted into licensed operators. Vieira argued that better enforcement would be more effective than raising taxes.

Deputy Caio Vianna, who leads the Subcommittee, pointed to another issue—how oversight funds are being used:

“The Brazilian Government today is acting illegally. The law clearly establishes that the oversight fee must be collected with a specific purpose: to combat the illegal market and other irregularities. Yet it is not being used for that. It goes into a general account. Anyone who studies the market understands this is not an oversight fee, it is a tax for the government to use however it pleases, not for the purpose it was created for. That is a serious matter.”

Vianna’s comments reflected frustration among lawmakers who want to see resources directed toward enforcement rather than general spending.

Tax Debate Heats Up

At the same time, operators are pushing back against a provisional measure in Congress that would increase the tax on gross gaming revenue from 12% to 18%. Industry documents showed that licensed companies already face heavy costs, including concession fees, corporate taxes, and social contributions.

Supporters of the measure argue it would boost government revenue, but critics warn it could backfire by weakening the regulated market and giving illegal platforms more room to grow.