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President Luiz Inácio Lula da Silva is preparing to revive a plan to raise taxes on Brazil’s betting and fintech sectors after the expiry of Provisional Measure 1,303. The proposal aims to double the current betting tax rate from 12% to as high as 24%, with the government framing the move as part of a wider fiscal and social reform effort.
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Lula’s administration believes that industries generating substantial profits—like betting and digital payments—should contribute more toward funding public services and social programs. Lindbergh Farias, leader of the Workers’ Party (PT) in the Chamber of Deputies, has introduced a bill to formalize the higher rate and channel new funds to social welfare initiatives.
“This measure is important, as Brazil already has more than 2 million people addicted to gambling, and cases of pathological gambling reported in the public health network increased by 300% between 2022 and 2024,” Farias stated.
Government sources suggest the aim is to create a fairer tax structure rather than to stifle innovation. Finance Minister Fernando Haddad is reviewing the proposal alongside broader fiscal strategies to address a BR30bn ($5bn) shortfall left by the expiration of MP 1,303. The administration has emphasized the need for new revenue streams to maintain social commitments without widening the deficit.
The Brazilian Institute for Responsible Gaming (IBJR) responded to the proposal with concern, arguing that higher taxes on regulated betting operators could strengthen the illegal market. The organization estimates that unlicensed platforms already account for roughly 51% of Brazil’s total wagering activity.
IBJR said that taxing legal companies too heavily may push players toward unregulated sites that do not contribute to public revenue or uphold responsible gaming standards. According to the group, increasing formal participation through enforcement and public education would generate more consistent income than raising tax rates.
Research conducted by consultancy LCA with Locomotiva indicates that Brazil’s illegal betting market generates about BR40bn ($6.8bn) per year, causing an estimated BR10.8bn loss in potential taxes. The institute’s analysis shows that each five-point increase in market formalization could bring in around BR1bn in extra annual tax revenue.
The IBJR also noted that the withdrawal of Provisional Measure 1,303/2025 this week —shelved after a 251-193 vote in the Chamber of Deputies—already reduced expected collections. That measure would have raised the gross gaming revenue (GGR) tax from 12% to 18% and included a voluntary program for operators to pay taxes and fines on previous unreported activity.
Policymakers now face the challenge of balancing fiscal reform with the stability of Brazil’s emerging betting framework. Over-taxing licensed operators could slow market growth and drive consumers back to offshore and unregulated platforms. Industry experts have urged lawmakers to strengthen enforcement instead of applying heavier levies on compliant firms using the .bet.br domain.