Ahead of a key vote in Brazil, the country’s Senate has detailed that sports betting and online gambling activities can be considered new criteria for “selective taxes.”
It’s a key move in Brazil’s legislative development around betting, making up part of a report filed by Senator Eduardo Braga (MDB-AM), who serves as Rapporteur for the Senate’s federal tax reform project.
As reported by SBC Notícias Brazil, Braga’s report states sports betting, online games, and fantasy sports are “targeted goods and services deemed harmful to health or that generate negative externalities — such as alcoholic beverages, cigarettes, and fossil fuels.”
It’s a classification that will have an impact on how the sector is taxed, an area of ongoing scrutiny.
Authorised in December 2023, the tax framework under Law No. 14,790/2023 applies a general income tax rate of 12% on gross gaming revenues (GGR) for licensed operators. For consumers, a 15% personal income tax will be levied on prizes and winnings exceeding BRL 2,824 (approximately €530), upheld by an executive order from President Lula da Silva.
Although this framework has been approved, it remains subject to further scrutiny. A “Constitutional Amendment Proposal (PEC)” has been introduced to determine whether selective taxes should apply specifically to betting activities.
Tamas Kadar, CEO and Co-Founder of SEON, shared his view that the Brazilian market is approaching “a transformative moment”.
He told CasinoBeats: “The decision to introduce a locally regulated gambling licence, replacing foreign licensing systems, is poised to have significant ramifications across the market and could spark a “gold rush” dynamic, with companies competing to establish themselves in this newly regulated space.
“The new framework aims to foster transparency and drive economic growth. As part of this change, new compliance requirements will be introduced, including substantial licensing fees and taxes, while also promising significant revenue for Brazil, estimated to boost the economy by $3bn. As a result, Brazil now looks poised to become a major player in the global gambling market.
“However, the transition will not be without its challenges. Operators must navigate a complex regulatory landscape, balancing compliance with stringent licensing requirements while adapting to local enforcement mechanisms. This shift highlights the urgent need for robust fraud prevention measures, which must be implemented and fully operational ahead of the impending January deadline.”
Furthermore, it’s a landmark year, not only for the Brazilian sector but for the whole of Latin America as the region feels the impact of the Brazilian market opening up.
Kadas emphasised that if managed effectively, Brazil’s model could “serve as a benchmark for other Latin American nations”, as he underpinned the importance of a well-regulated market in attracting investment and maintaining integrity.
