Brazil Faces Gambling Tax Hike Amid Fierce Congress Debate

Brazil’s Congress has launched a joint committee to evaluate a contentious provisional measure that raises the gross gaming revenue (GGR) tax on licensed gambling operators from 12% to 18%—a 50% increase. The move, effective immediately under Provisional Measure 1,303/2025, has drawn sharp criticism from industry stakeholders and ignited a broader political debate over taxation and social equity.

The tax hike, introduced by the federal government in June, comes amid efforts to fill a BRL20 billion ($3.6 billion) budget gap after a rollback of a proposed increase in Brazil’s financial transactions tax (IOF). While the IOF increase was scaled back following public resistance, the gambling sector has become a new fiscal target, with the government defending the shift as a step toward tax justice.

Senator Renan Calheiros chairs the new joint committee, with Deputy Carlos Zarattini serving as rapporteur. The committee is scheduled to hold four public hearings beginning August 7 and will issue its own vote on the measure by August 26. Congress has until October 9 to vote on whether to enshrine the provisional tax hike into law.

A Divided Response

The measure has provoked a strong reaction from Brazil’s regulated gambling sector. The Brazilian Institute of Responsible Gaming (IBJR) warned that the tax increase could drive more than 60% of activity into the unregulated market, undermining the very tax revenues the government seeks to protect.

“The measure is unacceptable and makes it impossible for many companies that trusted and invested in the regulated market to operate,” the IBJR said in a June statement. “It generates legal uncertainty and threatens public revenue.”

Industry leaders argue that when combined with other taxes—including corporate income tax and social contributions—the effective tax burden could reach 50%, potentially rendering licensed operations financially unviable.

The Political Lens

Supporters of the tax, including Senator Randolfe Rodrigues, see it as part of a broader strategy to address Brazil’s stark social inequalities. “We are one of the 10 largest economies in the world and, at the same time, one of the 10 most unequal countries,” Rodrigues said. “This measure aims to establish mechanisms for tax justice.” Provisional Measure 1,303/2025 allocates one-third of the new 18% GGR tax to social security and health, with the remainder distributed across education, sports, and other public services.

Still, opposition voices in Congress question the measure’s focus and execution. Senator Izalci Lucas criticized the government for not taxing gambling more aggressively and failing to prevent welfare recipients from using public funds for betting. “You take the betting industry, which has destroyed Brazil,” he said. “To this day, the government hasn’t had the authority to prohibit people receiving Bolsa Família from gambling.”

Lucas also called out what he sees as inconsistencies in the government’s tax policy, noting that sectors such as agribusiness and real estate are simultaneously being hit with increased levies, raising concerns about broader economic impacts.

The measure is unacceptable and makes it impossible for many companies that trusted and invested in the regulated market to operate.

Broader Implications

The tax debate comes at a critical time for Brazil’s gambling industry, which only recently achieved regulatory clarity after years of legislative uncertainty. The government’s pivot toward the sector as a fiscal solution now threatens to destabilize a market still in its infancy.

While proponents argue the measure promotes fiscal responsibility and redistributive fairness, critics say it could derail investment and unintentionally strengthen illegal operators—undoing progress made in establishing a regulated framework.

With a tight legislative calendar and polarized views, the outcome of the committee hearings and the eventual congressional vote will be decisive for the future of Brazil’s legal gambling market. For now, the industry remains in a state of limbo—taxed under a provisional regime, yet unsure whether it will survive under the proposed permanent one.