Brazil’s government is doubling down on efforts to tax its booming online gambling industry, with President Luiz Inácio Lula da Silva’s administration pushing a series of legislative proposals that could reshape the sector and fill critical holes in the 2026 national budget. The moves come as part of a broader fiscal reform campaign led by Finance Minister Fernando Haddad, who has branded the initiative under the banner of “billionaires, banks and bets.” The stakes are high: the government aims to raise as much as R$35 billion (about €6.2 billion) from levies on the online betting market, a sum seen as vital to funding Lula’s ambitious social programs and stabilizing public finances in a turbulent political climate.
Yet, as the clock ticks down to year-end budget deadlines, the path to enacting these taxes remains fraught with political and economic challenges. Lawmakers are moving at breakneck speed to fast-track tax hikes, but industry operators and some legislators warn that the proposed rates could threaten the viability of Brazil’s regulated betting market and push players into the arms of illegal offshore operators.
According to TV BRICS, the government’s latest push comes after a series of legislative setbacks. Earlier in 2025, Provisional Measure No. 1,303/2025 was issued to raise the Gross Gaming Revenue (GGR) tax on online gambling from 12% to 18%, with implementation set for October 1. But the measure expired on October 8 before Congress could vote, leaving the sector in limbo and the higher rate dead on arrival. The failed attempt highlighted the difficulties of passing fiscal reforms in Brazil’s fragmented, multi-party Congress, where consensus is hard-won and even well-intentioned proposals can collapse amid last-minute amendments and political intrigue.
One such episode saw PT deputy Carlos Zarattini introduce a controversial retroactive taxation amendment—dubbed “Litígio Zero Bets”—just hours before a decisive vote on raising the GGR tax. The surprise move alarmed investors and allies alike, leading to the proposal’s rejection by an overwhelming 251 votes. As TV BRICS reported, the incident underscored how procedural missteps and lack of stakeholder buy-in can derail even the most urgent fiscal initiatives.
Undeterred, the Lula administration has returned with a new strategy. On October 13, 2025, PT chamber leader Lindbergh Farias submitted a bill to raise the gambling tax rate even further—to 24% of GGR. This measure, still under review within party leadership, reflects a calculated effort to strike a balance between fiscal ambition and political feasibility. Finance Minister Haddad now faces the delicate task of calibrating the tax rate to maximize revenue without alienating key legislative allies or destabilizing the fragile coalitions that underpin the government’s agenda.
The urgency of the situation was underscored on October 22, when the Finance and Taxation Committee (CFT) of Brazil’s Chamber of Representatives scheduled an urgent analysis to fast-track a bill raising the online gambling tax from 12% to 18%. CFT chairman Rogerio Correia (Workers’ Party–MG) explained the strategic importance: “We can only select two bills per year to request urgent consideration from Chairman Hugo Motta, and we will vote tomorrow.” Lawmakers intend to move the bill quickly to the plenary, bypassing other committees and avoiding delays that could disrupt the government’s 2026 revenue plans, as reported by Focus Gaming News.
But the government’s ambitions go even further. Bill 5.076/2025, currently before the CFT, proposes to double the tax rate on online gambling houses from 12% to 24%. If the urgent request is approved, the measure could skip normal committee reviews and head straight to the plenary session of the Chamber of Deputies. Another bill, No. 5.090/2025, would push the rate to 25%, and is also under review. Finance Minister Haddad estimates that these measures could generate as much as R$20 billion in 2026 from gambling taxes alone, a figure that would go a long way toward offsetting lost revenue from failed reforms and supporting vital social spending.
For the Lula administration, the rationale is clear: companies that have profited handsomely from the expansion of online betting should contribute their fair share to public coffers. The government frames the proposals as both a fiscal necessity and a matter of social responsibility, arguing that increased taxation will help mitigate the social risks associated with gambling while providing much-needed resources for welfare programs.
However, the proposals have sparked fierce debate within Brazil’s rapidly maturing betting industry. The National Association of Games and Lotteries (ANJL) has issued a stark warning, arguing that such a sudden tax hike could undermine the sustainability of licensed operators and drive bettors toward illegal sites. The ANJL stated, “It’s not just 12 percent in taxes that bettors pay. In fact, the 12 percent represents only the payment of the allocations calculated on the difference between bets placed and prizes paid. After this payment, bettors bear the operating costs and pay all the other taxes of a normal business.”
The association listed a daunting array of additional levies: 25% corporate income tax (IRPJ), 9% Social Contribution on Net Profit (CSLL), up to 9.25% in PIS and Cofins, and local service taxes (ISS) of up to 5%. When combined, the total tax burden can reach 45–50% of gross revenue, a figure operators say could threaten the competitiveness of Brazil’s regulated platforms and stymie industry growth just as the market begins to mature. The ANJL called the proposal “technically flawed and untimely,” warning that it could stimulate illegal gambling and erode the progress made in bringing the sector under regulatory oversight.
Supporters of the tax hike, however, counter that higher rates are essential to strengthening Brazil’s fiscal framework, ensuring transparency in the gambling sector, and discouraging illegal offshore operators. Lawmakers argue that the measures are necessary to maintain revenue stability after the expiration of the Financial Transactions Tax (IOF) and to ensure the sustainability of the government’s social initiatives.
In a bid to reduce opposition and accelerate passage, the government has opted to divide its broader economic reforms into smaller, issue-based bills. This piecemeal approach, officials hope, will allow them to secure faster approval for contentious measures like the gambling tax without derailing the entire fiscal reform package.
Meanwhile, the Joint Budget Committee has postponed voting on the Budget Guidelines Law (LDO), citing disputes over spending cuts and revenue targets—a reminder of the political fragility that continues to complicate fiscal planning in Brazil. As President Lula’s team scrambles to secure consensus, the outcome of the gambling tax debate will serve as a bellwether for the administration’s ability to balance fiscal ambition with political reality.
The coming weeks will reveal whether the government’s high-stakes gamble pays off. If successful, the reforms could provide a crucial lifeline for social programs and reinforce Brazil’s fiscal credibility. If not, the administration risks further delay, industry backlash, and a widening gap in the national budget. For now, all eyes are on Congress, where the future of Brazil’s online gambling market—and the government’s broader reform agenda—hangs in the balance.
