Brazil’s President Approves Law to Increase Taxes on Gambling Operators

Brazil’s president, Luiz Inácio Lula da Silva, has enacted a law raising taxes on betting companies operating in the South American country, increasing the rate from 12% to 15% by 2028.

President Lula Approves New Tax Law

Lula granted final approval to Complementary Law No. 224 last week, following mid-December approval of the original bill, PLP 128/2025, by both the Senate and the Chamber of Deputies. According to the Ministry of Finance, the measure is intended to strike a balance between taxation and sector growth, while providing higher revenue and more predictable tax collection.

The new law will reduce federal tax incentives for several sectors by 10% and gradually raise the tax rate on gambling licensees. In 2025, this sat at 12% on gross gaming revenue. Now, in 2026, the tax rate will be raised to 13%. This will once again rise to 14% in 2027, and finally 15% from 2028 onward.

The tax is levied on gross gaming revenue, which is defined as total revenue minus winnings paid to bettors. It follows Brazil’s emergence as the world’s fifth-largest sports betting market in its first year after legalization. While it is expected that the tax increase would greatly help Lula’s cabinet to meet its financial goals before this year’s general elections. 

However, getting to this stage was not a straightforward task. Initial versions of the law were met with strong criticism as some senators warned that such a rate could lead to the illegal market gaining more ground in Brazil.

What Income Does the Government Expect and Where Will the Money Go?

Data from the Secretariat of Prizes and Betting show that the government collected BRL 3.32 billion (approximately $612 million) in federal taxes through September, while legalized operators processed BRL 27.7 billion ($5.1 billion) in revenue during the first nine months of the year.

According to Complementary Law No. 224, starting in 2026, companies holding gambling licenses will be required to allocate 1% of their revenue to social security, rising to 2% in 2027 and 3% in 2028. In addition, the law also establishes joint tax liability for entities that promote illegal betting sites, including financial and payment institutions that engage with unlicensed operators.

The final 15% tax rate is lower than the 18% rate for operators by 2028, which was approved in December by the Senate’s Economic Affairs Committee. While the lower 15% rate may be seen as a modest win for gambling operators, many industry professionals are concerned about the possibility of a future tax on player deposits.

With Lula’s approval of Complementary Law No. 224, many of its provisions came into effect at the start of the year. However, under Brazil’s constitution, new or increased taxes must wait 90 days from the date of publication before taking effect. This effectively means that gambling operators will have a brief window of being taxed at the old 12% rate, before the 13% rate kicks in later in 2026.