Tax conflicts in Brazil will continue in 2026 and beyond, warns André Gelfi, Director General of the Brazilian Institute for Responsible Gaming (IBJR).

Interviewed by SBC Notícias Brazil, Gelfi believes the tax status of the Brazil Bets regime remains fragile as think tanks and industry bodies continue to eye new mechanisms to siphon money from what he describes as an “already exhausted and over-targeted” gambling sector.

The interview followed the last-minute decision by the Senate Economic Committee (CAE) to raise income taxes on Bets licences from 12% to 18% GGR through a phased three-year escalation to be completed by 2028.

Year-1 of the Bets regime has been a rollercoaster, as the market proves its fiscal depth — raising significant revenues for the government. According to federal data, from January to September 2025, betting operators generated around R$28bn in GGR, from which the government collected approximately R$3.3bn in taxes and levies over the period.

Yet for Gelfi, these headline numbers risk creating a dangerous political illusion that the sector can absorb limitless fiscal pressure.

“Brazil has barely begun to regulate”

Gelfi warned that policymakers are making decisions as if the regulated market were a mature, consolidated ecosystem rather than a framework less than a year old and still competing with a vast, entrenched illegal economy.

“The game has barely started, and we are already talking about raising taxes as if it were completely natural. It isn’t,” he said. “Brazil still operates with an illegal market that represents more than half of activity. Any new levy imposed today only widens that imbalance.”

The IBJR Director said the latest proposals — including the CNI-backed CIDE-Bets levy, which seeks to impose a 15% contribution on the value of each bet — follow a pattern of fiscal opportunism, rather than evidence-based policymaking.

Illegal operators remain the biggest fiscal threat

Gelfi stressed that the government’s focus should be squarely on eroding the illegal market, not taxing compliant operators further.

“If you increase taxes now, you simply tip the price equation in favour of the clandestine operator. It’s mathematics. A bettor will choose the product that gives a better return unless they fully understand the risks of illegality — and today, they don’t.”

He pointed to international precedents: Colombia’s experiment with a bet-value tax led to a 30% drop in revenue, while the Netherlands saw its illegal market surpass the regulated sector for the first time following a tax hike.

“These are not abstract warnings. They are real cases showing what happens when governments tax the consumer instead of tackling unlicensed operators,” he added.

Gelfi also criticised the recent public-sector narrative that online betting is driving household indebtedness, calling it a distorted reading of financial data.

“Banks already block credit for deposits into betting accounts. The Brazilian debt problem is structural — rooted in banking fees and consumer credit — not in bets that represent 0.3% of GDP,” he said.

2026: A decisive year for policy clarity

Looking ahead, Gelfi believes 2026 will be a defining year for whether Brazil chooses a sustainable regulatory path or repeats the mistakes of other jurisdictions.

“The government should be strengthening the regulated ecosystem, not weakening it with proposals that have already failed internationally,” he said. “Only once the illegal market is significantly reduced can Brazil discuss higher taxation without putting the regulated system at a disadvantage.”

For now, he warns, the sector remains vulnerable to “policy experiments” that may score short-term political points but undermine long-term channelisation and tax stability.

“Brazil must decide whether it wants a competitive, regulated market — or a fiscal battleground that ultimately empowers the very operators it is trying to eliminate.”