Ridiculed and scolded, PT deputies have returned to the negotiating table with urgency to finalise plans for a 24% tax on Bets licences. President Lula and Finance Minister Fernando Haddad push to settle Brazil’s fiscal and gambling tax affairs before the end of 2025 or deputies will face consequences…

Frantic debates and negotiations are taking place within Brazil’s political ranks to determine the future economic plan of the country’s regulated betting market.

In Brasilia, deputies remain unyielding that a new tax plan must be submitted for review by the Congress and Senate, following the embarrassing rejection of the Workers Party (PT) government’s Provisional Measure (MP) No. 1,303/2025, introduced three months ago.

On Thursday, the Provisional Measure was rejected after 251 legislators voted against the PT government’s proposal tabled by Deputy Carlos Zarattini, who just hours before the vote, amended the text to introduce a retroactive tax on betting licensees and removed the standard income tax increase to 18% GGR previously backed by Finance Minister Fernando Haddad.

The debacle has erupted into a major setback for President Lula da Silva, as several of his top lieutenants failed to back Zarattini’s last-minute changes. Zarattini claimed he had amended the bill to appease opposition blocs pushing for a retroactive tax on licences – who ended up rejecting his proposal.

The fallout has now forced Haddad to redraft the broader fiscal framework for the 2026 Budget. A furious Lula and Haddad have signalled that there will be serious repercussions for what they see as an embarrassing episode undermining the PT government’s political credibility ahead of the 2026 general election campaign.

Brazilian licences may have avoided judgment on Thursday, but the threat still looms with no assurance that any future outcome will be more favourable.

Beyond a shambles

The pro-tax increase deputies of the PT responded with Bill No. 5076/2025, introduced to the Chamber of Deputies yesterday by Lindbergh Farias, a Deputy for the Federal District.

If approved, the overall tax on betting will rise by 24% according to SBC Noticias, while the draft text of the legislation makes specific comparisons between Brazil’s tax regime and those of Germany and France, where rates are much higher.

In the bill’s text, Farias compares the overall tax burden on Brazilian betting firms of 27% as ‘lower than that applied to corporate profits in general’ of 34%, and ‘well below that practices in countries like France and Germany’, at 55% and 48% respectively.

“The bill proposes raising this tax to bring it closer to international standards, justifying it as an activity “harmful to health and the family economy,” he said.

Harsh words for Bets

Lula’s PT government launched Brazil’s regulated nationwide betting market on 1 January 2025 after extensive legislative debate throughout 2024.

The President’s administration saw the launch of a regulated market as an opportunity to create a lucrative new tax revenue stream as well as a way to curb illegal gambling in Brazil.

The transition from grey-to-white market has seen hundreds of companies, both local and international, apply for licences under the new regime, known locally as ‘Bets’.

According to a white paper from B2B sportsbook firm OpenBet, Brazil there will be 39 million active online betting accounts in Brazil in 2026, with average GGR per account of R$745 (US$133).

The market’s rapid growth has raised concerns among some politicians, including PT ones despite this party being the one to launch the market.

Critical politicians include Finance Minister Fernando Haddad, who said earlier this year “no amount of tax revenue justifies it’, and was a major proponent of raising tax from 12% to 18%.

Deputy Farias landed further criticism on the Bets market: “Online gambling, popularly known as “bets,” has become very popular in Brazil due to the ease and convenience of betting and the massive volume of advertising, including influencers who reach millions of people daily with promises of easy money.”

Number crunching

Citing further data, Farias notes in his legislation that 24 million Brazilians made at least one betting transfer between January-September 2024 (prior to regulated market launch), and at least two million people suffer from gambling addiction in the country.

“Many people, eager to win a lot of “easy money” or even recover their losses, end up betting more money than they have available and what they can afford to lose, leading them to stop spending on necessary things or even get into debt,” the bill’s text reads.

“A study by the Brazilian Society of Retail and Consumption showed that, in Brazil, 63% of those who gamble had part of their income committed to gambling, 19% stopped shopping at the grocery store, and 11% did not spend on healthcare or medication.”

According to SBC Noticias, the bill aims to distribute betting revenue across four different areas – 76% will cover lottery operating costs, a further 12% will be directed to social security and healthcare, and the remaining 12% distributed across ‘purposes defined in the law itself’.

An interesting international comparison to be made here is the wording of the bill. In many countries, the industry often argues against tax raises by arguing this will impact returns to customers, leading to customers leaving the market. This in turn impacts operator revenues and profits, and in turn leads to a lower tax contribution.

This argument has been seen extensively in the UK lately, where the industry is anticipating tax raises to be announced next month. In Brazil, the proponents of tax hikes do not seem concerned by this – if anything it seems deterring customers from the gambling market is their goal.

“This proposed law increases Brazilian taxation on betting to a higher level than the average for other activities — which is justified by the fact that betting is harmful to health and the family economy,” Farias said.

“However, it is important to note that even with the proposed increase, the Brazilian tax rate will still be below the rates in other countries, such as France and Germany.

“Therefore, to try to reduce this epidemic, in addition to all the regulations being developed by the federal government, we must increase taxes on betting to make betting a little less attractive and to allow the country to obtain the resources necessary to invest in its healthcare system.

“Certain of my colleagues’ understanding, I request your support for the approval of this bill.”

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Check out SBC Noticias Brasil and SBC News’ perspectives on the Brazil’s tax battle in the latest episode of iGaming Daily below….