Brazil’s gambling tax hike raises questions for esports betting

Brazil’s government has introduced a significant tax increase on the gambling sector, raising the gross gaming revenue (GGR) tax rate from 12% to 18%.

This 50% hike, enacted through a provisional measure in June 2025, has triggered strong reactions from both domestic and international betting operators, who warn that the move could undermine the country’s newly regulated market and deter future investment.

The tax hike comes just months after Brazil’s regulated online gambling market officially launched in January 2025.

Operators had already committed substantial resources, including a BRL30 million entry fee, to participate in the market under the original tax regime.

Industry leaders argue that the abrupt change in fiscal policy creates uncertainty and sends a negative message to global investors.

Eduardo Ludmer, BetMGM’s head of legal in Brazil, noted that operators are reconsidering their positions, stating: “They agreed to invest hundreds of millions into this venture and then six months down the road they just change the rules of the game without asking you.”

Trade bodies such as the Brazilian Institute of Responsible Gaming (IBJR) and the National Association of Games and Lotteries (ANJL) have condemned the measure as ‘unacceptable,‘ emphasising that frequent regulatory changes erode legal certainty and make Brazil a less attractive destination for gaming businesses.

The government, however, maintains that the tax increase is necessary to address a BRL20 billion budget deficit and rebalance public finances.

The tax hike is expected to have a direct impact on the esports betting sector, which has been growing rapidly in Brazil following regulatory reforms.

Esports operators, like their traditional sports betting counterparts, are subject to the same GGR tax rate.

The increased tax burden could force some companies to scale back their offerings, delay market entry, or even exit the market altogether, reducing the variety and competitiveness of esports betting options available to Brazilian consumers.

Additionally, higher taxes may drive more bettors toward unlicensed offshore platforms, undermining efforts to channel gambling activity into the regulated sector.

This is particularly concerning for esports, where younger, tech-savvy audiences are already familiar with international betting sites.

The risk of a shrinking legal market could also limit sponsorships, tournament funding, and innovation within Brazil’s esports ecosystem.

While the provisional measure took immediate effect, its future remains uncertain. The tax hike must be ratified by Congress within 60 days, with a possible extension to 120 days.

If Congress rejects the measure, any tax collected after 90 days would need to be reimbursed to operators.

The ongoing debate highlights the delicate balance between fiscal policy and market stability as Brazil seeks to establish itself as a leading jurisdiction for both traditional and esports betting.

As the situation develops, stakeholders across the gambling and esports industries are closely monitoring legislative proceedings, aware that the outcome will shape the future of regulated betting in Brazil.