535: Shot in the Foot - Why Brazil's Proposed Tax Hike Will Boost Illegal Betting

In this latest episode of iGaming Daily, brought to you by Optimove, hosted by Fernando Noodt, the team, including Ricardo Assis and Ana Maria Menezes from SBC Noticias Brasil, delves into the turbulent Brazilian iGaming market.

The discussion centres on a major tax increase proposed for the sector. On June 8th, the government decided to advance a provisional measure to increase the betting tax rate from 12% to 18% on the Gross Gaming Revenue (GGR) of all licensed betting companies. This proposal, expected to be presented to President Lula, is an alternative to a previously unpopular tax increase on financial operations (IOF). While viewed as popular in Congress and with the public, for betting operators, this represents an immense tax increase, potentially raising the overall tax burden to around 36% when other existing taxes are included.

The proposed tax hike has prompted strong reactions from the industry and political entities. ANJEL, the Association of Gaming and Lotteries in Brazil, has criticised the move as a "shot in the foot," warning of licensed companies leaving Brazil, lower tax revenues, and a boost to the illegal betting market, which already constitutes about 60% of all bets in the country. They suggest focusing on cracking down on illegal operators could yield nearly triple the expected tax revenue. Operators themselves express serious concerns, fearing competitive disadvantages for domestic companies, leading to mergers, acquisitions, or even closures, with some believing that half of the operators cannot handle this raise.

The Parliamentary Front of the Free Market, comprising 173 deputies and 27 senators, has also opposed the measure, fearing it could lead to the "death of the legal sector" and negatively impact Brazilian sports, as many football clubs are sponsored by betting operators.

Host: Fernando Noodt
Guests: Ricardo Assis and Ana Maria Menezes
Producer: Anaya McDonald
Editor: James Ross

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