Senator Sérgio Petecão (Social Democratic Party) has introduced a new bill in Congress proposing to temporarily increase the fixed odds betting (online + offline) tax rate from 12% to 27.5% until the "Selective Tax" (Imposto Seletivo) is officially implemented. In other words, this is a "transitional tax increase," but its intensity is comparable to a storm.
Petecão states that the goal of the tax increase is to "allow gambling to give back to society." According to the draft, 10% of the increased tax revenue will be invested in the public health system, with the remaining 17.5% used for social welfare and other public sectors. He openly says, "Games can be played, but society should also benefit from them."
Currently, the Brazilian gambling industry pays a 12% tax rate based on GGR (Gross Gambling Revenue). If raised to 27.5%, it would more than double, severely squeezing the industry's profit margins.
Petecão believes that although gambling is entertainment, its substantial cash flow should benefit the public interest—he cites data showing that in 2023, online gambling bets reached 50 billion reais (about 9 billion US dollars), "This is a huge amount of money flowing out of the public's pockets."
It is worth noting that this proposal is not a permanent adjustment, but a temporary patch in Brazil's tax reform. The so-called "Selective Tax" is a long-term tax mechanism planned by the government, mainly targeting goods and services considered "potentially harmful to society or health," including tobacco, alcohol, and gambling. However, since the reform has not yet been implemented, Petecão's proposal hopes to "take a step ahead" to provide short-term financial support to the national treasury.
The bill will next be reviewed by the Senate Committee, with discussions focusing on fiscal impact, implementation period, and compatibility with the existing gambling regulatory framework. Once passed, the Brazilian government will gain additional revenue from one of the fastest-growing entertainment industries—gambling—before the "Selective Tax" is implemented.
For gambling operators, the impact of this proposal is immediate:
First, the cost structure will be redefined, with taxes almost doubling, requiring a complete recalculation of the profit model;
Second, the Brazilian regulatory signal is stronger, as the government is clearly not satisfied with just "compliance licensing" but requires the gambling industry to take on "social responsibility";
Third, international operators need to respond cautiously, possibly evaluating exits, mergers, tax optimization strategies in the short term.
Industry insiders point out that this is not only a fiscal action but also a release of policy signals—Brazil is accelerating its embrace of the gambling economy while declaring a direction: to make money in this market, one must first learn to "contribute."
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