URGENT UPDATE: Brazil is on the brink of a significant tax overhaul that could double the Gross Gaming Revenue (GGR) tax from 12% to 24%. This proposed hike, currently under consideration by lawmakers, may have dire consequences for the nation’s burgeoning legal gaming industry, warns the Brazilian Institute of Responsible Gaming (IBJR).
The IBJR has raised alarms, stating that such an increase would represent a staggering 45.4% rise in the tax burden for operators, potentially pushing many out of the regulated market. Currently, operators face an initial license fee of BRL 30 million (approximately $5.6 million) alongside the existing 12% GGR tax. Together, these fees mean that operators are already paying nearly a quarter of their revenue in taxes.
Authorities are mulling this drastic change amid talks that mirror tax adjustments seen in other regulated markets. But the IBJR firmly opposes the measure, arguing that it could alienate operators, reduce player incentives, and ultimately empower the black market. Experts within the IBJR indicate that raising taxes could lead to a reduction in bonuses and promotions, rendering the legal market less competitive against unlicensed operators.
The implications are profound. Recent studies show that even with the legalization of gaming, approximately 51% of online betting in Brazil is conducted through unlicensed companies. This amounts to an astonishing BRL 38 billion (around $7 billion) in annual bets placed outside the regulatory framework, resulting in an estimated loss of BRL 10.8 billion ($2 billion) in public revenue each year.
The IBJR contends that a mere 5% decrease in the legal gaming sector could lead to an additional billion Brazilian reals flowing into the black market. This alarming trend underscores the urgent need for lawmakers to rethink their approach.
As discussions continue, the IBJR advocates for strategies that enhance the appeal of legal gaming rather than imposing punitive tax measures that could harm this vital sector. The stakes are high, and the future of Brazil’s gaming landscape hangs in the balance.
Stay tuned for further updates as this situation develops, as the outcome of these tax discussions will significantly impact both operators and consumers alike.