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Brazil’s nascent online gambling industry is suddenly fighting a high-stakes lobbying battle on two fronts as politicians in Brasilia consider tougher restrictions on advertising and potential tax increases.
The debate on stricter limits for gambling advertising escalated quickly last week when Brazil’s Senate hastily passed a bill to impose a series of restrictions that would go above and beyond initial rules that only took full effect on January 1.
That development has coincided with possible measures to raise taxes on newly licensed operators, with the government of President Lula da Silva forced by congressional leaders to consider alternative revenue-raising sources to an unpopular initiative to increase taxes on international financial transactions.
Although Brazil is far from the first example of a regulated online gambling market facing policy pressures over advertising and taxes, it is rare for those discussions to intensify in less than six months after the market’s launch.
The recent developments in Brasilia also underline how Brazil’s regulatory regime is set to develop on at least two separate tracks.
On one level, there are the more incremental regulatory reforms being planned by the Ministry of Finance’s Secretariat of Prizes and Bets (SPA), which just a few weeks ago published a 13-point rulemaking agenda for 2025 and 2026.
Members of Congress have their own ideas, however, and federal lawmakers will determine the fate of more dramatic regulatory or fiscal changes that threaten to disrupt or even derail the nascent industry.
“These proposals come at a time of increasing political and social pressure on the sector, particularly from media narratives that often frame betting as inherently harmful,” said Fernanda Meirelles, a partner at FAS Advogados law firm in São Paulo.
“In that environment, legislators have felt compelled to act – not just through taxation, but also by tightening rules around public messaging.”
Advertising In Focus
Brazilian legal experts are quick to note that the advertising bill, as passed by senators on May 28, is far more accommodating than an initial proposal to ban all ads for fixed-odds betting, with sponsorships and other marketing channels still permissible under the current version of PL 2.985/2023.
Still, Meirelles highlighted the proposed ban on influencers or other celebrities in ads as one “notable shift compared to the current framework”.
“While some operators have already started adjusting their strategies based on earlier signals from the regulator, this provision, if approved, would formalise a significant change in how brands interact with the public,” Meirelles told Vixio GamblingCompliance.
The advertising bill gained extra momentum two weeks ago after the controversial testimony given by one prominent influencer to a Senate committee led to a series of negative headlines, said Caio de Souza Loureiro, a partner at TozziniFreire law firm.
He said the bill’s proposals to ban daytime ads on TV and radio would “significantly impact marketing strategies”, while age-gating and other restrictions for ads on social media “may face technical challenges or require adaptations to app functionalities”.
“Given the adversarial environment, the final draft of the bill is more lenient than expected, although it still imposes substantial restrictions on betting advertisements,” Loureiro told Vixio. “Comparatively, outright bans on betting advertisements could have had worse outcomes.”
The lawyers and other Brazilian experts anticipate that the language of PL 2.985 will continue to evolve as the bill is now considered by the lower house of Brazil’s Congress, the Chamber of Deputies, which historically has been more hospitable to gambling than the Senate.
There is momentum in Congress to adopt some form of additional restrictions on advertising, said Rafael Marchetti Marcondes, chief legal officer of Brazilian betting and fantasy-sports operator Rei do Pitaco.
But there is also hope that deputies can be persuaded to make amendments to the bill “aimed at ensuring both consumer protection and the sustainability of the legal market”.
“We’ve seen from international experience, notably in Italy, that sweeping advertising bans can lead to unintended effects, such as the migration of users to unlicensed platforms and reduced capacity for public education on responsible gambling,” Marchetti Marcondes said.
“A balanced approach that allows for regulated communication, rather than outright suppression, is more likely to be effective in the long run. I remain cautiously optimistic that the final version of the bill will reflect these lessons.”
Taxing Times
On the tax front, Brazilian operators were already gearing themselves up for a high-stakes lobbying battle as the Senate and Chamber of Deputies determine the rate of a new selective tax to be applied against betting and other supposedly harmful products, in accordance with a broader tax-reform law approved by Congress in December.
These proposals come at a time of increasing political and social pressure on the sector, particularly from media narratives that often frame betting as inherently harmful. In that environment, legislators have felt compelled to act.
But those advocacy efforts have now been accelerated in the wake of a May 22 presidential decree to increase so-called IOF taxes applied to international financial transactions.
The increase in the IOF rates would in itself have an impact on the gambling industry, for example by raising taxes applied to fees paid by operators to any international suppliers that have not yet established subsidiary companies in Brazil from 0.28 percent to 3.5 percent of the transaction.
More pressing is the fact that online betting has been identified as a potential alternative source of additional tax revenue to the unpopular move by the government of President Lula.
Brazil’s finance minister has reportedly discussed the possibility of increasing taxes applied to fixed-odds betting instead of the IOF increases with the leaders of the Senate and Chamber of Deputies.
The president of Brazil’s national development bank BNDES and the heads of trade associations representing several other industries have also publicly called for increased taxes on online gambling to replace the IOF raises.
Whether additional taxes on online betting will be tabled is set to become clearer in the coming days, but it is evident that the industry is taking the threat very seriously.
In a clear sign of the urgency, six rival trade associations that represent different factions within Brazil’s online betting industry issued their first-ever joint statement on Tuesday (June 3) arguing that it would “unjustifiable from any technical, economic or public policy perspective to impose new tax burdens on a sector that is already extremely burdened and contributes significantly and responsible to the country”.
Industry representatives are also seeking to meet with government officials and federal lawmakers to outline their position.
“The aim is to communicate clearly that a new increase in the tax burden – especially at this early stage – could jeopardise the viability of the regulated market in Brazil,” said Marchetti Marcondes of Rei do Pitaco.
“The message is that a sustainable and stable tax environment is essential to ensure channelisation, responsible gambling practices, and long-term investment in the sector.”
Structural Challenges
As the Brazilian industry fights the two lobbying battles, it may be forced to confront several challenges that are affecting how it is perceived by federal policymakers.
A consistent theme among Brazilians at the recent SBC Summit Americas in Florida was frustration that members of Congress seem more interested in scoring political points and media headlines on the back of the industry, rather than seeking to understand the economics of online betting or engaging in a serious debate in how existing rules may be improved in key areas such as responsible gaming.
The multiple trade associations representing the industry are another longstanding concern, with this week’s joint statement likely to be welcomed as a key step toward operators speaking with a single voice for advocacy purposes.
Also in question is what role the SPA can play in enabling the industry it oversees to avoid adverse policy changes that may conflict with or even undermine its own regulatory agenda.
The regulator has generally gained the respect of the Brazilian industry for the thoroughness of its regulations and its pragmatic approach in implementing them.
But it is a source of frustration for some that the SPA has yet to release any official statistics on the revenues, taxes, or broader economic impact now being generated by licensed operators in the regulated market.
Those statistics would be especially valuable at this point in time when operators have to unite and launch a coherent public relations campaign in their own defence, according to Magnho José, a prominent blogger on Brazil’s gambling market who also serves as the president of one industry group.
“If there is no intelligent response to the [advertising] restrictions that are being imposed and even to the increase in taxes on the sector that some societal and political figures are seeking, the next step for opponents of online betting will be to propose a total ban,” Maghno warned.
