Brazil only started to issue online gambling licenses in January, and now the Ministry of Finance has approved a provisional measure to raise the GGR tax rate from 12% to 18%.

Some industry insiders say that puts the tax rate at approximately 50% with all the levies combined, and this unexpected tax hike could come with serious consequences.

Leading casinos scrambled to get licenses in Brazil at the start of the year, jumping through a number of legal hoops put in place by the regulators. That included incorporating in Brazil, posting a bank guarantee of R$5 million, registering a .bet.br domain, and, critically, proving compliance with local responsible gambling rules, anti-money laundering protocols, and data protection laws.

Bet365, Betano, Caesars, Betsson and more jumped at the chance to secure a license as Brazil regulated its online gambling scene at the start of the year. Now they have already been hit with a serious tax hike.

Brazil Facing Budget Problems

This move is part of a broader effort by the Brazilian government to plug budget gaps after plans to increase the IOF (Financial Transactions Tax) were shelved amid concerns it could scare off investors.

While the government is chasing short-term revenue wins, the betting sector is left to foot the bill. Brazil’s betting market is already generating serious numbers — around $500 million (R$2.8 billion[) in monthly turnover, with nearly $135 million (R$755 million) in federal tax receipts reported from February to April alone.

Sizeable Cost of Doing Business

Operators also face 9.25% in PIS/COFINS, up to 5% ISS (municipal services tax), and a punishing 34% corporate income tax. Add in a potential “Selective Tax” (a sin-tax-style proposal still under discussion), and total effective taxation could approach 50%.

Global brands eyeing expansion into LatAm are now reconsidering whether the cost of entry is worth it.

A joint front of industry groups, led by the Instituto Brasileiro de Jogo Responsável (IBJR) and the Associação Nacional de Jogos e Loterias (ANJL), has already pushed back. Their statement called the tax increases: “Unjustifiable from any technical, economic or public policy perspective.”

They warn that this policy shift could drive legitimate operators out, handing power back to the black market, which is still thriving in Brazil.

The problem goes beyond the basic tax hike. It also serves as a stark reminder that Brazil can implement swingeing regulatory changes on a whim, which might make some brands think twice about a long-term investment strategy that could be turned on its head overnight.