Brazil Sets 0.5% Tax on Lotteries, Fantasy Sports and Betting
Brazil.- 6 November 2026 | www.zonadeazar.com The Brazilian Government has established a 0.5% Selective Tax (IS) covering lotteries, fantasy sports and fixed-odds betting, scheduled to take effect on 2 February 2027.
The measure was introduced through Provisional Measure 1,399/2026, published in an extraordinary edition of the Official Gazette on 4 November.
The decision adds a new tax obligation for the gambling industry, although its application to sports betting will depend on the sector’s regulatory future.
New Tax Rate for Gambling Activities
The so-called sin tax forms part of Brazil’s wider tax reform and is intended to apply to certain goods and services considered harmful to health or the environment.
Article 7 establishes a 0.5% rate for prediction-based contests.
Its scope is determined by Complementary Law 214/2025, covering:
- Federal and state lotteries.
- Fixed-odds sports betting.
- Prize draws and other betting activities.
- Horse racing betting.
- Fantasy sports.
The framework includes activities conducted through both physical establishments and digital platforms.
Tax Will Not Apply to Total Betting Turnover
A central element of the measure concerns the taxable base.
The 0.5% rate will not apply to total betting turnover, but rather to operators’ own revenue.
Player winnings and legally mandated allocations will be deducted when calculating the taxable amount.
Consequently, the financial impact will vary depending on each gambling product and operator’s revenue structure.
For lotteries, mandatory prize payments and social contributions substantially reduce the amount subject to taxation.
Sports Betting Remains Restricted
The announcement comes amid significant uncertainty surrounding Brazil’s sports betting industry.
Provisional Measure 1,394/2026 introduced a ban on fixed-odds betting, which has subsequently been challenged before the Federal Supreme Court (STF).
The proceedings are being overseen by Justice Luiz Fux.
Legal betting operations could resume following a court ruling, congressional rejection of the measure or its expiration without legislative approval.
If the regulated market reopens, authorised operators would need to include the new Selective Tax among their fiscal obligations.
GGR Contribution Set to Reach 14%
If betting operations resume, licensed companies would face several tax obligations during 2027.
These include:
- GGR contribution: 14% in 2027.
- Selective Tax: 0.5% on operators’ own revenue.
- CBS: a new contribution replacing PIS and Cofins.
- IBS: gradual introduction of the goods and services tax.
- Municipal ISS: continuing during the tax transition.
- IRPJ and CSLL: corporate taxes on profits.
The specific GGR contribution is scheduled to increase to 15% in 2028.
The final financial impact will depend on the implementation of the new tax framework and the future regulatory status of betting.
Potential Annual Revenue of R$159 Million
A simulation based on official 2025 figures uses R$36.9 billion in GGR as its reference.
Under this scenario, the Selective Tax could generate approximately R$159 million annually, taking applicable deductions into account.
By comparison, a 14% contribution on GGR would exceed R$5 billion.
The figures suggest that the new tax would represent a relatively small proportion of operators’ overall fiscal obligations.
Fantasy Sports Also Included
The inclusion of fantasy sports is another notable aspect of the reform.
Although Law 14,790/2023 states that fantasy sports do not constitute a lottery or fixed-odds betting activity, Brazil’s tax legislation includes them within the prediction-contest framework.
Consequently, revenue-generating fantasy sports platforms will be subject to the 0.5% rate.
Legislative proposals are currently under consideration to exclude fantasy sports from the tax, citing differences between the activity and traditional gambling.
Congress Must Establish Definitive Rates
The rate established for 2027 is transitional.
Under the Provisional Measure, the Government must submit legislation setting definitive tax rates to Congress by 31 May 2027.
These new rates are intended to take effect on 1 January 2028.
Provisional Measure 1,399 must also receive congressional approval to remain in force.
Industry Impact and Next Steps
The decision introduces another component into Brazil’s evolving gambling taxation and regulatory framework.
Although the 0.5% rate is comparatively modest, it would operate alongside other contributions affecting licensed operators’ profitability.
The central uncertainty remains the future of regulated sports betting, which is currently subject to restrictions that could change following a decision by the STF or Congress.
Meanwhile, lottery operators and fantasy sports platforms must prepare for the new tax’s scheduled introduction in February 2027, provided the measure remains valid.
Edited by: @fonta
