By Edward Chandler, Global CEO at OKTO
It has been almost a year since Brazil authorised dozens of companies to operate in its newly regulated betting market. In that time, the country has transformed an industry known for chaotic, triple-digit annual growth into a highly structured and globally competitive market. This newly regulated industry has already delivered billions in tax revenue, attracted significant international attention, and moved millions of players from opaque offshore platforms into secure, transparent, PIX-powered environments.
But this rapid progress is not irreversible. Far from it. And if lawmakers continue to prioritise short-term tax expansion over market consolidation, Brazil risks undermining the very legitimacy it fought to establish.
Today, 51% of betting activity in the country remains illegal. But rather than directing regulatory pressure toward this half of the market, current proposals focus on raising the GGR (Gross Gaming Revenue) tax from 12% to up to 18% for operators who are already compliant. Of course, the R$7.9 billion that regulated operators have contributed in taxes so far this year is an impressive figure, but it isn’t automatic justification for an immediate tax increase.
This is precisely why the industry and regulators must act together to eliminate the illegal market, which today is estimated to be larger than the regulated sector—and growing. Without a coordinated enforcement, payments, and compliance strategy, every tax increase risks widening this gap. Strengthening the regulated ecosystem requires not just better rules, but unified effort and intelligence-sharing between authorities, operators, and payment providers.
To the contrary, maximizing near-term fiscal gains at the expense of consolidating the regulated sector is perhaps the biggest threat to our industry’s future, for two reasons.
First, a sharp increase in the tax burden reduces the competitiveness of licensed operators. These companies have already absorbed significant compliance, technology, and payments infrastructure costs — costs illegal operators do not bear. By diminishing the profitability of the regulated segment, Brazil risks slowing long-term growth and shrinking future tax receipts, regardless of whether the GGR rate is 12%, 15%, or 18%.
Second, raising taxes now inadvertently strengthens the illegal market. Higher GGR creates economic pressure that pushes price-sensitive players toward unlicensed platforms offering better odds, faster withdrawals, and no regulatory oversight. In practice, this means a larger flow of money back into the criminal networks that January’s legislation was designed to dismantle.
The past year has proven that regulation, when applied consistently, works. By playing differently, we can all win: from operators and consumers to the payment infrastructure that powers it. The industry has adopted robust KYC and anti-money laundering systems, enhanced by PIX’s real-time traceability – a process actively supported by payment service providers, such as OKTO, who are committed to compliance and transparency. Regulators have also blocked thousands of illegal sites, demonstrating both capability and willingness to act. The foundations for a safe, transparent, and investable sector are now in place.
This is precisely why stability is essential at this stage. A sudden tax hike acts as an anti-consolidation mechanism, squeezing the operators that invest the most in compliance and consumer protection. By restricting their scale and reinvestment capacity, Brazil reduces the competitive pressure that would otherwise marginalize illegal actors.
The strategic choice for lawmakers is clear. The government can either consolidate a sustainable, globally competitive market with a stable tax regime, or it can pursue an early revenue boost that risks eroding the legitimacy gained over the past year and indirectly funding the criminal long tail of unregulated operators.
If Brazil wants a sector capable of generating long-term employment, investment, and billions in predictable tax revenue, the priority must be completing the consolidation agenda — not restarting a cycle of instability. The next 12 months should be defined by stronger enforcement, better consumer protection, and a full transition of players into the transparent, licensed ecosystem.
Brazil cannot afford to let the sector become a victim of its own early success. The gains of the past 12 months were hard-won and remain fragile. Treating this progress as a guarantee—rather than a foundation that requires stability—would be a strategic misstep. We should complete the work of consolidation before raising the burden of playing fair.
