Lula Government Prepares New Measures to Tighten Brazil’s Betting Sector Ahead of Elections

Brazilian President Luiz Inácio Lula da Silva is expected to send a provisional measure (MP) to Congress this week aimed at tightening the country’s betting regulations, as concerns over household debt and gambling addiction increasingly put pressure on the sector.

According to CNN Brazil, the government is considering broader restrictions on betting advertising as well as a possible ban on online casino games. Under the proposal being discussed, sports betting would remain permitted while other forms of online gambling could be prohibited.

The decision to pursue the changes through a provisional measure would allow the new restrictions to take effect immediately, rather than waiting for the longer legislative process associated with a conventional bill. The timing is particularly significant, with the elections less than a month away, and has raised questions over whether the betting sector is becoming an electoral issue as Lula seeks to strengthen his position with more conservative voters and secure re-election.

The text is reportedly being prepared under the authority of the Civil House. Within political circles, there is speculation that the initiative also has an electoral dimension, with Lula potentially seeking to capitalize on the growing criticism directed at Brazil’s betting industry.

The sector has come under mounting scrutiny amid allegations that gambling is contributing to rising household debt, with critics increasingly linking betting activity to financial difficulties among families.

Political divisions emerge over gambling restrictions

Lula has opted not to pursue the proposed restrictions through a full legislative bill, a route that would require the measure to go through Congress and potentially dilute its immediate political effect before the elections.

There is also disagreement within the government itself over how far the crackdown should go. Some government factions, particularly within the Ministry of Finance, are pushing back against more severe restrictions.

The Finance Ministry is responsible for regulating sports betting and online gaming and recognizes the sector’s economic importance. Finance Minister Dario Durigan faces the challenge of persuading Lula that a properly regulated betting industry can provide meaningful benefits to public finances.

Lula, however, has repeatedly expressed a highly critical position on betting. The president has said that, if the decision were entirely his, he would bring betting in Brazil to an end.

His position puts him broadly in line with other candidates and political groups that have criticized the industry. Studies commissioned by Lula’s Workers’ Party (PT) reportedly indicate that three out of four Brazilians oppose betting establishments, a finding the president has used to support his opposition to the sector.

Betting industry expected to generate BRL16 billion in tax revenue

One issue that has received less attention in the political debate is the amount of tax revenue generated by the regulated betting industry.

Brazil collected almost BRL10 billion in tax revenue from the licensed betting sector in 2025, equivalent to approximately $1.97 billion. During the first seven months of this year alone, the sector generated BRL8.7 billion for the public coffers.

The Federal Revenue Service estimates that betting-related revenue could reach BRL16 billion in 2026, highlighting the significant contribution the regulated industry is expected to make to government finances.

The financial implications extend beyond tax receipts. Licensed betting companies have already paid more than BRL2.5 billion for operating licences since the market was regulated.

Any decision to effectively shut down the legal betting market could therefore trigger significant legal and economic consequences. Operators could seek to recover licence fees already paid and potentially pursue compensation for investments made in Brazil following the introduction of the regulatory framework.

There is also a broader fiscal concern. Revenue generated by betting has already been incorporated into Brazil’s Annual Budget Law and Budget Guidelines Law, which establish the government’s spending priorities. A major reduction or elimination of betting revenue could therefore create complications for public finances and budget planning.

For the industry, however, the biggest concern is not simply the possibility of tougher measures against licensed operators. The sector remains particularly worried about the government’s failure to effectively suppress the illegal betting market.

Despite efforts to establish and regulate a legal betting industry, the illegal segment continues to account for almost half of the Brazilian market. Industry representatives fear that imposing substantially tougher restrictions on licensed operators without successfully eliminating illegal alternatives could push consumers away from regulated platforms and back into the unregulated market. 

By fLEXI tEAM