ANJL Challenges Brazil Betting Tax Investigation

Brazil’s National Association of Games and Lotteries (ANJL) has challenged a request involving a sports betting company operating in Recife made by the Federal Revenue Service (RFB) and the Public Prosecutor’s Office (PPG).

In an appeal filed on August 28, the association raised concerns that the investigation could lead to discriminatory treatment and what it described as a “back door tax” on betting activity conducted before Brazil’s current regulatory framework was fully established.

ANJL legal director Bernardo Freire argued that taxing transactions from a period when no tax structure existed would conflict with Brazil’s constitutional principles. He said there had been no validation or taxation mechanism for the activity because there was no legal foundation allowing such taxation.

Betting Operated in a Regulatory Gap

Fixed-odds betting was legalised in Brazil in 2018, but the regulatory framework only took effect in 2024. According to ANJL, betting operators operating during the intervening period were not assigned a specific economic activity classification by the Federal Revenue Service.

The association also said there were no official procedures through which companies could report and pay taxes on betting operations at that time.

Freire questioned how operators could have paid taxes before a formal regulatory system existed, arguing that there was not even a tax classification available for the activity.

ANJL also addressed the corporate structures used by operators during that period. According to Freire, many companies established their corporate headquarters outside Brazil while using service providers within the country.

Winnings were transferred through international financial institutions and so-called “pool accounts”, with international transfers subject to IOF taxation. Freire argued that this structure should not itself be considered money laundering, adding that around 90% to 100% of companies used the model.

Federal Revenue Disputes ANJL’s Position

Federal Revenue special secretary Robinson Barreirinhas offered a different interpretation of the activity. He said evidence indicates that betting had been taking place in Brazil for approximately seven years, including around five years before operators were formally authorised to operate on a regular basis.

Barreirinhas said the evidence showed that the organisation under investigation already had employees and beneficiaries in Brazil while not paying taxes or being subject to Brazilian regulation.

ANJL disputes both the interpretation of the companies’ activities and the way the investigation is being conducted. The association said the companies had previously made themselves available to authorities and were prepared to provide explanations and access to their accounts.

The association also questioned what it considers regional selectivity, pointing to the investigation's focus on brands owned by entrepreneurs from Pernambuco and Brazil’s Northeast Region.

ANJL Highlights Economic Contribution

The association also pointed to the economic significance of some of the companies involved in the investigation.

ANJL cited Betnacional as an example, noting that its merger and acquisition transaction generated more than R$1 billion in taxes. The association described the transaction as the largest in Pernambuco’s history. The company is also estimated to have around 2,000 direct employees.

ANJL said the betting sector had sought to establish self-regulatory standards and pay taxes even before the federal government introduced its comprehensive regulatory framework.

The association therefore argues that activity carried out during the earlier period should be assessed according to the laws and rules that were in force at that time.

Association Raises Constitutional Rights Concerns

Following the operation on August 28, ANJL said it was concerned about potential violations of constitutional protections during investigations and legal proceedings involving the betting sector.

The association specifically highlighted the presumption of innocence, the right to adversarial proceedings and the right to a full defence. It said these principles are fundamental to a democratic state governed by the rule of law and should apply regardless of the investigation or economic sector involved.

ANJL said it recognises the authority of the relevant institutions while also defending constitutional rights and due process. The association expects the cases to undergo review.

It added that any responsibilities should be established through the appropriate legal procedures, with due process and decisions from the competent authorities being respected.