Brazil’s presidential candidates are being asked to understand the betting market before they regulate it

Fellipe Fraga says Brazil’s betting debate is drifting toward familiar mistakes: treating regulated operators as if they were the only market, and discussing taxes as if the sector only paid 13% on GGR (gross gaming revenue). For PSPs, acquirers, and banks, the point is blunt: policy that makes the legal route too expensive or too restricted does not kill demand; it pushes volume to the illegal side.

1. Fraga, who says he has worked in the sector for seven years, is addressing candidates for Brazil’s Presidency ahead of the country’s election debate on bets. His request is simple enough: before proposing new rules, understand how the market actually works. In other words, don’t write policy on top of a misunderstanding.
2. On taxation, he argues that the common “13% tax” line is incomplete. Those 13% are a specific allocation calculated on GGR, meaning betting revenue after player winnings are paid out. Licensed companies also face Brazilian business taxation, including PIS/Cofins, ISS, IRPJ and CSLL, plus a supervisory fee and the cost of operating under licensing, certifications, systems, compliance controls, AML (anti-money laundering), responsible gambling, and other obligations.
3. He also notes that the specific charge on GGR will increase gradually in the coming years. So the real policy question is not whether the sector is lightly taxed; it is whether the total burden remains compatible with a legal product that can compete with unlicensed operators.
4. That competitive gap is the core issue. Fraga says a regulated operator in Brazil does not compete only with another licensed company; it also competes with the illegal operator. If taxes, restrictions, and costs become too high for licensed firms, the bettor does not necessarily stop betting. The bettor moves to another site.
5. The illegal site, as he lays it out, pays none of the 13%, no license fee, no comparable taxes, and none of the Brazilian rules on responsible gambling, AML, advertising, or consumer protection. The result is a classic policy trap: the more the law-abiding operator is burdened, the stronger the relative position of the operator that ignored the law in the first place.

For high-risk payment providers, the message is practical rather than philosophical. Brazil’s legal betting market is being shaped not just by licensing rules, but by the gap between regulated and unregulated acceptance. If the legal channel becomes too expensive or too narrow, volume does not disappear; it migrates, and the payment stack follows it.