Brazil sets 0.5% selective tax rate for lottery and betting contests

On the evening of Wednesday the 4th, the federal government issued Provisional Measure 1,399/2026 in an extra edition of the official gazette, and the measure sets Selective Tax rates for 2027. Article 7 puts the rate for prognostics contests, which is what concerns the lottery and betting sector, at 0.5%. Article 19 delays the measure's effects until 2 February 2027 because of the noventena.

The text of the measure does not name lotteries, betting or fantasy sports. It refers instead to article 244 of Complementary Law 214/2025, which covers all lottery modalities, fixed-odds bets, sweepstakes, turf bets and other bets, whether physical or virtual. The sole paragraph of that article extends the regime to fantasy sports. The government's announcement cited Mega-Sena, Lotofácil and Loteca as examples.

According to the report, the reference to article 244 makes clear that fixed-odds bets stay inside the tax's scope. The report notes that the prohibition in Measure 1,394/2026 left Complementary Law 214 unchanged. State lotteries may still run their other modalities, but fixed-odds bets are no longer allowed to them. Those remaining modalities are the ones that start paying the Selective Tax in 2027.

The Selective Tax is not charged on the amount wagered. Its base is the own revenue of the entity running the activity: the proceeds, less prizes paid and the allocations required by law to public bodies, funds and other beneficiaries. Under the tax reform, the Selective Tax is also part of the calculation base for IBS and CBS in the prognostics contests regime.

Law 14.790/2023 states that fantasy sport is not a lottery modality, a commercial promotion or a fixed-odds bet. Under the new measure, fantasy platforms that earn revenue will pay the same 0.5% on their own revenue from February. Proposals in Congress would remove fantasy sport from the tax.

The regime covers only the coming year. Under article 15, the Executive has until 31 May 2027 to send Congress a bill with definitive rates that would apply from 1 January 2028. Measure 1,399 itself also needs a vote in Congress if it is not to lapse. Article 16 adds a compensation mechanism: the estimated Selective Tax revenue reduces the CBS reference rate in 2027.

The report names three paths for fixed-odds betting to come back in 2027: a Supreme Court (STF) decision in the cases against Measure 1,394, which Justice Luiz Fux is handling, Congress rejecting the measure, or the measure lapsing. Among the charges listed is a GGR contribution of 14% in 2027, reaching 15% in 2028. The TCU put the reference rate at 11.3%, a figure that still awaits the Senate, which has until 15 December to set it. Taking the official 2025 GGR of R$36.9bn as its base, the report estimates that 0.5% would bring in about R$159m over a full year.