The Mayor of Belo Horizonte, Álvaro Damião, submitted a bill on July 24, 2025, to the City Council proposing a significant reduction in the municipal betting tax (ISSQN) from the current 5% to the legal minimum of 2%, aiming to position the capital of Minas Gerais as a competitive hub for online betting operators.
Currently, the municipal government projects a minimal revenue loss of approximately R$11,685 (US $2,100) for the balance of 2025. However, officials anticipate that the inauguration of new operators in the market could generate up to R$2.8 million (US $504,000) in annual ISS revenue—even with the lower rate—thanks to expansion of the taxpayer base.
Belo Horizonte joins other Brazilian cities—like São Paulo, Porto Alegre, Barueri, and Recife—that have adopted similar fiscal incentives to attract corporate investment in the rapidly growing regulated betting sector.
Yet the initiative has faced swift pushback. The City Council has already received over 40 information requests, and a public hearing is scheduled for August 26 to examine social risks, advertising regulation, consumer protection, and public health policies in relation to gambling addiction.
Councilors Wagner Ferreira (PV) and Bruno Pedralva (PT) have questioned whether the expected economic returns—such as job creation and revenue growth—justify the social costs associated with expanded gambling, including the potential rise in ludopathy, family debt, and psychological harm. Both have also introduced counter-legislation proposing bans on gambling advertising and implementing a dedicated mental health policy for gambling-related disorders.
Critics argue the proposal risks catalyzing a municipal-level fiscal race, particularly in the absence of Brazil’s pending tax reform. Experts caution that the emergence of a unified tax system (IBS) by 2029–2032 could render such local incentives obsolete and may call for a more nuanced policy stance during the reform transition.
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For prospective gaming companies evaluating market entry in Brazil, Belo Horizonte’s move reflects a broader trend: municipalities offering reduced tax burdens to attract licensed iGaming platforms ahead of federal standardization. Whether the initiative yields long-term gains—or ignites regulatory clash—will depend heavily on how the council finalizes the ISS bill and integrates safeguards for vulnerable communities.
