Controversy over Brazil’s betting sector influences São Paulo gubernatorial contest

(AsiaGameHub) –   The Partido dos Trabalhadores (PT) administration in Brazil has appointed Dario Durigan as its new Finance Minister. He will oversee fiscal and tax policy for the continent’s biggest economy under President Luiz Inácio Lula da Silva.

This Friday, Brazil’s official gazette revealed extensive changes to the Ministry of the Economy and Finance (MEF), prompted by Fernando Haddad‘s choice to campaign for Governor of São Paulo state.

This concludes Haddad’s twenty-year role as a prominent member of Lula’s PT Party, where he served in several governments and was most recently the designer of its fiscal and taxation reform plans.

Rumors had grown in recent months that Lula would support ‘Paulista Haddad’, a native of São Paulo, to run for governor of his home state—a crucial political arena for the PT’s national ambitions.

São Paulo is seen as an essential victory in this year’s elections. The PT aims to defeat the sitting governor, Tarcísio Gomes de Freitas of the Republicanos party, a major right-wing ally of ex-president Jair Bolsonaro, who currently commands a solid majority in the state.

Although Haddad begins the contest as a long shot, his run is anticipated to boost his national standing. Campaigning under the PT flag in São Paulo, he will present himself as Lula’s selected candidate to spearhead the government’s electoral efforts and strategy across Brazil’s 26 states.

Dramatic shifts

Durigan, the former Executive Secretary of the MEF, assumes the position at a pivotal time for Brazil’s economy. He is projected to uphold continuity on “fiscal discipline and tax reform” as the country enters its electoral period this year.

In 2026, the PT party’s economic policies will likely face challenges from external factors, such as global energy disruptions, ongoing inflation threats, and trade tariffs enacted by the Trump administration.

Haddad resigned from the ministry after managing a substantial transition period for the Treasury, guaranteeing the government’s fiscal policy matched PT priorities in the wake of the Bolsonaro government’s economic measures.

As Finance Minister, Haddad was instrumental in creating the Brazil Bets Law (No. 14,790/2023), which established the regulatory structure for online gambling starting 1 January 2025.

However, both Haddad and Lula have grown more disapproving of the betting system within its inaugural year. They characterize online gambling as an exploitative sector that preys on Brazilian consumers and weakens broader economic goals.

In late 2025, Haddad advocated for doubling the tax on licensed betting operators to 24%, a plan that was derailed by PT ministers in Congress due to opposition from coalition and bloc allies. This failure compelled a rewrite of key elements in the PT government’s 2026 Budget, which Lula reluctantly approved.

Criticism of the Bets framework has become part of a wider political and fiscal story leading up to Brazil’s general election on 4 October. Lula has already started campaigning for a potential fourth presidential term, escalating his rhetoric about raising taxes on “banks, betting, and billionaires”—encapsulated in the PT’s “tres-Bs” slogan.

Thus, the change in leadership at the Finance Ministry points not just to steadiness in economic management, but also to a wider realignment of Brazil’s political scene, as tax policy, regulatory course, and election tactics become more closely linked before a decisive national vote.

Currently, Lula is escalating his criticism of the Bets system, continuing to urge Congress and the Senate to alter its framework—mainly via higher taxes, increased licensing fees, and tougher advertising limits.

Legislators have already shown their intent, with the Senate consenting to increase betting taxes to 18% by 2028. Meanwhile, discussions have temporarily halted the implementation of the CIDE ‘technical services tax’, which proponents want to levy on the deposits of betting license holders.

Concurrently, suggestions concerning gambling advertising are still pending, varying from complete prohibitions to more specific limitations.

Despite 2026 being an election year, the Brazil Bets system is predicted to see more changes, as promised by Congress and the Senate. Yet, the extent and final form of these reforms are still undecided, casting doubt on the regime’s long-term path.

Who will battle Lula?

The electoral landscape is still unclear regarding which right-wing candidate will face Lula. With ex-President Bolsonaro under house arrest and barred from running, Brazil’s right wing has not yet united behind a sole opponent.

Rio Senator Flávio Bolsonaro, Jair’s son, has risen as a frontrunner after obtaining his father’s backing to head the Liberal Party (PL) ticket—though doubts persist about his campaign abilities.

Rifts exist across the conservative field, with other appeals endorsing Tarcísio de Freitas as a ‘unified right-wing candidate’ or the unexpected option of Michelle Bolsonaro.