The proposal under discussion in the Senate’s Constitution and Justice Committee (CCJ) establishes a 15% tax on money transfers made by individuals to betting platforms. A new study released by LCA Economic Consulting indicates that this mechanism effectively works as a financial bonus for clandestine platforms.
“By taxing deposits at 15% on a legalized site, the government makes R$100 worth only R$85. On an illegal platform, the same R$100 continues to be worth R$100. By law, this creates an immediate price advantage for sites that operate clandestinely and offer no player protection,” explained André Gelfi, director, board member, and one of IBJR’s founders.
LCA estimates that 51% of Brazil’s betting market operates illegally. This market moves up to R$78 billion (US$14.35bn) per year, with more than half of this volume circulating without paying taxes. By projecting R$8.5 billion (US$1.55bn) in revenue from the new CIDE (Economic Intervention Contribution), the government makes a miscalculation, as it ignores the fact that the levy would apply only to the legal market—which will shrink even further under the measure.
The regulated sector is already preparing for a significant tax burden, expected to contribute R$9 billion (US$1.65bn) in federal taxes and R$600 million (US$110m) in municipal taxes in 2025. In addition to the 12% GGR contribution, the regulated sector already pays several federal and municipal taxes —including PIS, Cofins, and ISS— which together form a substantial base of public funding. Creating a new tax on deposits threatens to cannibalize this existing revenue, reducing the regulated market’s share and expanding illegal operations.
International experience reinforces the warning. In the Netherlands, a tax increase caused the illegal market to surpass the legal one, capturing 53% of bets, according to the technical note “Analysis of the Proposal to Create the CIDE-Bets Tax,” by IBJR and LCA.
In Colombia, taxing deposits resulted in a drop of more than 30% in gross revenue, according to Fecoljuegos (the Colombian Federation of Games of Chance). In Brazil, where the channelization rate (the share of bets placed on regulated platforms versus illegal ones) is estimated at just 49%, the risk is imminent, the technical note on CIDE-Bets states.
André Gelfi stresses the urgency of reversing the scenario. “The Senate needs to evaluate this contradiction. A CIDE created to fight organized crime cannot end up giving crime the greatest commercial advantage in the history of the sector. Penalizing those who operate in the light, with headquarters in Brazil and responsible gaming rules, is a recipe for pushing citizens into the shadows. The path to increasing revenue and protecting consumers is combating illegality, not suffocating legality.”
Source: Poder360
