Brazil’s licensed gambling industry is grappling with significant challenges following the recent approval of a 15% tax on player deposits by the Senate plenary. This decision has intensified concerns about the potential rise in illegal gambling activities.
On Wednesday, the Brazilian Senate approved the Antifaction Bill, which introduces this new tax measure. The bill, passed with unanimous support (64-0), also increases penalties for criminal organizations. However, due to amendments, the bill will return to the Chamber of Deputies for further analysis before awaiting the President’s approval.
The newly introduced CIDE-Bets tax is expected to generate approximately BRL30 billion ($5.5 billion) annually for the National Security Public Fund. Additionally, the bill reinstates the RERCT Litígio Zero Bets, requiring operators to pay a 15% retroactive tax on gambling activities from 2018 to 2024, in preparation for regulation.
Concerns are mounting within the Brazilian gambling sector regarding the potential impact on the illegal market. Industry insiders warn that the new tax could drive players towards unregulated platforms. Colombia’s recent experience serves as a warning; after a 19% value-added tax on player deposits was introduced there in February, the Colombian Federation of Gaming Entrepreneurs (Fecoljuegos) reported a 30% drop in online gross gaming revenue by April. “The VAT has made the legal gaming market less attractive, prompting players to turn to illicit options where taxes and controls are absent,” Fecoljuegos noted.
The Brazilian Institute of Responsible Gaming (IBJR) is voicing similar concerns, suggesting that up to 51% of the market already operates outside the law. They warn that the new tax could empower illegal operators with “the most significant competitive advantage the market has ever seen.”
The IBJR also questions the sustainability of the licensed sector, especially considering the retrospective tax requirements. They argue that taxing deposits at 15% effectively devalues legal transactions. “When the state imposes a 15% tax, BRL100 is only worth BRL85 in compliant companies, whereas in the black market, the full BRL100 retains its value. This policy inadvertently encourages migration to illegal markets,” they stressed.
Furthermore, the IBJR criticizes the financial assumptions underpinning the CIDE-Bets tax, which anticipates annual revenues of BRL30 billion from a market generating approximately BRL36 billion. They argue this projection is “mathematically impossible” and could render the legal market unsustainable.
In a related development, the proposed gradual increase in gambling taxes in Brazil is experiencing delays. Nineteen politicians have requested further analysis of PL 5,473/2025 by the Senate plenary, stalling its progress. The bill proposes increasing the current 12% tax rate to 15% in 2026-2027 and reaching 18% by 2028. Although it received approval from the Senate’s Economic Affairs Committee, the appeal has temporarily halted its advancement.
The delay suggests that the bill may not move forward before the government’s recess later this month, adding to the uncertainties facing Brazil’s gambling industry.
As these legislative developments unfold, industry stakeholders are left contemplating the potential repercussions on both regulated and unregulated markets. While some argue that stricter tax measures are necessary to combat illegal gambling and enhance public funds, others caution that such policies might inadvertently strengthen the very market they aim to curb.
The debate over gambling regulation and taxation in Brazil reflects broader concerns about balancing fiscal objectives with market sustainability. As the industry awaits further legislative decisions, the emphasis remains on finding strategies that support economic growth while ensuring robust regulation and player protection.
Ultimately, the outcome of these legislative measures will have far-reaching implications for Brazil’s gambling landscape, influencing regulatory practices and market dynamics for years to come.
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