Brazilian sports betting faces a new 15% deposit tax

• Senate unanimously approves 15% CIDE-Bets tax on customer deposits through anti-faction legislation.
• Industry warns measure will drive bettors to illegal operators, representing 51% of Brazil’s market.
• Bill returns to the Chamber of Deputies for analysis after Senate modifications.

Brazil’s regulated betting sector faces another taxation challenge after the Federal Senate unanimously approved a 15% tax on customer deposits on 10 December.

The levy, known as CIDE-Bets, forms part of the Anti-Faction Bill aimed at combating organised crime, but industry representatives warn it could achieve the opposite effect by strengthening the illegal market.

The measure passed by a vote of 64-0 and will now return to the Chamber of Deputies for further analysis, as senators modified the original text approved by the lower house in November.

If a customer deposits R$100, only R$85 will land in their betting account under the new framework.

Tax structure and revenue projections

The Contribution for Intervention in the Economic Domain (CIDE) represents a tax traditionally applied to payments made by Brazilian firms to non-Brazilian entities for certain services. Senator Alessandro Vieira, rapporteur for the bill, adapted this mechanism specifically for the online betting market.

Central Bank projections estimate the CIDE-Bets tax could generate approximately R$30 billion annually. These funds will be directed to the National Public Security Fund to finance improvements in infrastructure and integrated security forces, with deductions for collection charges.

The deposit tax arrives shortly after Brazil’s Senate Economic Affairs Committee approved a phased increase in the gross gaming revenue (GGR) tax from 12% to 18%. That measure establishes a 15% rate for 2026-2027, rising to 18% from 2028 onwards.

Industry warns of market disruption

The Brazilian Institute for Responsible Gaming (IBJR), representing 75% of licensed operators, including Bet365, Betano, Betsson, Entain and Flutter, strongly condemned the approval.

“The IBJR vehemently repudiates the approval of the CIDE-Bets tax by the Senate’s Constitution, Justice and Citizenship Committee, considering it a measure that will strengthen organised crime,” the organisation stated.

“Under the pretext of financing public security, the text commits a historical error: it gives clandestine platforms – many financed by criminal factions – the greatest competitive advantage the market has ever seen.”

The institute highlighted that by taxing deposits at 15%, the state decrees that R$100 is worth only R$85 in companies that follow the law. In the illegal market, however, the same R$100 retains its full value, creating a direct incentive for migration to unregulated platforms.

According to research from LCA Consultoria Econômica, the illegal Brazilian betting market totals approximately R$78 billion, with 51% of betting companies operating without a licence.

The IBJR argues the new tax is based on flawed financial projections that claim to collect R$30 billion annually from a formal market generating around R$36 billion, rendering the mathematics unviable.

International precedents raise concerns

The National Association of Games and Lotteries (ANJL) emphasised that no country has successfully implemented taxation on bettor deposits.

“When users notice any kind of taxation on deposited amounts, they migrate to clandestine operators,” the organisation warned.

Plínio Lemos Jorge, president of ANJL, stressed the fundamental issue with the tax structure:

“The betting operator acts as a custodian of the client’s funds. The money, even after being deposited on the platform, remains the bettor’s property. Taxing this stage of the operation would be the same as charging a tax for a citizen to deposit their money into a bank account or load a prepaid card – a dangerous precedent without parallel in the Brazilian tax system.”

Colombia provides a cautionary example. In February 2025, the country introduced a 19% value-added tax on player deposits. By April, the Colombian Federation of Gaming Entrepreneurs (Fecoljuegos) reported online GGR had dropped 30% since implementation.

“The implementation of VAT has made the gaming experience in the formal market more expensive, creating an incentive for players to seek unregulated alternatives, where no taxes or controls are applied,” Fecoljuegos explained.

Retrospective taxation compounds concerns

The Anti-Faction Bill also reintroduced the RERCT Litígio Zero Bets, requesting operators pay a 15% retroactive tax on their gambling activities between 2018 and 2024, covering the period before regulation commenced on 1 January 2025.

The retrospective tax includes a 100% penalty on the increase in assets verified until 31 December 2024.

The IBJR expressed concern about sector sustainability given the possibility of retrospective tax collection:

“The measure is based on a non-existent financial premise. It projects collecting in taxes almost equivalent to the entire revenue of the regulated sector, which is mathematically impossible and renders formal economic activity unviable.”

Market context and timing

Brazil’s regulated betting framework only began taking shape in late 2023 when President Luiz Inácio Lula da Silva signed Decree No. 14,790, establishing rules for licensed operators. The market officially launched on 1 January 2025, making it less than one year old.

According to federal data, from January to September 2025, betting operators generated approximately R$28 billion in GGR, from which the government collected around R$3.3 billion in taxes and levies.

The sector already faces a complex tax burden, including 12% on GGR, plus PIS, Cofins, ISS, IRPJ and CSLL. This results in an estimated total consumption tax load of approximately 25-35%.

André Gelfi, Director General of the IBJR, warned that tax conflicts will continue into 2026 and beyond:

“The game has barely started, and we are already talking about raising taxes as if it were completely natural. It isn’t. Brazil still operates with an illegal market that represents more than half of activity. Any new levy imposed today only widens that imbalance.”

Player protection developments

On the same day the Senate approved the Anti-Faction Bill, Brazil’s betting regulator launched the country’s nationwide Centralised Self-Exclusion Platform. Brazilians can voluntarily block themselves from all accounts with betting sites, with their CPF (taxpayer ID) blocked from new registrations and targeted advertising.

Ariadne Fonseca, Director of Economic and Tax Affairs at the Secretariat of Social Communication of the Presidency of the Republic (SECOM), described the platform as “a milestone in protecting bettors and consolidating a regulated betting market in Brazil.”

The effectiveness of player protection measures remains uncertain whilst the illegal market thrives. As long as Brazil hosts a vast network of unlicensed betting houses, consumers facing problem gambling will have outlets regardless of self-exclusion status.

Legislative path forward

The bill now returns to the Chamber of Deputies, where Deputy Guilherme Derrite will serve as rapporteur. He previously handled the version approved by the Chamber in November. Deputies will assess whether to accept the modifications suggested by senators.

The Parliamentary Front for the Free Market opposed the CIDE-Bets creation, warning the new tax could strengthen the illegal betting market. International experience cited includes the Netherlands, where the illegal market surpassed the regulated sector for the first time following a tax hike.

Bernardo Cavalcanti Freire, partner at Betlaw and legal consultant for ANJL, expressed concern about market viability:

“Increasing taxation would contribute to making the fixed-odds betting sector unviable in Brazil. It would send a very serious signal of legal uncertainty to the market, scaring away foreign investors and contributing to the unlicensed sector.”

Government justification

Senator Alessandro Vieira defended the measure, explaining the central objective is to confront factions and militias that exert armed control over communities.

“Everything was built with the goal of confronting one of the great challenges of our time, which is the escalation of organised crime in the country’s territory and economy,” Vieira stated.

“Highly satisfactory,” Justice Minister Ricardo Lewandowski said, praising the opinion and supporting the government’s approach to financing public security through betting revenue.

The Anti-Faction Bill establishes harsher penalties for criminal organisations, with prison sentences ranging from 15 to 30 years for joining or financing criminal factions. Penalties can be doubled for those exercising command positions.

Industry outlook

Looking ahead to 2026, Gelfi, Director General of the IBJR, believes it will be a defining year for whether Brazil chooses a sustainable regulatory path or repeats mistakes from other jurisdictions.

“The government should be strengthening the regulated ecosystem, not weakening it with proposals that have already failed internationally. Only once the illegal market is significantly reduced can Brazil discuss higher taxation without putting the regulated system at a disadvantage.”

The sector remains vulnerable to what Gelfi describes as “policy experiments” that may score short-term political points but undermine long-term channelisation and tax stability.

“Brazil must decide whether it wants a competitive, regulated market – or a fiscal battleground that ultimately empowers the very operators it is trying to eliminate.”

With Brazil’s betting regulation approaching its first anniversary on 1 January 2026, the combination of the 18% GGR tax and 15% deposit tax creates an unprecedented fiscal environment for a market still competing against a dominant illegal sector.

If this dual taxation strategy can achieve its stated goals of funding public security whilst maintaining a viable regulated market remains to be seen, and this uncertainty defines the central challenge facing Brazil’s betting industry in 2026.