Tax on betting could expand the illegal market in Brazil, warns the sector.

The Brazilian Chamber of Deputies is debating a bill that would impose a 15% tax on deposits made by bettors on digital platforms. The proposal, called CidBets, is part of the Antifaction project and aims to raise R$ 30 billion from legalized betting sites. The sector warns that the measure could expand clandestine operations in the country, according to a report by CNN Brasil . ( see video )

Proposal anticipates revenue of R$ 30 billion.

The bill establishes a 15% tax rate on deposits made by users on betting platforms. The tax would apply to legalized betting sites, but would be paid by the bettors. The government expects to collect around R$ 30 billion with this measure.

The proposal seeks to generate resources for actions to combat organized crime. Senator Alessandro Vieira (MDB-SE), rapporteur of the project, defends the creation of a stable source of funding. “Today, the funding for this activity, I would say, requires billions of reais for it to be effective and concrete. And this money doesn't exist in the budget. So having a specific, stable channel ensures that you have planning, structuring, and a real fight against crime,” stated Vieira.

The illegal market generates R$ 38 billion.

A study by LCA Consultores indicates that illegal gambling in Brazil generates R$ 38 billion. This amount represents 51% of the country's gambling sector. The regulation of the market has completed one year without significantly reducing illegal operations.

Industry representatives warn that the tax could encourage migration to clandestine platforms. "Since this tax will fall on the betting site, it will be paid directly by the bettor, and in a way that the bettor will be able to clearly identify that the amount of money they send to a legalized betting site is less than the amount of money they send to an illegal betting site," stated an industry expert.

The Colombian experience serves as a warning.

Experts cite the so-called "Colombia effect" as a risk for Brazil. The Latin American country adopted similar taxation and experienced a reduction in the legal market, strengthening clandestine operations. "In Colombia, we have a very clear example of measures equivalent to CidBets with results that were absolutely contrary to what was expected. This was so much the case that this measure did not prosper, it was revoked, and today the market continues without the incidence of this 19% VAT," explained a specialist in betting regulation.

Colombia implemented a 19% VAT tax on the betting sector. The measure was later revoked due to negative results.

The bill is currently being processed in the Chamber of Deputies. There is no date set for a vote on the proposal.