Operators in Brazil will avoid the 15% deposit tax initially agreed by the Senate at the back end of last year after the Brazil Chamber of Deputies removed the clause from its Antifaction Bill.
The bill had been approved in its original version by senators last year, which would have seen stricter penalties for criminal organizations and CIDE-Bets, which equates to a 15% tax on player deposits applied to licensed platforms.
However, Article 14, the clause that called for a tax on wagering deposits, has now been removed.
Article removal necessary to progress bill, said Speaker of the House
House of Representatives Speaker Hugo Motta had said Article 14 must be removed so that “the text can be voted on without the wider disagreements of the previous vote.” The bill was then approved and now goes to President Lula da Silva for ratification.
The move has been met with fierce criticism from opponents to Brazil’s betting industry. Otoni De Paula, federal deputy representative and a pastor, didn’t hold back.
He told his colleagues in the house: “Betting, in this past year alone, moved BRL30 billion monthly, BRL360 billion annually. Ladies and gentlemen, do you know the estimated GDP of São Paulo? BRL388 billion. Betting drives São Paulo’s GDP. And now this House wants to give a gift to betting. Anyone who votes in favour of this is voting for the betting lobby.”
Jandira Feghali, a Member of the Chamber of Deputies of Brazil, agreed, adding: “We need to tax betting. Anyone who doesn’t want to tax it is in favour of organised crime.”
Original proposal widely rejected by Brazilian betting industry
Brazil’s proposed 15% levy on betting deposits drew sharp criticism from licensed gambling operators, who argued the measure was unlike any conventional betting tax and risked distorting the country’s newly regulated market. The proposal would have applied a flat rate to funds transferred by individuals into fixed-odds betting accounts before any wager is placed.
Unlike traditional gambling taxes, the levy would not be applied to bets placed, gross gaming revenue (GGR), or player winnings. Instead, the taxable event would occur the moment a deposit is made. That means the charge would apply regardless of whether a player ultimately gambles the funds, wins, loses or withdraws the money without placing a bet.
Industry analysts said the distinction is critical. Deposits are not considered revenue for operators, who hold player balances in custody until wagers are placed. Under Brazil’s existing framework, companies are already taxed on GGR, which is calculated as stakes minus payouts, along with corporate and indirect taxes. By targeting the full value of deposits rather than the smaller share operators retain, critics argued the proposal would stack a new layer of taxation onto funds that do not represent earnings.
From a commercial standpoint, operators contend the approach would have fundamentally altered the economics of the business. A GGR tax fluctuates with performance, rising and falling with actual betting activity. A deposit tax, by contrast, would apply regardless of usage, creating costs even when no gambling occurs. That structure, companies say, made the proposal far more disruptive and unpopular than traditional betting taxes.
Study shines light on illegal gambling in Brazil
The news comes as a study in Brazil revealed the illegal betting market could be as high as 51%. Speaker Motta had been presented with evidence by the Esfera Institute for TMC and coordinated by Luís Fernando Massonetto, a professor at the University of São Paulo.
The report estimates between R$26 billion and R$40 billion ($5.2 billion–$8 billion) is generated annually in the illicit market, costing the state up to R$10 billion ($2 billion) a year in lost tax revenue.
The study argues Brazil’s regulatory framework may be creating market distortions, saying high compliance costs for licensed operators widen the gap with unlicensed sites that can offer better odds and fewer restrictions. Citing Locomotiva Institute data, it adds that 78% of bettors struggle to identify whether a platform is legal, with many illegal operators mimicking authorised brands.
The report was particularly critical of the Senate-approved CIDE-Bets measure, warning that higher taxation in a digital market could accelerate migration to offshore platforms.
Pointing to examples in Colombia and Belgium, the authors say excessive taxes and regulatory burdens have at times fuelled black market growth rather than boosting revenue or reducing harm, cautioning that policies driven mainly by fiscal goals could undermine Brazil’s regulated market.
