Note on the Creation of the Cide-Bets

Note on the Creation of the Cide-Bets

The Brazilian Institute for Responsible Gaming (IBJR) recognizes the importance of the ongoing debate in the National Congress on new ways to finance public policies. However, it warns that the creation of the Cide-Bets—by substantially increasing the tax burden on a newly regulated sector—risks producing effects contrary to those intended by lawmakers. As currently designed, the Cide-Bets risks becoming, in practice, a contribution that strengthens the illegal market—the very opposite of its stated purpose. By making legal operations more costly, the measure increases the appeal of clandestine platforms, reinforcing the very market it seeks to combat and weakening the effectiveness of the newly implemented regulation.

A study by LCA Consultoria Econômica highlights conceptual and methodological weaknesses in the proposal: by making legal operations less competitive, the additional contribution encourages bettors to migrate to irregular sites, reduces channelization, weakens tax collection, and increases risks to consumers.

According to LCA, about 51% of the Brazilian betting market still operates illegally, meaning that more than half of all wagers escape any form of taxation. The projection of raising R$ 8.5 billion with the new contribution ignores this structural reality and overestimates the potential results. Moreover, the regulated sector already contributes significantly: in 2025, it is expected to generate approximately R$ 9 billion in federal taxes and R$ 600 million in municipal taxes, in addition to the 12% contribution on GGR—which, in practice, already performs a function similar to a selective tax and directs resources to priority areas, including public security.

International experience shows that excessive tax rates reduce the attractiveness of the regulated market and weaken revenue collection, as seen in the Netherlands. The most recent example is Colombia: the country implemented a 19% VAT on deposits (equivalent to taxing the wagered amount), resulting in an immediate drop of more than 30% in online gross revenue and a consequent reduction in transfers to the health-care system—the original goal of the measure.

In Brazil, where channelization is estimated at only 49%, the risk is even greater. It is essential that the Senate consider the opposite effect: a contribution designed to fight organized crime cannot end up increasing the competitive advantage of illegal operators. A CIDE intended to finance public security cannot, by its design, create incentives for the growth of informality—and this balance is crucial. Penalizing the sector that operates within the law will only strengthen illegality and undermine the outcomes expected from the public policies now under discussion in Congress.