Brazil Reroutes Gambling Taxes: More Funds for Federal Police

The Brazilian gambling industry continues to be a hot topic, but with a surprising twist. A legislative proposal that redefines the distribution of betting tax revenues has passed the Senate. Now, only President Luiz Inácio Lula da Silva's approval is needed, which could funnel significantly more funds to the Federal Police. This promises increased resources for law enforcement.

On Wednesday, July 8, the Senate Plenary gave the green light to a provisional measure that significantly alters how betting revenues are distributed. The core beneficiary of this move is the Fund for the Equipping and Operationalization of Federal Police Core Activities (Funapol). This represents a major step for Brazil's internal security.

Numbers and facts

Funapol, which equips and finances the operations of the Federal Police, currently receives 0.5 percent of gambling tax revenues. This proportion will increase progressively. For 2026, an increase to 1 percent is planned. In 2027, the share will rise further to 2 percent. From 2028 onwards, Funapol is set to receive a full 3 percent of gambling tax revenues. According to reports from Senado Notícias, this additional capital will be specifically ring-fenced to fund and support essential healthcare expenses for federal police officers. The bill now rests with President Lula da Silva, who holds the executive power to sign the measure into law.

This increase for Funapol is part of broader fiscal adjustments in Brazil. As early as December 2025, Complementary Bill No. 128/2025 was approved by the National Congress. This bill provided for a linear 10 percent reduction in federal tax incentives. At the same time, it increased taxation for strategic sectors and, particularly relevant for our industry, the taxation of fixed-odds betting. "The proposal increases taxation on fixed-odds betting operators, reinforcing the government's strategy of combining market regulation with revenue generation in the newly regulated betting sector," stated the BPC Partners' newsletter in January 2026.

The tax on the gross revenue of online betting companies was initially planned to rise from 12 to 18 percent, according to a draft published in June 2025. This was outlined in Provisional Measure (PM) No. 1303/2025, which, however, expired on October 8, 2025, without being converted into law. A later vote in the Senate in December 2025 then approved a slower increase, from 12 percent to 13 percent in 2026, 14 percent in 2027, and finally 15 percent from 2028. This amendment was approved by a vote of 62 to 6. Half of this increase is intended for social security, the other half for healthcare initiatives.

Background

The Brazilian government under President Lula da Silva is pursuing a clear strategy to increase state revenues. This occurs in a context where the country is implementing a far-reaching tax reform. In 2026 alone, the government expects additional revenues of BRL 3.2 billion from taxes on betting companies and fintechs. The gambling industry in Brazil is growing rapidly; iGaming revenues recently surpassed BRL 6 billion. Given such sums, it is understandable that the government is trying to capture a larger share of these revenues for public purposes.

The reallocation of tax funds to the Federal Police also indicates the priorities of Brazilian politics. Strengthening law enforcement agencies and the healthcare system for their employees is to be directly financed by the growth of the gambling industry. This shows that the gambling market is considered not only a source of income but also an instrument for funding societal needs.

Why it matters for German players

For German players who play exclusively in GGL-licensed casinos, developments in Brazil have no direct impact. The rules of the German Interstate Treaty on Gambling 2021 (GlüStV 2021) are authoritative in Germany. German online providers must be on the whitelist of the Joint Gambling Authority of the Federal States (GGL) and comply with strict regulations. These include a stake limit of one euro per spin on online slots and a monthly deposit limit of 1,000 euros, controlled by the central monitoring system LUGAS.

The GGL places great emphasis on player protection and combating illegal gambling. This ensures a safe and regulated environment. German regulations and the disbursement of tax money flow into the German budget and are not earmarked for specific authorities like the Federal Police. They are typically used in the general state budget. Visiting a casino in Malta or Curaçao, however, remains illegal in Germany and offers players no legal protection. Therefore, it is essential to rely on the GGL whitelist.

What it means for GGL-licensed casinos

For casinos holding a GGL license, the situation in Brazil primarily means that other jurisdictions are finding their own ways of regulation and taxation. German operators are already subject to a strict regime aligned with the GlüStV 2021. This includes high compliance requirements, technical standards, and player protection measures. Taxation in Germany is also clearly regulated and serves to finance the public budgets of the states.

While tax increases and fund distribution are politically negotiated in Brazil, the framework conditions for GGL casinos are stable. The GGL continuously works to make the market safer and fairer. These developments show a global trend towards stricter regulation and higher taxation of gambling markets to generate state revenue. The way these revenues are used varies greatly from country to country.

"The proposal increases taxation on fixed-odds betting operators, reinforcing the government's strategy of combining market regulation with revenue generation in the newly regulated betting sector." – BPC Partners, Newsletter January 2026