The debate on the regulation of sports betting and online gaming in Brazil took a significant step. The Chamber of Deputies approved Constitutional Amendment Proposal 18/2025, popularly known as the Public Security PEC, an initiative that redefines the destination for part of the revenue generated by the gaming sector in the country.
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Unlike other legislative initiatives that sought to increase the tax burden on operators, this amendment proposes an internal redistribution of funds already collected, without imposing new tax burdens on the private sector.
The origin of PEC 18/2025 and the role of rapporteur Mendonça Filho
The proposal approved in Brazil is not the original text sent by the Federal Government to Congress. Deputy Mendonça Filho, appointed as rapporteur for the initiative, introduced substantial modifications to the initial document, reorienting the focus of the amendment towards public security as a priority investment area.
With the approval in the Lower House, the text will now move to the Federal Senate for debate and voting. If the Senate introduces changes, the project must return to the House for a new review.
How funds will be distributed: FNSP and FUNPEN as main recipients
The core of PEC 18/2025 establishes that resources from fixed-odds betting and online gaming in Brazil will be channeled into two specific funds:
- The National Public Security Fund (FNSP), which finances police operations, equipment, and crime prevention programs.
- The National Penitentiary Fund (FUNPEN), oriented towards infrastructure and management of the prison system.
This legislative decision responds to a historical demand from the country’s security agencies, which point to a chronic financing deficit in the face of the growth of organized crime.
The gradual increase scheme: from 10% to 30% between 2026 and 2028
The amendment does not apply the maximum percentage immediately. Instead, it establishes a progressive implementation schedule: starting in 2026, 10% of net online gaming resources will be allocated to public security. That percentage will increase gradually until reaching the 30% ceiling set by the constitutional amendment itself.
This mechanism seeks to avoid an abrupt impact on the current distribution of funds and allow the receiving institutions to adapt their budget management structures.
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How the tax base is calculated: what is deducted before distribution
A technical but central aspect of the PEC is the definition of the base on which the percentage destined for public security will be applied. Before calculating the amount to be transferred, the following concepts must be deducted from the total collected:
- Prizes paid to bettors.
- Income tax corresponding to operators.
- Gross profits of the betting houses.
In practice, this means that the calculation base is the net income of the sector, not the gross turnover. This is a criterion that operators have supported in previous stages of parliamentary debate, as it limits the real magnitude of the transfer.
The impact on other institutions and the debate on redistribution
The approval of this amendment is not neutral for all actors in the system. By reserving up to 30% of net gaming income for public security, the volume of funds available for other institutions that currently receive resources from that same source is reduced in equal proportion.
Among the affected areas are social security, the Ministry of Sports, and the Ministry of Tourism, institutions that already had allocations from the regulated gaming sector. The FNSP itself, in fact, already received a portion of those revenues under the current scheme, so the amendment expands and formalizes that allocation at the expense of other budgetary destinations.
The context: Brazil and the expanding regulation of online gaming
Brazil completed the formal regulation process for fixed-odds sports betting in 2024, with the issuance of licenses for national and international operators. Since then, the legislative debate has intensified around the distribution of tax resources generated by a sector that, according to official estimates, moves billions of dollars a year.
PEC 18/2025 is one of the first attempts to redirect those revenues towards areas of high social sensitivity, marking a precedent for how the Brazilian state seeks to capitalize on the formalization of gaming to address structural public financing needs.
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