Senator Rogério Carvalho has removed the provision that would have redirected 30% of betting tax revenue to the National Public Security Fund and the National Penitentiary Fund.
Carvahlo is the rapporteur for Brazil's Public Security constitutional amendment.
The bill was approved by the Chamber of Deputies and President Luiz Inácio Lula da Silva has tied the recreation of the Ministry of Public Security to its passage in the Senate.
The betting revenue provision faced resistance because it would have cut funding to other sectors that currently receive a share of betting tax revenue, including sport.
Members of Brazil's Olympic movement traveled to Brasília this week to lobby against the funding reduction, with the Brazilian Olympic Committee opposing the bill, estimating the change would have cost sport around BR500m ($97.9m) annually, funding it argued supports programs with a preventive role in reducing youth violence and crime.
Flamengo is also among the sports organizations tracking the provision closely. The club argued it supported strengthening public security funding but not at sport's expense, noting that betting tax revenue has funded sport since the sector was regulated.
Carvalho kept other elements of the version approved by the Chamber intact, saying his report preserved the proposal's core structure.
Provisions retained include tougher penalties for members of criminal organizations, modernization and reorganization of police structures, new investment in the prison system, and a fixed funding source dedicated to crime-fighting efforts going forward.
The bill also still grants constitutional status to Brazil's Unified Public Security System and formally enshrines the National Public Security Fund and National Penitentiary Fund in the constitution, two of the amendment's central structural changes.
The report also maintained the provision allowing municipalities to create municipal police forces
