The Federal District Court of the First District in Rio de Janeiro ruled that gambling platforms active in the state can continue to operate without a license from the Rio de Janeiro State Lottery (Loterj).
The decision was made following an appeal by the National Association of Games and Lotteries (ANJL) aimed at overturning a federal ruling that mandated the blocking of operators active in Rio de Janeiro without a Loterj license.
The National Telecommunications Agency (Anatel) was ordered by the court to take "appropriate measures" to block websites of operators who do not have a license from Loterj.
Loterj stated that this decision will help the Rio de Janeiro government combat money laundering and eliminate unlicensed competition against Loterj-certified operators.
However, ANJL's appeal led to a new court ruling by Federal Judge Pablo Zuniga Dourado that "partially" accepted the appeal, suspending his initial decision to grant an injunction and order the blocking of the site.
Zuniga noted that the deadline for federal license applications is December 31, citing it as a reason to overturn the blocking order. ANJL argued that the "transition period" before the deadline means companies need time to organize and submit applications while still operating normally in Rio de Janeiro. Zuniga accepted this argument.
Zuniga's ruling stated: "I partially accept the motion for clarification with injunctive effect to correct this omission and determine the suspension of the part of the decision that granted preliminary relief."
Operators must obtain a license by December 31
In May this year, the Brazilian government issued Normative Instruction No. 827. This regulation clarifies that operators must obtain authorization by December 31, 2024, to operate.
After paying a fee of 30 million reais (4.6 million pounds/5.4 million euros/5.9 million dollars), authorized operators will receive a five-year license.
However, unlicensed operators will face penalties starting January 1, 2025.
Normative Instruction No. 1,233, one of the last regulations to be announced, focuses on penalties for operators who commit illegal acts, such as operating without a license.
Before the sanctioning process begins, fines ranging from 0.1% to 20% of revenues can be imposed, with a maximum limit of 2 billion reais. Non-compliant operators may also be prohibited from holding or applying for a license for up to ten years.
The process will be initiated by the Supervisory and Inspection Secretariat of the Supreme People's Assembly. It will then be handed over to the Sanctioning Actions Secretariat, which will decide on the penalties to be imposed.
Udo Seckelmann, head of gambling and cryptocurrency at Bichara e Motta Advogados, believes the 2 billion reais fine is "too harsh." However, he also thinks it will be an effective deterrent.
"I believe the reason for this is to scare operators into being more cautious and not committing any regulatory violations," Seckelmann told iGB.
Has Loterj exceeded its authority?
Loterj has been criticized this year for allegedly exceeding its influence.
Operators certified by Loterj have been allowed to operate nationwide, while the legal Brazilian market has not yet started. Other state lotteries only approve operators to gamble within state borders.
The Brazilian Institute for Responsible Gaming (IBJR) criticized Loterj's actions, claiming they "clearly violate" federal regulations. The association stated: "Loterj's actions have caused confusion, raised unnecessary doubts, and harmed the regulatory process of the fixed-odds betting industry in Brazil."
André Santa Ritta, deputy attorney at Pinheiro Neto Advogados, believes IBJR's criticism is justified.
"IBJR indeed has a point, their arguments are valid," Santa Rita told iGB. "I have also been involved in these discussions. I do not believe Loterj has the legal basis to allow companies to operate nationwide."
