The action of six states and the Federal District against articles of the sports betting law is under the Supreme Federal Court, supervised by Minister Luiz Fux. The entities point out restrictions regarding local operation and inhibition on advertising. In an article for Lei em Campo, the lawyer specialized in regulation, Gabriel Quiliconi, points out the conflicting views between the parties and that the resolution of the dispute will be a landmark that will define the direction of the segment in Brazil.
Analysis of the implications regulatory and autonomy of the estates
Brazil is facing a new chapter in the regulation of lotteries, specifically in sports betting, with the Direct Action of Unconstitutionality (ADI) 7640[1] under review by the Supreme Federal Court (STF), under the supervision of Minister Luiz Fux.
Context of the dispute
This action was triggered by the opposition of the states of São Paulo, Minas Gerais, Paraná, Acre, Mato Grosso do Sul, Rio de Janeiro, and the Federal District. They specifically question § 2º and the phrase “and advertising”, contained in § 4º, both of article 35-A of the Federal Law No. 13.756[2], dated December 12, 2018, as amended by Federal Law No. 14.790, dated December 29, 2023.
The contested sections define a licensing model that restricts each sports betting operator, or companies belonging to the same economic group, to receive authorization in only one State or the Federal District. Additionally, they impose limitations on advertising that crosses state borders, a situation that has raised issues of conflict related to autonomy and equality among the federative entities.
Conflicting views and cooperation
The market for sports betting in Brazil is undergoing a period of significant regulatory changes, reflecting various perspectives on the best way to manage the sector.
A notable example of these efforts is the initiative of the Ministry of Finance, which formed a working group within the National Council of Fiscal Policy (Confaz) with the goal of avoiding a fiscal war among the states[3].
This group works to unify the rules for state authorizations for sports betting companies, seeking to balance local needs with national policies, although they face criticism that such measures may limit regional autonomy in favor of excessive centralization.
Currently, there is variability in state policies; for example, the State of Rio de Janeiro allows betting houses to obtain licenses that, in theory, enable operations at a national level, an approach that contrasts with more severe restrictions in other states.
ADI 7640 is a reflection of this dynamic, representing a significant movement of the states to question and potentially reform the norms established at the federal level.
Historic decisions of the STF and expectations for ADI 7640
Historically, the STF has already addressed similar issues in the Allegations of Non-Compliance with a Fundamental Precept (ADPFs) 492[4] and 493[5], allowing the states to manage their own lotteries. The 2020 decision reaffirmed that, although the Union has exclusive legislative competence over lotteries, this does not exclude the possibility of state management. Observing the history of decisions of the STF, one can speculate on the possible outcome of ADI 7640 in terms of decentralization.
The need for regulation federal
Based on these disputes and collaborations, an argument arises for the need for federal regulation that can harmonize the rules, offering stability to the sector and preventing excessive fragmentation.
In this regard, the Secretariat of Prizes and Bets linked to the Ministry of Finance, has been making continuous efforts to comply with the regulatory agenda of the sector, defined by the SPA/MF Ordinance No. 561, dated April 8, 2024[6].
An example is the publication of SPA/MF Ordinance No. 827, dated May 21, 2024[7], which establishes detailed rules for obtaining authorization for the commercial exploitation of sports betting companies throughout the national territory. This ordinance defines the legal, fiscal, labor, integrity, economic-financial and technical qualification requirements that legal entities must meet to obtain authorization, as well as the deadlines and administrative procedures.
Preparation and adaptation to the new regulatory scenario
As Brazil navigates the turbulent waters of sports betting regulation, ADI 7640 represents not just a legal challenge, but also an opportunity to redefine the future of the sector. This moment requires legislation that not only balances the interests between the states and the Union, but also promotes a stable and predictable regulatory environment.
Preparation and adaptation to the new regulatory scenario should be priorities for all parties involved. Collaboration among companies, regulators, and the government will be essential to develop a sports betting market that is fair, competitive, and responsible. This requires an open and ongoing dialogue, where all stakeholders contribute to shaping the policies that will govern the sector.
The complexity of this market cannot be underestimated and, therefore, the need for rigorous regulatory vigilance and strategic planning is more relevant than ever. It is imperative that operators, investors, and regulators are engaged and proactive, ensuring that regulation evolves in a way that protects public interests without restricting the growth potential of the sector.
The resolution of ADI 7640 will be a decisive milestone for the future of sports betting in Brazil. Depending on the outcome, it may establish a significant precedent for the autonomy of the states in managing their own lotteries and, at the same time, define the reach of federal regulatory influence. The sector's ability to adapt and thrive under the new regulation will determine its long-term success in the global scenario.
[1] BRAZIL. Supreme Federal Court. Initial Petition of ADI 7640. Available at: <https://redir.stf.jus.br/paginadorpub/paginador.jsp?docTP=TP&docID=776633441&prcID=6917578>. Access on: May 20, 2024.
[2] BRAZIL. Law No. 13.756, dated December 12, 2018. Available at: <https://www.planalto.gov.br/ccivil_03/_ato2015-2018/2018/lei/L13756.htm>. Access on: May 20, 2024.
[3] ABEL, Victoria; OLIVEIRA, Eliane. “‘Bets’: To avoid fiscal war, Finance wants to convince states to unify rules of online betting.” O Globo, 2024. Available at: <https://oglobo.globo.com/economia/noticia/2024/05/24/bets-para-evitar-guerra-fiscal-fazenda-quer-convencer-estados-a-unificar-regras-de-apostas-on-line.ghtml>. Access on: May 27, 2024.
[4] BRAZIL. Supreme Federal Court. Judgment of ADPF 492. Available at: <https://portal.stf.jus.br/processos/downloadPeca.asp?id=15345265193&ext=.pdf>. Access on: May 20, 2024.
[5] BRAZIL. Supreme Federal Court. Judgment of ADPF 493. Available at: <https://portal.stf.jus.br/processos/downloadPeca.asp?id=15345265231&ext=.pdf>. Access on: May 20, 2024.
[6] BRAZIL. Ministry of Finance. Secretariat of Prizes and Bets. Ordinance SPA/MF No. 561, dated April 8, 2024. Available at: <https://www.in.gov.br/en/web/dou/-/portaria-spa/mf-n-561-de-8-de-abril-de-2024-553015529>. Access on: May 20, 2024.
[7] BRAZIL. Ministry of Finance. Secretariat of Prizes and Bets. Ordinance SPA/MF No. 827, dated May 21, 2024. Available at: <https://www.in.gov.br/en/web/dou/-/portaria-spa/mf-n-827-de-21-de-maio-de-2024-561240128>. Access on: May 27, 2024.
Gabriel Quiliconi
Lawyer and consultant in institutional relations, governmental affairs, and regulatory matters in São Paulo. Graduated in Law from Mackenzie; Specialist in Contract Law from PUC/SP; MBA in Leadership, Innovation, and Management from PUC/RS.
