In recent weeks, the betting market has experienced turbulent days due to controversies involving the limits of state lotteries' jurisdiction over the exploitation of bets. On one side, Lottopar, a Paraná state authority that approved five houses in the state of Paraná, filed a lawsuit to prevent Loterj from exploring the activity in other states. Lawyer Fabiano Jantalia analyzes the issue and points out that it is just the "tip of the iceberg".
Last Friday (22), the Ministry of Finance sent a notification to Loterj (State Lottery of Rio de Janeiro) to stop the accreditation of online sports betting houses, the "bets", in the current model.
According to Lottopar, as pointed out in the lawsuit, Loterj, by amending its notice for the accreditation of companies to explore sports betting, ended up allowing the operation of bets beyond the territory of Rio de Janeiro, which would be contrary to a decision of the Supreme Federal Court (STF) regarding the limits to the exploitation of lotteries by the states.
The notification sent by the Ministry of Finance follows the same line. The Ministry maintains that Loterj is accrediting bets without establishing a lock for the companies to operate only in the State of Rio de Janeiro, which, in the view of the Ministry, would be prohibited by Law No. 14.790, of 2023.
"This controversy of Loterj is just the tip of an iceberg that has the potential to generate serious risks to the opening of the betting market in Brazil", warns the founder-partner of Jantalia Lawyers and expert in Gaming Law, Fabiano Jantalia. For him, the regulation of bets and state lotteries, in general, urgently needs a "shock of order, a brake of arrangement".
"Despite already having a modern and consistent federal law, we are immersed in a legal limbo due to the lack of the expected regulation. This is what is leading to various confusions and distortions in the application of the law by some state lotteries", argues Jantalia.
Controversy
In 1944, Decree-Law No. 6.259, which regulated the exploitation of lotteries in Brazil, allowed states to indirectly exploit through concession, establishing, however, that state lotteries were “restricted to the limits of the respective State”. The states, given the legislative authorization, began to structure and explore their own lotteries exclusively within their territories.
In 1967, the creation of new state lotteries was prohibited by Decree-Law No. 204, which established the monopoly of the Union for the exploitation of lotteries, maintaining only the state lotteries instituted until February 27, 1967.
This scenario only changed with the Constitution of 1988, which, in Article 22, item XX, established the exclusive competence of the Union to legislate on consortium systems and lotteries, raising a question about the constitutionality of the prohibition on the exploitation of lotteries by the states.
Faced with the doubt, the matter was taken to the Supreme Federal Court (STF) by the state lotteries themselves. In 2020, the Court decided that, observing the principles of territoriality, state autonomy, and the stability of the federal pact, the legislative competence of the Union cannot remove the material competence of the states to explore lottery activities.
In other words, the Court recognized the competence of the states to explore, within the limits of their territories, state lotteries, in an environment of coexistence with federal lotteries, these, indeed, of national scope.
At the end of 2023, Law No. 14.790 was sanctioned, responsible for giving legal treatment to fixed quota lotteries that had been created in 2018 by Law No. 13.756, which had already assigned to the Ministry of Finance the competence to regulate the activity of bets in Brazil. The 4-year deadline set by the law for regulation, however, was not met.
In February 2024, the Ministry of Finance structured the Secretariat of Prizes and Bets, which received the competence to regulate the market of sports bets – dealing with sensitive issues, such as prevention of money laundering, responsible gaming, advertising, and marketing – and authorize the operation of bets in Brazil. The regulation, however, is still in its infancy, with only two ordinances issued, which creates a regulatory vacuum.
Legal insecurity
While the Union does not issue all the necessary regulatory norms and does not open the authorization procedure, states and even municipalities have sought to anticipate the Union, in the expectation of attracting operators with lower concession values and taxation.
“The problem is that these accreditation notices and even the supervision of state lotteries are based on misreadings of both the STF's decisions on the subject and the provisions of the federal betting law”, states Jantalia.
The lawyer also maintains that this is generating a growing legal insecurity for the sector. “If this is not promptly and properly resolved, we run the serious risk of generating a lottery war and driving away operators, harming all the effort made by the Executive Power and the National Congress to enable the opening of this market”, asserts Jantalia.
Source: GMB
