The world of online gaming has brought a new reality to state lotteries, and exploitation may not be limited to the issue of territoriality. This is the understanding of Paulo Horn, president of the Gaming Commission of the OAB/RJ, in an article for Jus Navigandi. According to him, it is acceptable to sell tickets only within the state, but in the digital environment, the operation transcends physical borders, allowing federal entities to expand their reach to new markets.
The exploitation of lotteries in Brazil, an activity that has historically always been intrinsically linked to the concept of public service, regulated and supervised by the State for the benefit of society, especially in Rio de Janeiro, reveals a trajectory full of normative milestones and judicial decisions that have directly impacted the current scenario.
The State Lottery of Rio de Janeiro (Loterj), founded as the successor to the Autonomous Department of Lottery of the State of Rio de Janeiro and the Lottery of the former State of Guanabara (Loteg), has been playing a crucial role in this context, reflecting the complexity of the regulatory system over the years.
1. Historical and regulatory context of Loterj
Decree-Law No. 138, of June 23, 1975 established that the lottery service in the State of Rio de Janeiro will be operated by the State Lottery of Rio de Janeiro – Loterj, as the successor to the Autonomous Department of Lottery of the State of Rio de Janeiro – Loterj and the Lottery of the State of Guanabara – Loteg, operated in accordance with the provisions of § 1, of art. 12, of Complementary Law No. 20 of 1974.
This exploitation was initially ratified by Federal Decree No. 5,409 of March 29, 1940 and, subsequently, with the approval of the Regulation of the Lottery Service of the State of Guanabara (SELE), by State Decree No. 827, of January 18, 1962, it came into effect, with the publication of the Ratification Decree No. 1,029, of May 18, 1962, under the terms of art. 3, of Federal Decree-Law No. 6,259 of February 10, 1944, which states that:
“The concession or lottery exploitation, as a derogation from the norms of Criminal Law, which prohibit gambling, will always emanate from the Union, by direct authorization regarding the federal lottery or by ratification decree regarding the state lotteries”.
However, in the midst of the military dictatorship, Federal Decree-Law No. 204 of 1967 prohibited the creation of new state lotteries, centralizing control in the Union. This was an attempt to organize and standardize the exploitation of lotteries in the country.
With the promulgation of the Federal Constitution of 1988, the Union's competence to legislate on "consortium systems and raffles", including “bingos and lotteries” was reaffirmed and expanded (art. 22, XX). However, the Constitution also opened space for states to continue exploiting pre-existing lottery modalities, provided they comply with federal norms, in the absence of a monopoly on exploitation.
2. The exploitation of lotteries as a public service
From the beginning, lottery exploitation was considered an activity of public interest, operated under the supervision of the State to ensure that the resources generated were reverted for the benefit of society. This vision was consolidated by Decree-Law No. 204 of 1967, which centralized the control of lottery exploitation in the Union, while allowing the continuity of already existing state lotteries.
This character of public service requires that lottery exploitation be conducted under the principles of legality, impersonality, morality, publicity, and efficiency, as provided in article 37 of the Federal Constitution. Loterj, in this context, has the responsibility to operate its lottery modalities with transparency and efficacy, directing resources to social and cultural projects in the State of Rio de Janeiro.
3. The Decision of the STF in ADPFs 492 and 493: Much more than confirmation
The issuance of Binding Precedent No. 2 by the STF in 2007, declaring the unconstitutionality of state laws that provided for systems of raffles and consortia, including bingos and lotteries, reinforced the role of the Union in regulating these games.
However, the judgment of ADPFs 492 and 493, in 2020 brought a new perspective by confirming that federal entities can explore lotteries, provided they do not create new modalities and respect constitutional principles.
The judgment of ADPFs 492 and 493 by the STF in 2020 represented a milestone in the history of state lotteries. The decision not only confirmed the right of states and the Federal District to explore lotteries created before the promulgation of the Constitution of 1988, but also opened new possibilities for other federal entities.
The STF understood that, although the Union has the exclusive competence to legislate on consortia and raffles (art. 22, XX, of the CF/88), including bingos and lotteries, federal entities have autonomy to explore the lottery modalities created by federal law, provided they respect the limits of the federal pact.
This means that federal entities, including Rio de Janeiro through Loterj, can compete on equal terms with the Union, competing for the preference of bettors.
More than that, the decision expanded the field of action of federal entities, allowing them to explore not only traditional modalities, but also new modalities of fortune games, provided they are compatible with constitutional and infraconstitutional norms.
This understanding represents a true opening of doors for states and municipalities, allowing them to innovate and diversify their offerings in the lottery market, following the general norm of the Union.
This jurisprudential evolution allowed state lotteries, such as Loterj, to continue operating their modalities within a clearer and more defined regulatory environment, ensuring the maintenance of their activities and contributing to the financing of social projects, without embargoes.
4. Prohibition of the exploitation of physical tickets outside the state territory
The commercialization of physical tickets of state lotteries is restricted to the limits of the respective State, as established by the venerable Decree-law No. 6,259, of February 10, 1944. This limitation is justified by the principle of legality, which requires that the public administration act strictly within the limits of the law.
The breach of these rules, with the sale of physical tickets outside the state territory, would represent a violation of the exclusive competence of the Union to legislate on lotteries at the national level and a potential conflict between federal entities.
From the point of view of the principle of efficiency, this restriction may seem limiting. The impossibility of expanding the commercialization of physical tickets beyond state borders may reduce the potential for collection and limit the social impact of state lotteries.
However, this limitation is a reflection of the need for control and organization of lottery activities in the country and especially the absence of competence for acts of inspection and control of exploitation beyond the respective territory where the public service is provided.
However, technological advancements and the regulation of fixed quota bets have brought a new dynamic to the sector, allowing state and municipal lotteries to expand their operations beyond physical borders, through the digital environment.
5. Expansion to the digital environment: Online games
Recent legislation, particularly Law No. 13,756, of December 12, 2018, enhanced by Law No. 14,790, of December 29, 2023, which regulate fixed quota bets and online games, have opened new possibilities for the exploitation of fortune games in Brazil, especially in the online environment.
Unlike physical tickets, the exploitation of online games transcends physical and territorial borders, allowing federal entities, directly or through concession, permission, or accreditation, through bidding. For example, the State of Rio de Janeiro, under the charge of Loterj, as a state autarchy, to expand its reach and explore new markets, formed by consumers who virtually access the platforms of providers located in the state.
The exploitation of online games, unlike physical tickets, does not face the same territorial restrictions, allowing for a more efficient and profitable operation. This is in full accordance with the constitutional principles of administrative autonomy and efficiency, among others, which seek to optimize the collection of resources and expand the social impact of lotteries.
By exploring online games, federal entities can benefit from a constantly growing market, without the territorial restrictions imposed on physical tickets.
From a legal point of view, this expansion must occur in strict observance of the principle of legality, ensuring that operations respect federal regulations and consumer rights.
Loterj, by adopting digital platforms for the sale of lottery products, can reach a broader and more diverse audience, increasing its collection and efficiency without infringing legal restrictions and, on the contrary, would not be forced to spend more on access restriction and control mechanisms to collect less.
6. Conclusion
The evolution of the STF's understanding of the exploitation of lottery modalities by federal entities, including municipalities, in conjunction with current legislation, offers a challenging and promising scenario for the lottery market.
Loterj, with its history and consolidated legal base, must continue operating within legal limits, respecting territorial restrictions for the commercialization of physical tickets, but exploring to the maximum the opportunities offered by the digital environment.
This balance between legality and efficiency is essential for Loterj to continue playing its role in society, contributing to the financing of social projects and ensuring the sustainability of its operations in an increasingly competitive and dynamic market.
Paulo Horn
Founding partner of Paiva & Horn Lawyers Associates. President of the Commission for Sports, Lottery, and Entertainment Games of the OAB/RJ, Member of the Brazilian Association of Political and Electoral Law - ABRADEP and of the Constitutional Law Commission of the OAB/RJ. He has held the positions of administrative and financial director, chief legal advisor, and vice-president of the State Lottery of Rio de Janeiro - Loterj. Master in City Law from UERJ.
