The Attorney General's Office (AGU) has filed a lawsuit in the Supreme Federal Court (STF) aiming to prohibit the State Lottery of Rio de Janeiro (Loterj) from authorizing online sports betting houses on a national level. The lawsuit also requests an injunction for the prohibition of operating the activity outside the state of Rio de Janeiro to begin immediately.
In the Original Civil Action, the AGU argues that the accreditation rules for betting houses managed by Loterj do not restrict online betting to the state of Rio de Janeiro alone. It also points out that Loterj has lax rules regarding the prevention of money laundering and the financing of terrorist actions.
According to the AGU, Loterj adopts a system in which bettors declare that the bets will be made in the state of Rio de Janeiro. However, there is no geolocation system to ensure that these bets are actually originating from the state. The system also does not block bets from other regions.
In the terms of the lawsuit, in practice, Loterj accredits companies to explore the service nationwide, which leads to harmful consequences for the federal pact and free competition. Moreover, operating nationwide disobeys the rules of the Ministry of Finance and invades the Union's competence by exploring lottery services throughout the national territory.
The lawsuit cites, as an example of violation of equality among federal entities and free competition, that the states of Paraná and Maranhão require the use of geolocation mechanisms for the exploration of lottery services.
The lawsuit requests the granting of a preliminary decision to suspend the provisions of the Loterj accreditation notice that allowed the exploration of online betting activities beyond state limits. The request also includes the immediate cessation of the activity by companies accredited by Loterj outside the territorial limits of the State of Rio de Janeiro, including the mandatory use of electronic geolocation mechanisms.
Fiscal War
A technical note from the Secretariat of Prizes and Bets of the Ministry of Finance, attached to the process, clarifies that the national operation of the entities accredited by Loterj acts as a perverse incentive to predatory competition among federal entities, similar to a scenario of fiscal war.
"Indeed, if this parameter of territoriality of Rio de Janeiro were considered valid throughout Brazil, the states would compete to attract to their jurisdictions the operators of fixed quota bets and would be induced to deteriorate their regulatory standards and progressively deteriorate their legal institutionality, impacting cybersecurity, responsible gaming, the financial health of operators, and the fight against money laundering", says a section of the petition presented to the STF.
The AGU also maintains that the State of Rio de Janeiro and Loterj have not issued regulation provided in the Money Laundering Law (Law No. 9,613/1998) to regulate compliance with obligations to prevent money laundering and financing of terrorism and the proliferation of weapons of mass destruction (PLD/FTP), in the scope of online betting services.
A technical note from the Financial Activities Control Council (Coaf) attached to the lawsuit states that the criterion of territoriality assessment adopted by Loterj severely compromises the money laundering prevention system.
In the document, Coaf emphasizes that the admission of the criterion of territoriality assessment provided in the Loterj authorization notice would have the potential to turn each Brazilian state into a global betting collection center, expanding to global levels the risks of using bets as a channel for money laundering and related illicit practices.
The Attorney General's Office requests the STF to grant a preliminary decision to suspend the provisions of the Loterj accreditation notice that allowed the exploration of online betting activities beyond state limits, as well as requiring Loterj and the State of Rio de Janeiro to immediately cease the activity by companies accredited by the agency outside the territorial limits of the State of Rio de Janeiro, including the mandatory use of electronic geolocation mechanisms.
Source: GMB
