The General Attorney's Office of the Republic is seeking to prohibit Loterj from authorizing companies to operate throughout Brazil. Here is the response from the Rio-based company.
Brazil.- The General Attorney's Office of the Republic (PGR) submitted to the Supreme Federal Court (STF), a petition in the Original Civil Action filed by the General Advocacy of the Union (AGU) aiming to prohibit the State Lottery of Rio de Janeiro (Loterj) from authorizing online sports betting houses across the country. The AGU's action requests the granting of a precautionary measure to immediately cease the prohibition of exploring the activity outside Rio de Janeiro.
The petition signed by the Attorney General of the Republic, Paulo Gonet, records that the Union argued that the non-compliance with the territoriality parameter directly impacts the exploitation of the lottery betting activities by agents authorized by the Union (national scope) and by other federated entities (in their respective territories).
The Union issued a statement, emphasizing the existence of a federative conflict due to the relaxation of the territoriality parameter and the usurpation of the exclusive material and legislative competence of the Union. It noted that the states of Paraná, Maranhão, and Minas Gerais sent a communication to the Union. The Ministry of Finance reports on the illegality practiced by Loterj and the impact on state lotteries. In turn, it reiterated the assertion that Loterj did not establish mechanisms to combat money laundering.
According to Gonet, the “admission of bets that are considered to be made in the State, although made by bettors who are not physically in Rio de Janeiro, is a form of extrapolation of the material competence of the State, as well as the limitation of the geographical base that the legislator imposed on the activities of companies willing to operate in the lottery sector”.
Paulo Gonet maintains that the “recognition of the acquired right to explore the activity outside the territorial limits of the State of Rio de Janeiro, the legal entity accredited by Loterj – and not by the Ministry of Finance – has the potential to generate federative discord, given the considerations of the Secretariat of Prizes and Bets (SPA) of the Ministry of Finance.
At the end of the petition, the prosecutor records that “there is evidence of elements that demonstrate the probability of the right to grant the preliminary measures requested by the Union. The danger of harm arises, in turn, from the impact on the federative concord generated by the operation, throughout the national territory, of bets accredited only by Loterj”.
Loterj submitted a request to challenge the preliminary opinion of the PGR and “reiterate essential reasons to challenge the preliminary request made and indicate issues that necessarily must be addressed” by the reporting minister Edson Fachin.
“It draws attention to the eloquent silence of the Union and the PGR regarding the fact already widely discussed and presented in these documents that to the current date not a single federal authorization has been issued, much less preceded by a tender, nor has the SPA completed any stage of evaluation of the legal, technical, economic-financial conditions, or suitability of its operators”, the entity accuses.
Loterj points out that no license was granted at the federal level and no real was collected as a fixed or variable subsidy by the Union, despite the “broad and profusely disseminated national list of companies “authorized” to operate throughout the country, until the end of the year and during the so-called “adaptation period”.
“With all due respect, it is not understood how it is possible that the Union talks about risks to the “legal and transnational commitments of money laundering prevention” by the state licenses of Loterj, while it itself (the Union), in a clear state of unconstitutional affairs, has fostered offshore exploration and is inaccessible to inspection or imposition of more than two hundred websites and betting brands”, it comments.
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Loterj points out that the request for a precautionary measure against a regular and tendered operation of accredited before a state authority borders on the absurd while, simultaneously, there is a generalized tolerance or indulgence with extraterritorial operations and from tax havens, to the detriment of all possible public interests.
