Hazenclever Lopes Cançado, president of Loterj, challenges the decision of Supreme Federal Court (STF) minister André Mendonça to ban the operation throughout Brazil of bets authorized by the agency. In a strong opinion article for Migalhas, he talks about the Court's and the Union's inconsistency in providing a hostile environment for legalized bets and not going against Chinese players, who operate without complying with the rules or collecting federal taxes.
Unfair competition in the Brazilian betting market haunts entrepreneurship, weakens the national economy, and has the support not only of informal operators but also of the public administration itself, which systematically fosters legal insecurity and thus encourages clandestinity.
An example of this is in the ACO - Original Civil Action 3.6961 at the STF, initiated by the Union against the State Lottery of Rio de Janeiro (Loterj), in which minister André Mendonça, case rapporteur, inadvertently granted during the judicial recess (1/2/25) a preliminary injunction for Loterj to end in 5 days the "exploitation of lottery and electronic gaming activities outside the territorial limits of the State of Rio de Janeiro", using as a basis a subsequent rule touted by the Union and which, in truth, was distorted and does not exist in the law.
The case itself is not the scope of this analysis, but well translates the stone in the shoe.
In short, the Union says that Loterj, under penalty of offense to the federal pact, must employ "georeferencing technology that blocks attempts at bets from people who are in other federative units", because the model adopted by Loterj, of filling out a declaration and consent by the bettor, that his bet will be considered made in Rio de Janeiro for all legal purposes, does not guarantee compliance with the territorial criterion - according to which the exploitation of the lottery service by the states is limited to their respective territories, with only the Union allowed to operate nationwide.
It happens that, as in Brazil legal security is merely an aesthetic ornament for English to see, minister Mendonça, misled by the Union, ignored that such a rule of territorial limitation was created only by law 14.790, of December 29, 2023, published on 12/30/232, that is, almost 6 months after the adoption by Loterj of the simple model of declaration and consent.
Indeed, Loterj adopted such model according to its Accreditation Notice 001/23, published on 4/25/2023 and with correction published on 7/26/2023.
That is to say, at that time there was no territorial limitation for the exploitation of the service, provision on georeferencing and criteria of location or domicile of the bettor. And even with the advent of territorial limitation through law 14.790/23, this law, still, did not determine in any way the adoption of georeferencing mechanisms, leaving it to the States to regulate the matter. Nevertheless, minister Mendonça ordered against Loterj even "the return of the obligation to use electronic geolocation mechanisms".
Indeed, Brazil is not for amateurs.
For those who remember, law 13.756/2018 legalized online fixed quota bets in Brazil and gave the Ministry of Finance a deadline of up to two years, extendable for up to two more, to regulate the exploitation of the activity. However, the Union remained inert, taking more than five years to enact law 14.790/23, which introduced the novel turtle of territoriality, at a time when Loterj was already operating under the terms of its Accreditation Notice 001/23.
Given the delay of the Public Power in fulfilling its duty and, more importantly, considering the natural consolidation over time of past legal relations, such as that of Loterj, the same law 14.790/23 established in §8 of art. 35-A of law 13.756/18 an intertemporal clause of protection to the acquired right and the perfect legal act.
According to this clause, "all concessions, permissions, authorizations or direct exploitations promoted by the States and the Federal District from authorizing procedures initiated before the publication of the provisional measure 1.182, of July 24, 2023, are preserved and confirmed in their own terms, understood as those whose first notice or corresponding public call has been published on a date prior to the issuance of said provisional measure, regardless of the date of actual conclusion or issuance of the concession, permission or authorization, respecting the acquired right and the perfect legal acts".
It is worth noting, by the way, that besides not having established any territorial limitation and even less the obligation to adopt georeferencing mechanisms, the provisional measure 1.182/23 lapsed, as it was not converted into law.
That is, by obvious logic and symmetry of the system, the past acts of Loterj, governed by its Accreditation Notice 001/23, since they were prior to the act of the Executive Power, which did not foresee any territorial restriction, should be safeguarded, right? Well... that's not what the Brazilian administration thinks, as seen, which once again acts against the social values of free enterprise that underpinned the legalization of bets in Brazil.
In practice, while the operators accredited by Loterj have already collected more than R$ 100 million in federal taxes only in favor of the Union, the Union itself, using creationisms and its own turpitude, with the endorsement of the Judiciary, provides a truly hostile environment for legalized bets, especially because it stiffens the rules for those inside while countless players based in tax havens and in China, immune to Brazilian law, continue to operate freely in the country without collecting federal, state, and municipal taxes, representing tax evasion as well.
In this unequal scenario, of distrust and insecurity, certainly the biggest affected are not Loterj and its accredited operators, but the entire nation, which suffers tied to delay, victim of excessive regulation, of this endless partisan-governmental passion for artificial centralization of power and market reserves always to the detriment of the final recipient of public services, the people, the individual, the citizen.
Unlocking Brazil from irrational and truncated bureaucratic shackles, in which so many administrative, judicial, political, economic, and legal obstacles to free enterprise are inserted, should be seriously regarded as a strategic objective of national interest, for, as Milton Friedman and Ludwig von Mises, renowned economists and influential defenders of economic liberalism of the 20th and 21st centuries, said, "economic freedom, by itself, is an extremely important part of total freedom", and "the most prosperous nation will be the one that has not placed obstacles to the spirit of free enterprise and private initiative".
Hazenclever Lopes Cançado
President of Loterj
Source: Migalhas
