After the Supreme Federal Court (STF) voted in favor of Minister André Mendonça's preliminary injunction, the attempt by the Rio de Janeiro State Lottery (Loterj) to authorize its brand across Brazil seems to have suffered a fatal blow.
In October 2024, a turning point occurred in the long-standing dispute between Loterj and the Brazilian federal government, when the Attorney General's Office (AGU) filed civil lawsuit No. 3,696. This move aimed to prohibit Loterj licensees from operating beyond the borders of Rio de Janeiro State.
Although many state lotteries have approved gambling operators to conduct business within their states, Loterj is the only one offering a nationwide license. The company claims that certification notice 01/2023 allows its licensees to operate public lottery services throughout Brazil.
However, Mendonça passed a preliminary injunction prohibiting Loterj from operating nationwide, shattering the company's hopes. The injunction also requires geolocation tracking to ensure that licensees only offer betting within Rio de Janeiro State.
Mendonça's ruling will be voted on at a virtual full court session of the STF. Although the session was briefly suspended after Minister Dias Toffoli requested a review, with ministers such as Flavio Dino, Gilmar Mendes, and Toffoli himself siding with the federal government, the STF has now secured a majority of seven votes.
As Mendonça's injunction is upheld, Loterj license holders will only be authorized to provide betting in Rio de Janeiro and implement geolocation tracking to ensure compliance with these restrictions.
Has the dispute between Loterj and the federal government finally ended?
The STF's new vote seems to ultimately end Loterj's claim that its certification notice 01/2023 allows it to authorize its brand nationwide.
Loterj appears to have conceded defeat last week, issuing a decree requiring its authorized brands to comply with the requirements of Mendonça's ruling. The company had previously appealed against these restrictions, but they were rejected.
Before the STF's majority vote, Daniel Romanowski, president of the Paraná State Lottery, told iGB on Thursday that he believes such a result means that Loterj's legal rebuttal will be "completed."
Loterj's hopes for a federal license are dashed
This is undoubtedly a huge blow for Loterj, which had previously claimed to have the "best cost-effectiveness" ratio for an online gambling license.
The five-year validity of a federal gambling license costs 30 million Brazilian reais (approximately 3.9 million pounds/4.7 million euros/4.8 million dollars), significantly higher than Loterj's five-year authorization, which is only 5 million Brazilian reais. Additionally, federal license holders are required to pay a 12% tax on total gambling revenue (GGR), much higher than the 5% tax rate for Loterj license holders.
Although Loterj license holders were previously allowed to operate nationwide, Udo Seckelmann, a professional gambling lawyer at Bichara e Motta Advogados, predicts that federal authorities will terminate their plans.
"Someone once came to me for legal advice, saying, 'I want to get a license in Brazil,' and I said, 'Well, there's a federal license, you can promote it nationwide. That's a good way,'" Seckelmann told iGB. "They said, 'No, but I heard a state license can give me the same rights, and it's cheaper.'"
"I said, 'Listen, you're right, but at the same time, we don't know what might happen in a few months or years.' So this is a legal uncertainty."
