The Solidarity Party of Brazil has filed a lawsuit with the Supreme Federal Court (STF), requesting a suspension of the municipal lotteries in Brazil.
The Brazilian Social Democracy Party Solidarity Party submitted a statement of non-compliance with fundamental principles (ADPF), requesting a temporary halt to the issuance of municipal lotteries, pending the STF's final decision on whether it violates the Brazilian Constitution.
The Solidarity Party claims that municipal lotteries are creating a "truly chaotic situation," with jurisdictions like Bodó disregarding federal law, allowing companies not authorized by the federal government to operate within municipal governments, and essentially not adopting player protection measures and tax contributions to the same extent as federal regulatory agencies.
There are over 5,500 municipalities in Brazil's 26 states, some of which wish to enact their own laws, establish lotteries, and generate revenue.
For example, Bodó, a municipality with just over 2,000 people, has become a national focus after issuing multiple licenses to operators. Each license costs only 5,000 Brazilian Reais (670.29 GBP/796.81 EUR/867.70 USD), whereas the national license issued by the country costs up to 30 million Brazilian Reais.
In the lawsuit, the Solidarity Party warns that municipal lotteries are questioning the financial stability of Brazil's newly regulated gambling market and may also endanger player safety due to varying levels of player protection measures by different municipalities.
Therefore, the case requests the suspension of the laws governing municipal lotteries and recognizes that the regulations implemented by these entities are unconstitutional. The regions mentioned in the bill have been asked to share information about their future strategies.
After the Loterj ruling, municipal lotteries became a focus of attention
This is the latest blow to local lotteries, which have been embroiled in a fierce legal dispute with the federal government for months, particularly in Rio de Janeiro's Loterj.
Loterj has long protested, believing that its national license should allow the brand to operate beyond the borders of Rio de Janeiro state and throughout Brazil.
However, in February, Loterj's hopes were dealt a fatal blow. In early January, STF voted in favor of Minister André Mendonça's preliminary injunction, which prohibited Loterj from conducting nationwide activities and required geolocation tracking to ensure its licensees only operate within the state of Rio de Janeiro.
Daniel Romanovsky, president of Paraná's state lottery, previously warned that the next discussions might involve other municipal lotteries in Brazil and their licensing power.
Romanovsky predicted that local governments would face the same fate as state lotteries, with their activities being restricted locally.
The newly regulated federal market in Brazil
The legal online gambling market in Brazil launched on January 1, expected to become one of the top three gambling markets globally.
However, the industry faced significant opposition in the second half of 2024, including a separate lawsuit by the Solidarity Party to the STF, requesting the federal gambling law be deemed unconstitutional.
STF held a two-day hearing with Brazil's third-largest union, the National Confederation of Goods, Services, and Tourism (CNC), investigating the impact of the gambling industry in Brazil and whether the gambling law violates the Brazilian Constitution.
The outcome of this hearing will be confirmed in the first half of 2025, although the industry consensus is that the horse has already bolted, and the chances of repealing the gambling law are slim.
However, discussions about non-federal licensing seem set to continue, as Bodó appears to have ignored the legal uncertainties caused by the Loterj ruling and the federal government's threat to prohibit the city's activities.
