Federal Government Call to Limit Loterj’s Reach in Brazil
The legal framework for online sports betting in Brazil has come under renewed scrutiny, with the Prosecutor General's Office (PGR) expressing support for a Supreme Court action filed by the Attorney General’s Office (AGU). The AGU’s case seeks to restrict the Rio de Janeiro State Lottery (Loterj) from authorizing online sports betting platforms to operate nationwide.
The PGR’s opinion, aligning with AGU’s request, was submitted to the Supreme Court on Friday, October 25, at the request of Justice Edson Fachin, who is presiding over the case.
Concerns Over Loterj’s System Transparency
The AGU filed a Civil Action (ACO 3696) with the Supreme Court, urging a preliminary ruling to prevent betting platforms licensed only by Loterj from operating outside Rio de Janeiro. According to the AGU, existing legislation restricts state lotteries to regional operations, with only the federal government authorized to regulate nationwide lottery activities.
A major concern raised by the AGU is Loterj’s lack of a reliable geolocation system, allowing players to claim their bets are made within Rio de Janeiro without verification. This loophole, they argue, essentially allows these companies to operate across Brazil. By contrast, states like Paraná and Maranhão have stricter requirements, mandating geolocation mechanisms before licensing lottery services, which helps maintain fair competition among states.
Implications of Relaxing Betting Regulations
Both the PGR and AGU agree that easing geographic restrictions could undermine federal balance, with potential implications for interstate relationships and competition in Brazil’s lottery sector. The Ministry of Finance’s Secretariat for Prizes and Bets (SPA) added that Loterj’s approach could lead to “perverse incentives for predatory competition,” suggesting that allowing national operations for state-licensed platforms could ignite a “tax war” between states.
Justice Fachin will review the AGU’s injunction request, with the outcome likely to have far-reaching effects on how federal and state governments regulate and oversee betting and lottery activities in Brazil.
