Brazil court confirms Rio Loterj licensees can remain active without a federal licence

The Supreme Federal Court (STF) in Brazil has granted the Rio de Janeiro State Lottery (Loterj) a preliminary injunction that will ensure Loterj-licensed brands are able to operate outside of the federal ban on unlicensed operators.

In September Brazil’s government announced, through Normative Ordinance No 1,475, that only operators that had applied for a betting licence and were already active in the market would be allowed to continue operating between 1 October and the regulated market launch date of 1 January 2025.

Businesses scrambled to meet the government’s 30 September deadline for submitting a licence application to stay online past 1 October.

With that deadline now passed, 182 total licence submissions were registered on Sigap, Brazil’s betting management system. One submission – by Tecnologia e Desenvolvimento Ltda – was registered today and just missed the deadline.

State lottery-licensed brands raised concerns over the 1 October deadline and the impact it would have on them. But the STF’s decision today (1 October) has confirmed these operators are safe from the blocking, even without submitting a federal licence application.

Loterj operators exempt from federal regulations
Federal betting regulations No 1,225, No 1,231 and No 1,475 were called out by federal judge Antonio Claudio Macedo da Silva for being “incompatible” with Loterj’s Accreditation Notice 001/2023, which allows accredited legal entities to operate public lottery services for up to five years.

These regulations cover advertising and the banning of unlicensed sites in Brazil.

Loterj licensees have the “broad and unrestricted right” to continue to operate fixed-odds online betting regardless of federal regulations, according to the injunction. This is as long as bettors confirm they are based in the state of Rio de Janeiro.

“The ordinances clearly go beyond federal jurisdiction, invading the regulatory jurisdiction of [Brazil’s] states,” the injunction noted.

“What is most grotesque from a legal point of view in relation to [Loterj] is that such ordinances blatantly violate Law No 13,756/2018, which preserves previous perfect legal acts,” it said.

Previous STF decision helped establish Loterj licenses
In 2020 a previous STF decision deemed a federal lottery monopoly unconstitutional, allowing states and federal districts to set up their own lotteries. Sports betting was classed as having a lottery model within Federal Law No 13,756/2018 and this enabled operators in jurisdictions such as Rio de Janeiro and Paraná to offer the vertical under Loterj state licences.

Local lawyers Eduardo Carvalhaes and Karen Coutinho from Lefosse said they were confident regional operators would be safe from the federal rules once the October ban came into force.

“It is expected that companies authorised by Loterj within the state of Rio de Janeiro (as well as those authorised in other states across Brazil) will remain active and compliant, [despite the ban on unlicensed operators],” Carvalhaes and Coutinho said of the October ban, back in September.