Loterj reopens licensing window after withdrawing blocking orders appeal

The Rio de Janeiro State Lottery (Loterj) has reopened its accreditation period for companies seeking authorisation to operate legally in the state.

Opening on Thursday (5 September), operators seeking Loterj authorisation to legally operate fixed-odds sports betting and igaming in Rio de Janeiro have 15 days to submit applications.

The move comes after Loterj last week withdrew its appeal against an order from the Rio de Janeiro Federal Regional Court of the First Region. The court suspended a previous ruling that ordered Anatel, the National Telecommunications Agency, to block operator sites active in the state without a Loterj licence.

The National Association of Games and Lotteries (ANJL) appealed that decision. Federal judge Pablo Zuniga Dourado partially accepted the appeal, overturning his previous ruling and allowing sites without a Loterj licence to remain active in Rio de Janeiro until at least 1 January 2025.

This is because companies are currently in a “transition period” until the 31 December deadline to secure federal sports betting and igaming licences. As laid out in Normative Ordinance No 827, operators active without a licence from 1 January 2025 onwards will face sanctions.

Therefore, Zuniga ruled companies without a Loterj licence should be granted time to get their applications in order. While Loterj initially said it would appeal the court’s decision, last Thursday (29 August) it withdrew its challenge.

Loterj’s licensing rules
Despite that legal setback, Loterj is now hoping it can attract operators to Rio de Janeiro thanks to its somewhat favourable requirements for licensees in comparison to the federal licence.

The federal licence will cost BRL30m (£4.2m/€4.9m/$5.5m) for five years and involves intensive regulation on both accreditation and maintenance. Such were the entry requirements that some in the industry were concerned over whether there would be a place for smaller operators in the market, although 114 operators have so far submitted applications.

But while federal licensees will pay a 12% tax on gross gaming revenue (GGR), that figure is cut to just under a Loterj licence. Additionally, the five-year licence costs just BRL5m, with regulations on compliance also much less onerous.

Loterj claims to have the “best cost-benefit” ratio for online betting licensees and among the companies already active in the state are Pixbet and Caesars Sportsbook, under a brand licensing deal with local operator Big Brazil.

It’s also providing benefits for the state. Loterj funding has helped the Rio de Janeiro government increase its investments into social projects nearly fivefold over the last three years.

Loterj dividing opinion
Over 2024, Loterj has certainly split opinion in Brazil. Some feel it’s acting beyond its remit. Others believe it offers an attractive alternative to those who don’t wish to operate on a federal licence.

Neil Montgomery of Brazilian law firm Montgomery & Associados believes the interest sparked by the “much cheaper and less demanding” Loterj licence meant the lottery was always going to reopen its accreditation period. It can scoop up operators who missed the 20 August deadline for a guaranteed decision on federal licence applications by 1 January 2025.

Loterj reportedly received nearly 50 requests by the time its previous application window shut on 14 August. This interest came in spite of an ongoing court case questioning the legality of the lottery’s actions. Montgomery believes some operators will continue to go down the state licensing route.

“While Loterj’s ‘extraterritoriality’ is currently being challenged in court, it may well be that a long time will pass until the matter is definitely settled by Brazil’s high courts, which could well mean that such a state licence has the potential of providing its holders with the expected returns,” Montgomery told iGB.

Others, however, feel Loterj is overstepping its reach, especially as Loterj claims its licensees can operate nationally despite the legal federal market not yet launching. Other state lotteries only authorise operators to offer gambling within state borders.

The Brazilian Institute for Responsible Gaming (IBJR) denounced Loterj’s actions, stating they are a “clear violation” of federal regulations. “The acts carried out by Loterj create disorder, raise unnecessary doubts and harm the process of regulating the fixed-odds betting industry in Brazil,” the association said in April.