Zona de Azar Brasil – LOTERJ Aims for Its Authorized Companies to Operate Nationwide

Brazil.- October 24, 2024 www.zonadeazar.com Hazenclever Lopes Cançado, president of the Rio de Janeiro State Lottery (LOTERJ), stated that the authority aims to ensure that all authorized companies can operate nationwide.

During an event organized by the Business Leaders Group (LIDE), founded by former São Paulo governor João Doria, Cançado highlighted that LOTERJ is receiving license applications from various betting companies across different Brazilian states and even from abroad.

“It’s the same logic as e-commerce, where tax collection takes place in the merchant’s state,” Cançado said in an interview with Folha de São Paulo.

However, the federal government is not complying with this situation. According to Law No. 14.790/2023, lotteries aiming to operate betting in Brazil must use a georeferencing system to track the origin of bets, to prevent money laundering, restricting betting companies’ activities only to the states where they are licensed—similar to what happens with Paraná (Lottopar) and Maranhão (Lotema).

For the president of LOTERJ, the government’s decision against the autonomous authority is linked to the concentration of tax revenues in the betting market, creating a monopoly similar to that of the Caixa Econômica Federal (CEF).

Experts assessed that between ten and twenty betting companies, out of all those applying for authorization, must comply with federal regulations and support competition in the long term. Additionally, according to the report, LOTERJ employees discreetly commented that the guidance from superiors is to approve license applications if minimum requirements are met.

Current Status of LOTERJ

The Ministry of Finance stated that each local authority is responsible for issuing authorizations and supervising betting companies.

In an effort to speed up the regulatory process, LOTERJ experienced a significant increase in operator license applications when the government announced a blockade of unauthorized websites starting October 1.

The authority intends to establish itself as a national alternative for licensing betting companies. However, the situation is not well received by other parties involved in the process.

After obtaining an injunction from the 8th Federal Civil Court of the Federal District Judicial Section (SJDF) to operate in Brazil and, in the same week, being banned from operating throughout the Brazilian territory, LOTERJ stated that it continues to earn revenue from betting in the state of Rio and complies with the legislation.

Lawyers interviewed during the report stated that the outcome of the litigation between the Attorney General’s Office (AGU) and LOTERJ will define how the rules will effectively work in the Brazilian market.

Esportes da Sorte and Federal License: Understand the Case

An example of regulatory issues in the Brazilian betting market is the case of Esportes da Sorte, which was prevented from operating during the adjustment period, set until December 31, as stipulated by Ordinance (SPA/MF) No. 1.475/2024 from the Secretariat of Prizes and Betting of the Ministry of Finance. The company stated that it had met all requirements and would comply with the country’s betting regulations.

On the Ministry of Finance’s website, the agency explained how the preliminary list was prepared. Among the reasons considered was: “The last relevant group consisted of companies about which, during the assessment of the documentation submitted in the authorization procedure, information was identified from official sources and open sources questioning fundamental elements for performing an activity recognized as a public service by law, such as the suitability of the individuals and entities involved, as well as the origin and use of funds.”

To enter the Ministry of Finance’s preliminary list of companies authorized to operate in Brazil until the end of this year, Esportes da Sorte acquired the Apostou.com website, licensed by LOTERJ, subsequently obtaining a license from the authority to operate in Rio de Janeiro and across the country until the regulation takes effect in January 2025.

According to the operator, the license was obtained after an “advanced documentation analysis” by LOTERJ.

Alert: Ban on Betting in Brazil?

After the National Confederation of Commerce of Goods, Services, and Tourism (CNC) took steps to block the regulation of betting in the Federal Supreme Court (STF), the AGU highlighted the risk of Brazil hosting a parallel market in the betting industry if the request is approved.

For the institution, the best option is to invalidate the law enacted by Michel Temer in 2018, which legalized betting platforms.

Edited by: @_fonta www.zonadeazar.com