Zona de Azar Brazil – Brazil: Dispute Between the Ministry of Finance and Loterj over Sports Betting

Brazil.- April 9, 2024 www.zonadeazar.com The debate over online sports betting is generating controversy among the power spheres in Brazil, while an official regulation has not yet been established.

The Rio de Janeiro State Lottery (Loterj) did not comply with a request from the Ministry of Finance to define the limits of virtual betting operations in the states. As a result, the impasse may be referred to the Federal Supreme Court (STF) for consideration.

Dispute between the Ministry of Finance and Loterj over Sports Betting

This year, the online sports betting industry, valued at billions of dollars, will be subject to taxes, providing revenue to federal and state governments. This puts the sector on the radar of governors, who see it as an opportunity to improve their finances, and of the Union, which aims to reduce the public deficit.

The conflict between the Ministry of Finance and Loterj is related to the scope of state lotteries, authorized by the STF in 2020, which ended the federal monopoly.

Loterj

The Ministry of Finance requests in its notice to Loterj to restrict betting to the local public, as required by Congressional legislation.

Loterj argues that the legislation maintained the conditions of the previous state concessions to the Provisional Measure that regulated the activity nationwide.

Ministry of Finance

Therefore, Loterj’s notice proposed more advantageous terms for companies than those of the federal government, such as:

A concession of R$ 5 million, compared to the R$ 30 million demanded by the Union.
A 5% tax on GGR (Gross Gaming Revenue), while the Union charges 12%.

Therefore, if state lotteries are not limited to their territories, there will be competition between states and with the Union. Loterj sees this competition as positive, but the economic team views it with concern.

The Ministry of Finance fears that this competition will harm national regulation and reduce federal revenues.

Edited by @_fonta www.zonadeazar.com