Zona de Azar Brazil – Brazil: Supreme Federal Court Advances Against Loterj
Brazil.- January 6, 2025 www.zonadeazar.com André Mendonça, minister of the Supreme Federal Court (STF) and rapporteur for Original Civil Action 3.696, issued a precautionary measure suspending the operation of lottery and online gaming activities outside the territorial limits of Rio de Janeiro by companies authorized by the Rio de Janeiro State Lottery (Loterj).
The decision also reinstated the mandatory use of electronic geolocation mechanisms. The Rio de Janeiro government and LOTERJ have five days to comply with the ruling.
Mendonça’s decision also prohibits both the Rio de Janeiro government and Loterj from promoting any new law authorizing betting companies to offer services outside Rio de Janeiro’s territory without federal approval. The minister’s order must be reviewed by the STF plenary, but no date has been set for this analysis.
The Case
The federal government brought the case to the STF, questioning the terms of Accreditation Notice No. 1/2023, published on April 25, 2023, and revised on July 26 of the same year. The revision eliminated the adoption of a geolocation system for placing sports bets, which, according to Mendonça, “violates Art. 35-A of Law No. 13,756 of 2018, as amended by Law No. 14,790 of 2023.”
Following the revision, Loterj stated in a notice that “online betting will always be considered to have occurred within the territory of the State of Rio de Janeiro for all purposes, including tax and legal matters, regardless of the geolocation of the IP or device originating the bet.”
According to the federal government, “the practical effect of these changes is that Loterj has authorized companies to operate public lottery services at a national level, undermining the federal pact and free competition to the detriment of not only the Union but also other states interested in offering public lottery services.”
Loterj, on the other hand, argues that “the Union seeks, in October 2024, to obtain an injunction to suspend a condition that was entirely legal at the time of its establishment, citing a violation of a law that did not even exist when the Notice was published and its correction issued. This claim infringes on the acquired rights of all companies operating since April 2023 under the rules established by LOTERJ.”
Mendonça Rules in Favor of the Union
In the ruling published this Thursday, André Mendonça sided with the Federal Government, stating that “Art. 35-A of Law No. 13,756 of 2018, as amended by Law No. 14,790 of 2023, clearly limits the exploitation of lottery services and similar activities by states (and the Federal District) to their respective territorial boundaries.”
According to Mendonça, replacing the geolocation requirement with the bettor’s acknowledgment that bets are placed within Rio de Janeiro creates “a kind of fiction about the expanded territorial boundaries of the State of Rio de Janeiro.”
For the minister, this is a mechanism for the “State to exceed the limits of its territorial jurisdiction.” In doing so, “it encroaches on the jurisdiction of other states (and the Federal District) and primarily violates the jurisdiction of the Union.”
Edited by: @_fonta www.zonadeazar.com
