Zona de Azar Brazil – IBJR Defends Thesis of the Ministry of Finance on LOTERJ Operations

Brazil.- April 03, 2024 www.zonadeazar.com  In recent days, it was widely reported by specialized media that the Ministry of Finance (MF) sent a formal notification to the Rio de Janeiro State Lottery (LOTERJ), recommending the immediate interruption of the accreditation of agents that operate modalities of lottery in the manner provided for in the regulation published by the government of Rio de Janeiro (in this case, State Decree No. 48,806/2023).

Currently, LOTERJ would be admitting the accreditation of the so-called “bets” with the municipality of Rio de Janeiro without imposing territorial restrictions on their respective operations, so that companies accredited in the State of Rio de Janeiro could operate throughout Brazil – clearly violation of the provisions of federal regulations.

Article 35-A of Federal Law No. 14,790/2023 is expressed by establishing that the States and the Federal District “are authorized to explore, within their territories, only the lottery modalities provided for in federal legislation,” In addition to its paragraph 4, it determines that “the marketing and advertising of the lotteries of the States or the Federal District, carried out in physical, electronic or virtual media, will be restricted to people physically located within the limits of their districts, or to those domiciled. within its territoriality.”

Requiring bettors to declare that their bet is placed in the State of Rio de Janeiro, regardless of their domicile or actual location, does not make logical or legal sense.

If it were not just that, the aforementioned Fluminense municipality would also be adopting values of subsidies and tax rates quite different from those established by the Federal Government, generating tension due to the establishment of a possible “fiscal war” between the federations. entities – which, consequently, increases the levels of legal uncertainty to the detriment and disadvantage of the entire sector.

The Brazilian Institute for Responsible Gaming (IBJR), which follows the issue with increasing concern, also learned that LOTERJ, for some time, has been sending letters to various companies, including fixed-odds betting operators and other companies that operate. indirectly in the sector, as financial and payment institutions – requiring the immediate interruption of the operation of a platform that, without a license granted by LOTERJ, was allegedly operating irregularly in the State of Rio de Janeiro.

Failure to comply with LOTERJ’s unreasonable request by the aforementioned companies would result in the initiation of several administrative sanctioning processes, subjecting them to administrative sanctions that, to the best of the IBJR’s knowledge, lack an adequate legal basis.

This is because, although the Supreme Federal Court (STF) recognized the competence of the States and the Federal District to operate lotteries (as a public service), the competence to legislate on the matter remains exclusive to the Union, in the terms of article 22, XX, of the Federal Constitution.

In other words, although States have material competence to explore lottery activities and regulate such exploitation, it is clear that State legislative/regulatory activity must adhere to the national guidelines drawn up by the Union (and, consequently, cannot contradict them). . .

For this reason, the IBJR recalls that Federal Law No. 14,790/23 is express and clear in the sense that “the Ministry of Finance will establish conditions and deadlines, not less than 6 (six) months, for the adaptation of the legal entities that “the provisions of this Law and the regulations that it establishes in specific regulations are in force.”

The acts carried out by LOTERJ create disorder, raise unnecessary doubts and harm the regulatory process of the fixed-odds betting industry in Brazil. They put at risk the effectiveness of the legal framework consolidated by Federal Law No. 14,790/23 and bring legal uncertainty to the market, creating a bad environment for business and for the planning of operators who wish to apply, under the terms of the law. , authorization to operate regularly in Brazilian territory.

That said and considering recent events, IBJR understands that:

⇒ It is illegal to take the position that fixed-odds betting operators authorized by LOTERJ (or any other authority other than the Ministry of Finance) have the right to explore this type of lottery and offer these services to consumers located anywhere that is not the territory of the State of Rio de Janeiro;

⇒ The position that, on this date, only counterpart betting operators authorized by LOTERJ have the right to explore this type of lottery and offer these services to consumers located in the territory of the State of Rio de Janeiro is illegal; Is

⇒ The MF is right to demand an urgent position on the questionable legality of the LOTERJ, especially given the risk that such decisions will harm the authorization process of fixed-odds betting operators at the federal level, contaminate the great sectoral advances that are have obtained from the National Congress and the Federal Government for the regulation of this important sector of the economy.

Editó @_fonta   www.zonadeazar.com