IBJR asks to join STF case against Loterj

The Brazilian Institute of Responsible Gaming (IBJR) is taking a significant stand by seeking to join the Supreme Federal Court (STF) case concerning the Rio de Janeiro State Lottery (Loterj). The IBJR asserts that geolocation tracking technology can indeed be effectively implemented by Loterj’s licensees to enforce compliance.

This ongoing dispute between Loterj and the federal government has gained momentum since STF minister André Mendonça’s preliminary ruling that prohibits Loterj licensees from accepting bets outside the borders of Rio de Janeiro. This regulatory decision hinges on the necessity of geolocation tracking, which is vital to ensure adherence to these geographical betting restrictions.

Currently, Loterj licensees are restricted to taking bets solely within the jurisdiction of Rio de Janeiro. The introduction of geolocation tracking is aimed at guaranteeing that these regulations are strictly enforced and that licensees do not engage customers from other regions.

The financial implications of obtaining a betting license further highlight the challenges within this regulatory landscape. A federal betting license is priced at BRL30 million (approximately £3.9 million/€4.7 million/$4.8 million) for a five-year term. In contrast, Loterj authorization for the same duration costs only BRL5 million. Additionally, the tax burden for federal licensees is significantly steeper—12% of gross gaming revenue (GGR)—compared to the more favorable 5% imposed on Loterj licensees.

Despite ongoing appeals from Loterj, the STF has rejected claims citing “defects, omissions, obscurities, and material errors” within the ruling. Loterj has argued that the technology required for geolocation tracking is currently unavailable.

In a proactive response, the IBJR is seeking to intervene as “amicus curiae,” a Latin designation meaning “friend of the court,” contending that they possess essential information pertinent to the deliberation. They argue that Loterj licensees have access to the necessary geolocation tracking technology and that the request for an additional 180 days to implement this technology is unwarranted.

The STF has indicated that non-compliance will lead to severe financial penalties, including a daily fine of BRL500,000 for continuing breaches, emphasizing the need for immediate action by Loterj.

Concerns of Unfair Competition in the Brazilian Betting Market

Hazenclever Lopes Cançado, president of Loterj, has expressed grave concerns regarding the STF’s ruling, stating that it jeopardizes the stability of Brazil’s nascent online betting market. In an article published in Migalhas, Cançado articulated the fears surrounding legal uncertainty in Brazilian betting, which he claims engenders conditions of unfair competition and hinders economic progress.

“The precarious legal environment in Brazilian betting landscapes not only insults entrepreneurship and undermines the national economy but also enables informal operators to flourish,” Cançado asserted. “This situation is exacerbated by public administration practices that foster legal ambiguity, effectively encouraging clandestine operations.”

Loterj has highlighted that its licensees have contributed over BRL100 million in taxes to the federal government, underscoring the economic stakes involved in the STF’s ruling. Cançado has warned that this legal decision potentially benefits companies registered in tax havens, which operate without the same fiscal obligations as local licensees.

“The existing union, by adopting restrictive policies under the guise of regulation, is creating an environment hostile to licensed betting, tightening regulations for local operators while allowing foreign entities to exploit loopholes. This discrepancy leads to significant tax evasion and undermines the integrity of Brazil’s regulatory framework,” Cançado explained.