Loterj appeal on nationwide operations rejected in Brazil court
Supreme Federal Court (STF) Minister André Mendonça has recently upheld a significant ruling that effectively prohibits the Rio de Janeiro State Lottery (Loterj) from permitting its licensed operators to conduct activities beyond state borders.
On January 2, 2024, Minister Mendonça issued a preliminary ruling barring Loterj from expanding its reach nationally within Brazil. This decision followed a petition from the attorney general’s office (AGU) filed in October 2023, which aimed to suspend specific provisions from 2023 that conferred upon Loterj the authority to regulate gambling activities outside Rio de Janeiro (Accreditation Notice 01/2023).
The judicial mandate resulted in an immediate cessation of Loterj licensees’ ability to accept bets from outside Rio de Janeiro, alongside a requirement to reimplement geolocation tracking systems. This action is intended to ensure that all wagers are made within the geographical confines of the state.
Minister Mendonça’s directive granted Loterj a five-day window, starting January 2, to cease its national operations and install robust geolocation measures.
In response, Loterj promptly filed an appeal against the ruling, arguing that the decision contained “defects, omissions, obscurities, and material errors” that, if implemented, could lead to reduced tax revenues and instability in Brazil’s nascent regulated betting market, which officially opened on January 1, 2024.
However, Mendonça rejected Loterj’s appeal on January 7, asserting that the state regulator’s objections merely reflected disagreement with the court’s ruling, lacking substantial legal footing.
In pursuit of a reversal, Loterj reiterated its position, maintaining that the decision was riddled with errors and oversights.
Challenges Against Geolocation Tracking Enforcement
Loterj is contesting the enforcement of mandatory geolocation technology, arguing that the 2023 legislation lacks explicit terminology supporting such technology requirements. This assertion complicates their legal argument against the ruling.
In contrast, Minister Mendonça counters that Loterj is attempting to construct a misleading narrative regarding its jurisdictional boundaries.
This stance ostensibly conflicts with federal regulations established for online sports betting via Federal Law No. 13,756/2018, which aimed to formalize a licensed federal online betting landscape. Specifically, Section 4 asserts: “The marketing and advertising of lotteries by the states or the federal district… will be restricted to individuals physically located within their jurisdictions.”
Mendonça has accused Loterj of overstepping its legal boundaries through the implementation of its Accreditation Notice, thereby undermining federal authority.
The Five-Day Deadline: Compliance Required
Within its appeal, Loterj expressed concerns over the five-day deadline for enforcing geolocation tracking, labeling it “excessively short” and impractical for operators.
A subsequent statement from Loterj urged the court to consider its appeal “as a matter of urgency and without a hearing,” referencing the tight compliance timeframe in question.
Nevertheless, Mendonça maintained his firm stance on the initial five-day deadline during his January 7 response, declaring, “The defendants must comply with the preliminary decision within the term stipulated by this court.”
Are Loterj’s Actions Delaying Tactics?
Loterj continues to assert that the legal foundation of the STF’s ruling is flawed, seeking a stay on its effects until their concerns are duly addressed.
However, given Mendonça’s dismissive critique of the initial appeal, Loterj’s prospects for achieving the desired resolution appear increasingly bleak, especially as federal betting regulations come into play now that the legal betting market is operational.
With the five-day deadline now passed, the question remains whether Loterj will comply with the STF’s ruling. Reports from O Globo indicate that two companies licensed by Loterj are still conducting operations throughout Brazil.
