Loterj finally gives in with ordinance halting nationwide activities
The Rio de Janeiro State Lottery (Loterj) has issued a new ordinance that suspends its operations outside of the state and reinstates mandatory geolocation tracking for its licensees.
This ordinance, released in the Rio de Janeiro Official Gazette (DORJ) on February 13, marks a significant turning point in the protracted legal dispute between Loterj and the federal government.
The conflict escalated after the Attorney General’s Office (AGU) initiated legal proceedings in October, leading to a landmark ruling on January 2 by Supreme Federal Court (STF) Minister André Mendonça. This ruling prohibits Loterj licensees from operating outside the borders of Rio de Janeiro, thereby enforcing stricter regulatory compliance across the nation.
Furthermore, the decision necessitates the reimplementation of geolocation technology to verify that Loterj-licensed operators restrict their activities to within the state limits.
Has Rio Lottery Conceded Defeat?
With several appeals rejected, Loterj appears to have accepted this outcome, as articulated in Ordinance Loterj/GP No 658.
According to Article 1 of the ordinance, all brands licensed by Loterj are required to cease operations beyond the confines of Rio de Janeiro immediately. Article 2 further stipulates an outright ban on the activities of lotteries and online gaming entities that cannot demonstrate compliance with geolocation requirements.
Signed by Loterj President Hazenclever Lopes Cançado, the ordinance remains effective for the duration of Mendonça’s preliminary injunction.
What Happens Now?
A virtual plenary session of the STF will commence today to deliberate on Mendonça’s injunction, continuing until February 21.
Loterj faces scrutiny and opposition from entities such as the Brazilian Institute of Responsible Gaming (IBJR). Recently, the IBJR has sought to participate in the STF proceedings as “amicus curiae,” asserting that it can offer valuable insights. They contend that geolocation tracking technology exists and is sufficient to satisfy the requirements set forth by Mendonça.
Major Setback for Loterj
Previously, Loterj licensees enjoyed the privilege of operating across Brazil, claiming to offer the most advantageous cost-benefit ratio in the online betting market.
For comparison, a federal betting license is priced at BRL 30 million (£3.9 million/€4.7 million/$4.8 million) for a five-year validity, while a Loterj license costs just BRL 5 million for the same duration. Moreover, federal licensees are subjected to a 12% tax rate on gross gaming revenue (GGR), significantly higher than the favorable 5% rate applicable to Loterj licensees.
Despite the previous latitude granted to Loterj operators, legal experts like Udo Seckelmann from Bichara e Motta Advogados, remained cautious in recommending Loterj licenses over federal ones. He shared insights with iGB, highlighting potential legal uncertainties, saying, “When clients consulted me about obtaining a license in Brazil, I pointed out the federal option, which covers the entire country as the preferable route. However, they often mentioned a state license that seemed equally beneficial but at a lower cost. I advised caution, noting the unpredictability of regulatory developments in the forthcoming months or years.”
This evolving landscape underscores the pressing need for operators to remain vigilant and adaptable in the face of regulatory changes amidst Brazil’s booming gambling market.
