October deadline in Brazil won’t impact state lottery licensees
The Impending Crackdown on Unlicensed Gambling Sites in Brazil: What it Means for State-Licensed Operators
The Brazilian gambling landscape is set for a significant transformation as the Ministry of Finance prepares to implement a crackdown on unlicensed online gambling platforms starting October 1, 2023. However, those operators holding state lottery licenses may find themselves largely unaffected by this initiative.
According to Normative Ordinance No. 1,475, only those operators who have either applied for a federal license or are already active will be permitted to continue operations during the transition period from October 1 to December 31, 2023. The fully regulated market is slated to launch on January 1, 2025.
Currently, the Brazilian betting management system, known as Sigap, has registered a total of 119 license applications, with six applications submitted since the announcement of the October deadline. This situation suggests that any operator failing to secure a federal license could face cessation of their activities.
Nonetheless, the dynamics of state licensing add a layered complexity. A landmark ruling by the Brazilian Supreme Court in September 2020 declared that the federal lottery monopoly was unconstitutional. This decision empowered individual states and federal districts to engage in lottery operations. Additionally, Federal Law No. 13,756/2018 categorizes sports betting as a form of lottery, affording states the authority to regulate these activities within their jurisdictions.
While Ordinance No. 1,475 suggests states like Rio de Janeiro, Paraná, Minas Gerais, Maranhão, Ceará, and Espírito Santo could be caught in the enforcement net, legal experts Eduardo Carvalhaes and Karen Coutinho from the Brazilian law firm Lefosse assert that the federal government has proactively addressed this possibility. They believe measures are in place to ensure that state-licensed companies can sustain their operations.
The Impact on State Regulators in Brazil
In terms of regulation, the Secretariat of Prizes and Bets (SPA) will proactively engage with state regulators across Brazil to ascertain details about authorized brands and their operational domains. However, Lefosse emphasizes that the effects of the new ordinance on local regulators such as Loterj will largely maintain the existing operational framework.
“It is expected that operators authorized by Loterj in Rio de Janeiro, as well as those certified in other Brazilian states and those currently pursuing SPA authorization, will remain compliant and operational,” Carvalhaes and Coutinho informed iGB. “As a result, only those operators failing to meet the outlined requirements will face suspension and blocking.”
Recent Court Defeat for Loterj
The new ordinance also delineates that operators in Rio de Janeiro with a Loterj license who have applied for federal certification are allowed to continue their activities. However, Loterj recently faced challenges in its own enforcement efforts against unlicensed providers.
An August ruling from the Rio de Janeiro Federal Regional Court of the First Region determined that betting platforms operating without a Loterj license could continue their services. This ruling partially accepted an appeal from the National Association of Games and Lotteries (ANJL), resulting in the overturning of previous site-blocking orders instated by the National Telecommunications Agency (Anatel) that were aimed at unlicensed operators.
October Enforcement Deadline Dividing Opinion in Brazil
The reception of the new ordinance has been mixed among stakeholders. Lottopar, the state lottery in Paraná, expressed approval of the ordinance, highlighting its potential to empower state regulators in combating illegal operations and fostering a safer gaming environment. CEO Daniel Romanowski stated, “This is a landmark for regulation and a step towards a safer and more transparent landscape within the lottery and fixed-odds betting sector.”
Similarly, the Brazilian Institute of Responsible Gaming (IBJR) commended the ordinance, asserting its pivotal role in establishing a cleaner market free from illegal interference. However, not all views align with this optimistic outlook. Paulo Horn, president of the Order of Attorneys of Brazil in Rio de Janeiro, has raised constitutional concerns regarding the ordinance, urging the Ministry of Finance to revise its implementation strategy.
As Brazil stands on the cusp of a new regulatory era, the outcome of these developments will significantly influence both licensed operators and the future of the country’s gambling market. Stakeholders must remain vigilant and adaptable as the landscape continues to evolve.
