October Deadline’s Limited Impact on Brazil’s State Lottery Regulators

Normative Ordinance No 1,475 stipulates that only operators who have applied for a license and are currently active will be permitted to continue their operations from October 1 to December 31, ahead of the legal market's launch on January 1, 2025. As of now, there are 119 license applications logged in Sigap, Brazil's betting management system, with six applications submitted since the announcement of the new October deadline. This implies that any company currently operating in Brazil that has not applied for a federal license could face a shutdown. However, a ruling from the Supreme Court in September 2020 deemed the federal lottery monopoly unconstitutional, allowing states and federal districts to manage their own lotteries. Additionally, Federal Law No 13,756/2018 categorizes sports betting as a lottery modality, granting states the authority to regulate wagering within their jurisdictions. The implications of Ordinance No 1,475 may affect licensees operating in states like Rio de Janeiro, Paraná, Minas Gerais, Maranhão, Ceará, and Espírito Santo. Nevertheless, lawyers Eduardo Carvalhaes and Karen Coutinho from the Brazilian law firm Lefosse state that the federal government is taking measures to ensure these companies can maintain their operations. Regarding the local regulatory impact, the secretariat of prizes and bets (SPA) plans to contact state regulators to ascertain which brands are authorized in each state and the domains they will utilize. Lefosse asserts that the influence of this new ordinance on state regulators like Loterj will largely align with the existing conditions, allowing current operators to continue functioning within their authorized jurisdictions. 'It is expected that this measure will ensure that companies authorized by Loterj in Rio de Janeiro and those that have applied for SPA authorization remain active and compliant,' Carvalhaes and Coutinho stated. Thus, only firms failing to meet these requirements will be suspended. The ordinance also permits active operators in Rio de Janeiro with a Loterj license who have filed for federal certification to continue operations. Loterj has recently taken its own steps to combat unlicensed operators through site blocking, though results have been inconsistent. An August decision from the Rio de Janeiro Federal Regional Court ruled that betting platforms operating without a Loterj license could keep functioning. Previously, the court ordered the National Telecommunications Agency Anatel to block the websites of unlicensed operators, following a preliminary injunction requested by Loterj. However, an appeal from the National Association of Games and Lotteries (ANJL) was 'partially' accepted, reversing the blocking orders and allowing unlicensed operators to continue offering their services until the federal licensing deadline at the end of December. The October enforcement deadline has sparked different opinions around Brazil. Lottopar, the state lottery in Paraná, expressed support for the ordinance, claiming it would enhance state regulators' ability to combat illegal operators and contribute to a safer betting environment. 'This is a milestone for regulation and for establishing a safer and more transparent environment in the lottery and fixed-odds betting sector,' said Lottopar CEO Daniel Romanowski. Other stakeholders, including the Brazilian Institute of Responsible Gaming (IBJR), also praised the ordinance as critical for fostering a clean market free from illicit operations. Conversely, concerns have been voiced regarding the legality of the ordinance. Paulo Horn, president of the Order of Attorneys of Brazil in Rio de Janeiro, contends that the new measure is unconstitutional and has called on the Ministry of Finance to reconsider its implementation.