The Rio de Janeiro Federal Regional Court of the First Region has ruled betting platforms active in the state without a licence from the Rio de Janeiro State Lottery (Loterj) can continue to operate.
The ruling comes after the National Association of Games and Lotteries (ANJL) filed an appeal looking to overturn a federal ruling stipulating operators active in Rio de Janeiro without a Loterj licence would be blocked.
Anatel, the National Telecommunications Agency, was ordered by the court to take “appropriate measures” to block operators’ sites that hadn’t secured a licence from Loterj.
Loterj said the decision would help the Rio de Janeiro government to fight against money laundering and stamp out unlicensed competition to Loterj-accredited operators.
However, ANJL filed an appeal and the new court ruling from federal judge Pablo Zuniga Dourado has “partially” accepted the appeal, suspending his initial decision to grant an injunction and order the site blocking.
Zuniga pointed to the 31 December deadline for federal licence applications grounds to overturn the blocking order. ANJL argued the “transition period” leading up to the deadline meant companies needed time to get applications in order and filed while still operating as normal in Rio de Janeiro. Zuniga accepted this argument.
“I partially accept the motions for clarification, with infringing effects, to remedy the omission and determine the suspension of the decision that partially granted the advance relief,” Zuniga’s ruling read.
Operator have until 31 December to secure licences
In May, Brazil’s government published Normative Ordinance No 827. The ordinance clarified that operators had until 31 December 2024 to gain authorisation to be active.
Authorised operators will be granted a licence for five years after a BRL30m (£4.6m/€5.4m/$5.9m) fee is paid.
However, operators active without a licence from 1 January 2025 onwards will then face penalties.
Normative Ordinance No 1,233, one of the final ordinances to be published, focused on the sanctions available to punish operators who commit infringements such as acting without a licence.
A fine of between 0.1% and 20% on proceeds in the year before sanctioning proceedings started can be issued, capped at BRL2bn. Non compliant operators could also be banned from holding or applying for a licence for up to 10 years.
The sub-secretariat of monitoring and inspection of the SPA will initiate the process. That process will then be forwarded onto the sub-secretariat of sanctioning action to decide what punishments will be handed out.
Udo Seckelmann, head of gambling & crypto at Bichara e Motta Advogados, believes the BRL2bn fine is “too harsh”. However, he also feels it will be an effective deterrent.
“I believe the reason for that is to scare operators and make them more careful not to commit any infringements,” Seckelmann told iGB.
Is Loterj overstepping its remit?
Loterj has faced criticism this year for what is perceived to be overstepping its reach.
Operators who have gained Loterj accreditation have been allowed to be active nationwide without the legal Brazilian market having yet launched. Other state lotteries only approve operators to run gambling within state borders.
The Brazilian Institute for Responsible Gaming (IBJR) criticised Loterj’s actions, claiming they’re a “clear violation” of federal regulations. “The acts carried out by Loterj create disorder, raise unnecessary doubts and harm the process of regulating the fixed-odds betting industry in Brazil,” the association said.
André Santa Ritta, associate lawyer at Pinheiro Neto Advogados, feels IBJR’s criticism is justified.
“IBJR does have a point and their arguments make sense,” Santa Ritta told iGB. “I myself have been involved in these discussions. I do not believe Loterj has the legal grounds to allow companies to operate in the entire country.”
