Supreme Federal Court (STF) minister André Mendonça has rejected the Rio de Janeiro State Lottery’s (Loterj) appeal against the ban on state-licensed brands operating throughout Brazil.
On 2 January, Mendonça passed a preliminary decision to ban Loterj licensees from operating nationally across Brazil. The request was initially filed by the attorney general’s office (AGU) back in October, requesting the court suspended certain 2023 provisions that gave Loterj powers to regulate outside of Rio (Accreditation Notice 01/2023).
As a result of the court’s ruling, Loterj licensees were banned from accepting bets beyond Rio de Janeiro state borders and also mandated to reintroduce geolocation tracking to ensure bets are only being accepted within the state.
Mendonça’s decision gave Loterj five days from 2 January to halt its nationwide activities and impose these geolocation mechanisms.
Loterj immediately appealed the decision, citing “defects, omissions, obscurities and material errors” in the ruling, which it claimed would lead to reductions in tax revenues and disrupt the regulated betting market in Brazil, which launched on 1 January.
However, Mendonça rejected Loterj’s appeal on 7 January, saying the state regulator’s legal rebuttal was only down to “mere disagreement with the decision under appeal” and had no real legal standing.
Loterj has once again requested for the minister’s decision to be reversed, reiterating that it is full of errors and omissions.
Loterj disputing geolocation tracking enforcement
The state regulator is claiming there is no specific terminology around mandatory geolocation technology in its 2023 legislation, which it says suggests there is no legal backing for the measure.
However, Mendonça retorts that Loterj is trying to create a fictional narrative of the extended territorial limits of the state of Rio de Janeiro.
Loterj’s argument contradicts federal regulations for online sports betting which were written in 2018 (Federal Law No 13,756/2018) and sought to establish a licensed federal online betting sector.
Section 4 states: “The marketing and advertising of lotteries by the states or the federal district carried out in physical, electronic or virtual media will be restricted to people physically located within the limits of their jurisdictions or to those domiciled in their territoriality.”
Mendonça is accusing Loterj of using its Accreditation Notice as a mechanism to exceed the limits of its territorial jurisdiction and undermining the authority of the federal government.
Five-day deadline remains in place for Loterj licensees
In its appeal Loterj also noted the five-day deadline for enforcing geolocation tracking was “excessively short” and unreasonable for operators.
A follow-up Loterj statement called for the appeal to be accepted “as a matter of urgency and without hearing” because of the tight deadline in question.
However Mendonça’s has maintained his original five-day deadline in his latest retort. “The defendants must comply with the preliminary decision within the term stipulated by this court,” he said on 7 January.
Are these delaying tactics by Loterj?
Loterj maintains the legal basis for the STF’s ruling is flawed and is seeking a suspension of its effects until its concerns are addressed.
However, after Mendonça’s criticism of the initial appeal, it looks unlikely Loterj will get the resolution it is seeking, particularly as federal betting regulations are being enforced now the legal betting market is live.
With the five-day deadline having now elapsed, it remains to be seen whether Loterj will adhere to the STF’s ruling.
O Globo has reported that two Loterj-licensed companies are still operating throughout Brazil.
