The Rio de Janeiro State Lottery (Loterj) has formally appealed the decision by the Federal Supreme Court (STF) to suspend national operations of state-licensed betting platforms.
The ruling, made last Thursday (2 January), impacts 25 companies operating under Loterj’s jurisdiction, many of which are prominent sponsors of soccer teams and significant contributors to state revenues.
The agency has expressed concerns over the ruling’s financial and operational ramifications, calling it a potential catalyst for “serious potential damage” to Rio de Janeiro’s income and its lottery operations.
The injunction of the STF’s Justice Mendonça mandates accredited betting companies to halt their operations outside the state within five days.
Additionally, the companies are required to activate electronic geolocation mechanisms to restrict bettors to those physically located within Rio de Janeiro’s borders.
Loterj argued in its appeal submitted on Friday (3 January) that the ruling effectively alters previously established public notices governing betting activities and introduces requirements that could lead to costly refunds, suspension of variable license collections, and claims for damages.
These financial liabilities, the agency warns, could amount to multimillion-dollar losses.
Loterj’s appeal hinges on the interpretation of the law regulating betting operations. It contends that the law does not explicitly require geolocation to verify the location of bettors.
Instead, it stipulates that betting must be marketed to individuals either physically present in or domiciled within the state. To comply, Loterj adopted a system based on a “Personal Declaration of the Bettor,” which the agency asserts aligns with existing legal frameworks.
It also criticised geolocation technology as inefficient and impractical, arguing that residents of Rio de Janeiro should retain the right to place bets even when traveling outside state boundaries.
The injunction’s implications extend beyond Loterj’s immediate operations. The agency highlighted that its accreditation process for betting companies relied on established legal and tax principles similar to those applied in eCommerce.
Not backing down
Loterj, which sued the federal government last October, has emphasised that its regulations were implemented in strict compliance with current legislation, ensuring that all accredited companies operated transparently and within the bounds of the law.
In its official statement, Loterj criticised the STF decision, asserting that the agency’s actions were a necessary and legitimate response to federal delays in regulating the betting industry.
Under Law 13,756/2018, the Union was tasked with establishing comprehensive guidelines for betting activities, but these regulations were not implemented within the stipulated timeframe.
This delay, Loterj argued, compelled the state to act independently to regulate the sector and prevent the proliferation of unregulated activities.
The agency also referenced Law 14,790/2023, which it claims reinforces its constitutional authority to manage betting operations within its jurisdiction.
Loterj warned that invalidating its accreditation of betting companies could lead to substantial economic disruptions, including millions of dollars in compensation claims and a sharp decline in tax revenues.
The agency also cautioned that the suspension could destabilise the burgeoning regulated betting sector, which has become a vital source of state income.
Beyond the financial toll, Loterj expressed concerns about the broader economic impact on Rio de Janeiro, including potential job losses and reduced investments in the region.
While the STF ruling seeks to enforce tighter restrictions on betting operations, Loterj maintains that its framework is both lawful and necessary to safeguard the state’s economic interests.
Brazil only launched its legal sports betting market on 1 January 2025, and the ongoing struggles might turn out to be a bad omen.
Yet, in December 2024, Loterj achieved a major legal victory, cementing its authority to regulate sports betting and online gaming within the state.
A decision on the ban is expected in February through a referendum as part of a STF plenary between 14 and 21 February.