Last Thursday (January 2, 2025), Federal Supreme Court (“STF”) Justice André Mendonça issued a preliminary injunction ordering that the Rio de Janeiro State Lottery (“LOTERJ”) and the state of Rio de Janeiro cease to exploit lottery and electronic gaming activities outside the state’s territory, reinstating the mandatory use of geolocation mechanisms to determine where bets are being placed.

This ruling resulted from Originating Civil Action 3696, in which the Federal Government contested measures adopted by LOTERJ aimed at simplifying territorial supervision to facilitate the exploitation of lottery activities in fixed-odds sports betting.

According to Justice André Mendonça, waiving the use of geolocation systems by LOTERJ, together with the provision in a notice that “online bets will always be considered as placed within the state territory of Rio de Janeiro (…) regardless of the geolocation of the IP or electronic device that originated the bet”, create a scenario of “legal fiction” regarding territoriality criteria, which favors interstate exploitation of a public service to the detriment of the Federal Government’s and other states’ competence, and violates a provision of Law No. 13,756/2018, as provided for in Law No. 14,790/2023 (Betting Law).

The injunction also suspended provisions rectifying LOTERJ’s accreditation notice, which simplified the enforcement and supervision of territorial limits. In addition, the injunction prohibited new acts that may enable LOTERJ-accredited companies to exploit betting services outside the Rio de Janeiro state territory.

LOTERJ and the state of Rio de Janeiro must comply with the ruling within five days.

The preliminary injunction will move forward to the full Supreme Court in a virtual session to be scheduled between February 14 and 21, 2025.

Demarest’s Dispute Resolution team is monitoring this topic and remains available to provide any further clarifications.