Published: June 2, 2023

The State Lottery of Rio de Janeiro takes history-making step by granting the first online sports betting license

The State Lottery of Rio de Janeiro (LOTERJ) published in the Official State Gazette the first contract of the term of accreditation and authorization for the operation of public lottery services, exclusively by virtual means and on a competitive basis, in the lottery modality of 'fixed odds sports betting, related to real sports-themed events,' entered into between LOTERJ and Rede Loto.

AsBNLData points out in its report, the contract will be valid for five years. The operation of LOTERJ's sports betting may be carried out in a virtual environment, with online access on personal devices or through mobile applications (Apps), web, VLT (Video Lottery Terminal), POS (Point of Sale), or Sports Betting Terminals.

The contract also allows the operator to sell sports bets through points of sale, retail outlets, outposts, and sports bars. The signing of the contract between LOTERJ's president Hazenclever Lopes Cançado, and the representative of Rede Loto, Paulo Roberto Melo de Castro Nogueira, makes LOTERJ the first state lottery in the country to authorize sports betting through accreditation with the Federal Government.

As of the publication in the Official Gazette, Rede Loto - which is headquartered in São Paulo - will have to pay BRL$ 5 million ($1 million) as a fixed fee.

The act of accreditation does not guarantee the start of the provision of services, which is conditional on the payment of the subsidy. Rede Loto will have a maximum of five business days from the beginning of the term of the Accreditation Agreement to pay the fee to LOTERJ to a bank account indicated in the Accreditation Agreement.

Payment of the variable fee of 5% of Gross Gaming Revenues (GGR) must be made no later than the fifth business day of the month following the execution of the services. After payment, the company may start operating immediately.

According to the Brazilian portal BNLData, it was learned that the marketing campaign is ready and will include a famous soccer player as an ambassador, and the commercial name of the product will be Loto Carioca.

Rede Loto's online betting system met all the requirements and was approved in the Proof of Concept (PoC) technical verification.

The company's technology met the standards of corporate social responsibility, security, and integrity; the management of personal and sensitive data to comply with the articles of the LGPD.

The PoC also verified compliance and risk management in the performance of operational activities, ensuring that there will be an 'Integrity Program' implemented in compliance with current legislation.

The operator's geolocation system was approved in order to ensure that online betting takes place only in the territory of the State of Rio de Janeiro and to prevent betting operations outside the territorial limits of the State by blocking access. In addition, a 24/7 customer service system was also approved, as well as a data processing center (Data Center) with ISO9001 and TIER III and IV certification or similar.

Rede Loto must adhere to the payment systems provider contracted by LOTERJ to process betting and prize payments for LOTERJ's lottery products.

PIXS Cobrança e Serviços em Tecnologia S.A. was the winner of the public tender to provide payment processing services for the public lottery service in the state of Rio de Janeiro through electronic means. Operators will pay PIXS a 2.5% commission on entry and 1% on exit. LOTERJ will receive 26.455% of total revenues.

Another requirement established in the contract is the obligation to fill between 2% and 5% of its jobs with rehabilitated or disabled beneficiaries, qualified in the following proportion: up to 200 employees 2%, from 201 to 500 employees 3%; from 501 to 1,000 employees 4% and from 1,001 onwards 5%.

BNLData also interviewed the president of LOTERJ, Hazenclever Lopes Cançado, about the first license to operate sports betting.

What does the granting of the first sports betting accreditation license for a state lottery in Brazil mean?

LOTERJ is experiencing a historical milestone, being the first company authorized to operate in the online sports betting market in Brazil.

It is a paradigm shift, a great victory for the State of Rio, led by our Governor Cláudio Castro, who supported and trusted the project unconditionally.

What is the impact of the start of sports betting operations in the State of Rio de Janeiro?

The start of operations, which will begin in the next few days, of the first legalized sports betting in the country, consolidates our search for an innovative LOTERJ, which will bring positive impacts for bettors, society, Loterj's employees as well as the expansion of jobs in Rio de Janeiro.

When you said at the Brazil Round Table at the ICE in London in February this year that the public notice would be published in three months and that sports betting operations would start in the first half of the year, almost everyone present at the meeting did not believe you...

We demonstrated that it is possible to have a successful experience in the sports betting market in Rio.

You just recently took over the management of Loterj and have already succeeded in launching a new modality. What is the secret formula?

Since I took over as director in July last year, I had the goal of getting this public announcement published. We have achieved more than that. Through the commitment and dedication of all Loterj employees, as well as the unconditional support of Governor Cláudio Castro and the Secretary of the Civil House, Nicola Miccione, we have the first company accredited and ready to operate in Rio de Janeiro.

Do you think other companies will be interested in applying for a license in Rio de Janeiro?

Other companies from different countries are applying for the same license to operate regularly in Rio. This is the result of a lot of effort and dedication from all of us who believe and have demonstrated that it is possible to have a successful experience in the sports betting market in the state of Rio de Janeiro.


© Public Gaming Research Institute. All rights reserved.