BRAZIL: Loterj licensees will only be authorised to offer bets within Rio de Janeiro
Brazilian Federal Court votes to ban Loterj’s nationwide activities
In October 2024 a long-running dispute between Loterj and the Brazil federal government took a turn when the attorney general’s office (AGU) filed Original Civil Action No 3,696. This aimed to ban Loterj licensees from operating beyond Rio de Janeiro state borders.
While a number of state lotteries have approved betting operators to do business within the state, Loterj was the only one to offer nationwide licences. It claimed Accreditation Notice 01/2023 allowed its licensees to operate public lottery services throughout Brazil.
However, its hopes of being able to do so took a dent when Mendonça passed a preliminary injunction on 2 January to ban Loterj’s nationwide activities. This injunction also mandated geolocation tracking to ensure licensees were only offering bets within Rio de Janeiro state borders.
Mendonça’s ruling was to be voted upon in a virtual session of the STF plenary. Though the session was briefly halted after minister Dias Toffoli requested a review, the STF has now achieved a majority of seven votes after ministers such as Flavio Dino, Gilmar Mendes and Toffoli himself sided with the federal government.
With Mendonça’s injunction maintained, Loterj licensees will only be authorised to offer bets within Rio de Janeiro, with geolocation tracking in place to ensure compliance with those restrictions.
Is the Loterj/federal government battle finally over?
The new vote from the STF looks to have finally put an end to Loterj’s claims that its Accreditation Notice 01/2023 allows it to authorise brands nationwide.
Loterj itself appeared to have conceded defeat last week, publishing an ordinance to order its licensed brands to adhere to the requirements of Mendonça’s ruling. It previously filed appeals against those restrictions, all of which were rejected.
Daniel Romanowski, president of the state lottery in Paraná, told iGB on Thursday prior to the STF’s majority vote that he believed such an outcome would mean Loterj’s legal rebuttals would be “done”.
An end to Loterj’s federal licensing hopes
It’s certainly a big blow for Loterj, which had claimed in the past to have the “best cost-benefit” ratio for online betting licences.
A federal betting licence costs BRL30 million (£3.9 million/€4.7 million/$4.8 million) for a five-year term. Loterj authorisation for the same period is significantly lower at just BRL5 million. Additionally, federal licence holders are subject to a 12% tax on gross gaming revenue (GGR), much higher than the 5% rate applied to Loterj licensees.
Despite Loterj licensees previously being permitted to operate nationwide, specialist betting lawyer Udo Seckelmann of Bichara e Motta Advogados predicted the federal authorities would put an end to its plans.
“Before people came to me to be their lawyer and said, ‘I want to get a licence in Brazil’ and I’d say, ‘Okay, there’s a federal licence in which you can offer to the whole country. That’s the good way to go,’” Seckelmann told iGB. “And they said, ‘No, but I heard something about a state licence which would give me the same rights, and at the same time would be cheaper.’
“And I said, ‘Look, you are correct, but at the same time, we don’t know what’s going to happen in a few months or in a few years about this.’ So it’s a legal uncertainty.”
https://igamingbusiness.com/legal-compliance/federal-court-loterj-nationwide-activities/#:~:text=The%20Rio%20de%20Janeiro%20State,minister%20Andr%C3%A9%20Mendon%C3%A7a's%20preliminary%20injunction.