Rio Loterj licensees allowed to remain active without federal Brazilian license in new ruling

Rio de Janeiro State Lottery (Loterj) licensees will be allowed to remain active without a federal license, the Supreme Federal Court (STF) in Brazil confirmed this week. The court has granted the Lottery a preliminary injunction that ensures Loterj-licensed brands can continue operating outside of a federal ban on unlicensed operators.

The development follows recent government moves towards regulating betting in the country. In September, Brazil officials announced that only operators that had applied for a betting license and were already active in the market would be allowed to continue operating between October 1 and January 1, 2025, the date for the regulated market's launch.

In order to stay online past October 1, operators hurried to meet the government's September 30 deadline for submitting a license application. A total of 182 license submissions were registered on Sigap, Brazil's betting management system, in time for the deadline.

However, state lottery-licensed brands had previously expressed concerns over the October 1 deadline, worried about the potential impact this could have on them. This week's STF decision brings them relief, confirming the operators are exempt from the blocking, even without the submission of a federal license application.

In his ruling, federal judge Antonio Claudio Macedo da Silva said federal betting regulations No 1,225, No 1,231, and No 1,475 were "incompatible" with Loterj’s Accreditation Notice 001/2023, which allows accredited legal entities to operate public lottery services for up to five years.

According to the injunction, Loterj licensees have the “broad and unrestricted right” to continue to operate fixed-odds online betting regardless of federal regulations, as long as bettors confirm they are based in the state of Rio de Janeiro.

“The ordinances clearly go beyond federal jurisdiction, invading the regulatory jurisdiction of [Brazil’s] states,” the injunction reads. “What is most grotesque from a legal point of view in relation to [Loterj] is that such ordinances blatantly violate Law No 13,756/2018, which preserves previous perfect legal acts."

It is worth recalling that a previous STF decision in 2020 paved the way for the establishment of the Loterj licenses. At the time, the STF deemed a federal lottery monopoly unconstitutional, thus allowing Brazilian states and federal districts to set up their own lotteries.

Under the decision, sports betting was classed as having a lottery model within Federal Law No 13,756/2018. This, in turn, enabled operators in jurisdictions such as Rio de Janeiro and Paraná to offer the vertical under Loterj state licenses.