Linked to the government of Cláudio Castro (PL), Loterj argues that only companies accredited by Rio can be considered regulated to operate throughout the country until the end of the year. All the others should be blocked by Anatel (National Telecommunications Agency), which is mentioned but not requested in the lawsuit.

When contacted, the Treasury's Office of Prizes and Betting said it could not comment on ongoing legal actions.

The Cláudio Castro and Lula governments are already fighting a legal battle over the legality of Rio's authorisation for companies accredited by the state to operate throughout the country, paying a fee of R$5 million.

The Federal Government defends the application of a federal law that restricts the operations of regionally accredited betting companies to the limits of each state - the government has a lawsuit before the Supreme Federal Court (STF) to prevent betting companies registered in Rio from operating nationwide.

Loterj argues that this restriction didn't exist when it launched its public notice, because the Provisional Measure (MP) that kick-started the regulation hadn't been issued yet. 

In the petition, presented on Tuesday (29) to the Federal Court in the Federal District, Loterj asks for the immediate suspension of the national list of fixed-odds betting companies until the prior bidding procedure is carried out and the federal grant fee, which is R$30 million, is paid.

The list is made up of companies that submitted an application for accreditation to the Treasury by 17 September, and which have shown a willingness to be part of the regulated market from next year. The other sites, by exclusion, were considered illegal and so the Treasury asked Anatel to block them.

On Thursday, the Department of Prizes and Betting sent a new list of illegal sports betting and online gaming sites to Anatel so that they can be blocked. The first, sent on 11 October, had just over 2,000 domains.

The Ministry of Finance also includes in the list of sites considered regular those accredited by the states, such as the Loterj parlours. However, the dispute between the Federal Government and Rio de Janeiro is over national operations.
In the lawsuit, Loterj also asks that the Federal Government, the Treasury and the secretary of Prize and Betting, Regis Dudena, be prohibited from ‘carrying out any acts of delegation of the execution of the public lottery service, expressly or tacitly, to private agents without a prior bidding procedure’ and that they cannot take measures aimed at ‘promoting, advertising, defending or encouraging the commercialisation of the public fixed-odds betting service by non-bidding companies.’

Loterj bases its argument on criticism of the logic that the companies listed by the Treasury are ‘authorised’ to operate in Brazil until 31 December. The Rio de Janeiro lottery claims that there was no prior bidding process for this ‘authorisation’ - the petition always uses the term in inverted commas.

‘Although no licence has been granted at federal level and no reals have been collected as fixed or variable grants by the Federal Government, the ‘national list’ of companies ‘authorised’ to operate throughout the country was widely and profusely disseminated until the end of the year and during the so-called ‘adjustment period’,’ writes lawyer Natália Fernandes Santiago, head of Loterj's legal department.

She argues that ‘there is a regime of flagrant unconstitutionality in the exploitation of the activity by third parties included on the Union's list’ and that, therefore, the companies included exclusively on the Union's list are ‘unauthorised to carry out the activity’.

‘Consequently, these companies should have their websites blocked by Anatel and their activities suspended, as has already been done by the Federal Government in relation to those that have not expressed interest at the federal level and are not accredited by the states,’ it continues.

For Loterj, there is ‘undeniable unfair competition’ between the companies considered by the Treasury to be able to operate during the ‘adaptation period’, without a bidding process, and the companies accredited by Rio which, says the authority, have gone through ‘the rigours of a bidding process, payment of fixed and variable grants, tax collection, inspections, subject to all the requirements of the Brazilian legal system.’

The offer of bets has been authorised in Brazil since the end of 2018, but since then it has remained unregulated and unsupervised. Last year, the regulatory process was initiated by the Lula government.

In practice, Rio de Janeiro and União are now competing for accreditation for online bookmakers to operate throughout the country. Rio has used the fact that it charges R$5 million in fixed fees in its favour to attract more companies, compared to R$30 million from the Federal Government.

Some experts point out that the Ministry of Finance's Secretariat for Prizes and Betting (SPA) is not complying with federal legislation on fixed-odds betting. This is because, when it published a list of 100 companies, totalling 219 bets authorised to operate by the end of the year, the secretariat failed to carry out an analysis of the documentation, technical and financial capacity of the companies, as well as failing to collect the grant of R$30 million, as required by the federal law passed in 2023.

The law states that the authorisation to operate betting is only valid once all the requirements have been met.
‘The articles of Law 14.790 are clear about the need for formal authorisation. The Ministry of Finance's positive list not only ignores this requirement, but also creates a dangerous precedent of implicit authorisation in a sector that requires strict regulation,’ said lawyer Álvaro Costa, a specialist in Administrative Law.

As for payment of the licence fee, Ministry of Finance regulations state that interested companies have a maximum of 30 days to make the payment after being notified of the conclusion of the analysis of their application. Failure to meet this deadline results in the application being shelved or the authorisation being revoked, as provided for in article 13.

On the subject, the Treasury, in a statement, said that ‘among the determinations of the law is the establishment of a transition period of no less than 180 days for companies to adapt to the legal rules that will be published by means of ordinances’.

The law also recognised state licences issued before July 2023, including those of Loterj, allowing these companies to continue operating after paying a grant of R$5 million for a period of up to five years and paying federal taxes and fees on a monthly basis.

The positive list was drawn up on the basis of SPA/MF Ordinance No. 1,475 and includes companies that applied for authorisation through the Betting Management System by the date of publication of the ordinance, demonstrating an interest in adjusting to the legislation.

For economist Mariana Santos, from the Federal University of Santa Catarina, the lack of collection of licences and taxes from these companies results in a significant loss of revenue, considering the sports betting market in Brazil.
‘In addition to the legal violation, there is a potential loss of billions in tax revenue, not to mention the risk of destabilising a sector that was seeking regulation,’ she said.

By Demétrio Vecchioli and Bruna Fantti