In 2020, the Federal Supreme Court(STF) authorised states and municipalities to operate games, but within the limits of their respective territories.

Ministry of Finance vs LOTERJ
 

LOTERJ said in a statement that it will analyse the letter sent by the Ministry of Finance regarding the accreditation of online sportsbooks in the current form. The Lottery also said that it maintains a dialogue with all spheres of the public and private sectors, as well as control and prosecution bodies, and that it values a federative and democratic environment. "In this context, we inform you that yesterday we received the letter from the Ministry of Finance, which will be analysed and responded to," it said.

However, the Rio de Janeiro authority argues that the sale of its products, as part of an accreditation for the operation of a public service via the Internet, does not go beyond the territorial limit of the authority's competence, which has been legitimised and settled by the STF.

According to the thesis of LOTERJ's president, Hazenclever Lopes Cançado, the gambler's right to choose the product or service that best suits him is legitimate, and any interference in this choice process is unacceptable, For this reason, accredited operators must present a system capable of controlling and confirming that the punter declares and agrees that online betting will always be considered to have taken place in the territory of the State of Rio de Janeiro, for all intents and purposes, including tax and legal purposes, regardless of the geolocation of the IP or the device from which the bet originated.

"The player, as an essential condition for the conclusion of any consummation, is obliged to declare that he accepts and agrees with the fact that the bet is made, for all purposes, in the State of Rio de Janeiro," he added in a statement.
In response to Caixa Econômica Federal's request to challenge Accreditation Notice 01/2023, LOTERJ argued that the initiative corrects an outdated concept of operating lottery services, along the lines of 70 years ago, which is unaccompanied by all the political, social, economic, cultural, technological and population changes.

One of the examples cited by LOTERJ is the concept of Federal Complementary Law 116/2003, which deals with the Tax on Services of Any Nature, which states that "[t]he service is considered to be provided, and the tax is due, at the place of the provider's establishment or, in the absence of an establishment, at the place of the provider's domicile.

Another factor that has to be considered is the legal certainty and acquired rights of the platforms accredited by LOTERJ, considering that the public notice was issued before Law 14.790/23 and that the federal law itself reserved previous public notices in the eighth paragraph of article 35 of that law.

‘Drible’ 

Rio de Janeiro's "drible" in the legislation worries the economic team. The assessment is that, if the practice is maintained, there will be a fiscal war in the country over the accreditation of parlours. In addition, there is a risk of dismantling the regulations prepared by the federal government and approved by Congress.

Another point of concern is the drop in revenue, since Rio de Janeiro has set a grant of usd 1 million for each company, while the federal government will set a grant of usd 6 million.

In addition, the sector's taxes are collected by the state government, not the federal government. The rate set by Loterj for bets is 5% of the companies' gross revenue, as opposed to the 18% to be collected by the Federal Revenue Service.

So far, more than 130 companies have shown the government an interest in operating in Brazil -- the economic team says that the public notice for federal accreditation is undergoing final adjustments before publication.

The federal government expects to raise up to usd 2 billion a year from the betting market, which also includes virtual casinos.

Appeal to the STF

Sources in the Ministry of Finance say that if Loterj doesn't comply with the Sports Betting Secretariat's requests, the Federal Government will appeal to the STF.

Today, the Rio de Janeiro lottery has four accredited bets and another three in the process of being authorised. The 30-day deadline given by Loterj for more companies to apply for accreditation ends on 4 April.

The Paraná State Lottery (Lottopar) was also annoyed by Loterj's stance and went to court. Lottopar has joined a public civil action that is taking place in the Rio state courts and is questioning the criteria that the Rio de Janeiro company has adopted for accrediting bets.

Loterj said that the sale of its products, within the scope of an accreditation for the exploitation of a public service via the Internet, does not go beyond the territorial limit of the authority's jurisdiction, which has been legitimized and settled by the STF.

"The bettor, as an essential condition for the conclusion of any consummation, is obliged to declare that he accepts and agrees with the fact that the bet is carried out, for all purposes, in the State of Rio de Janeiro," it added in a statement.

Loterj also said that it maintains a dialog with all spheres of the public and private sectors, as well as the control and prosecution bodies, cherishing a federative and democratic environment. "In this context, we inform you that yesterday we received the letter from the Ministry of Finance, which will be analyzed and responded to," it concluded.