Official magazine of the International Masters of Gaming Law
®
MALTA MARKET FOCUS
INTERNATIONAL MASTERS of GAMING LAW MAGAZINE
VOLUME 5 | NO. 3 | SEPTEMBER 2025
LANDMARK LEGAL CASES IN EUROPE AND THE U.S. PLUS: PREDICTION MARKETS FEDERAL VS STATE VS MUNICIPALITY IN BRAZIL
DFS & SWEEPSTAKES IN CALIFORNIA RG THROUGH TECHNOLOGY IN SPAIN WINNING HEARTS AND MINDS IN GAMING
...AND MUCH MORE!
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IMGL MAGAZINE | JUNE 2025 IMGL MAGAZINE | JANUARY 2023
MALTA’S FATF GREY-LISTING IMGL OFFICERS 2025
Officers of IMGL for 2025
PETER KULICK 1 st Vice President DICKINSON WRIGHT PLLC LANSING, MICHIGAN +1 517 487 4729 PKULICK@DICKINSONWRIGHT.COM MARC DUNBAR President JONES WALKER TALLAHASSEE, FLORIDA +1 850 214 5080 MDUNBAR@JONESWALKER.COM COSMINA SIMION Executive Vice President WHSIMION & PARTNERS BUCHAREST, ROMANIA +40 31 420 6225 COSMINA.SIMION@ WHSIMIONPARTNERS.RO
PHIL SICUSO Assistant Treasurer BOSE MCKINNEY & EVANS, LLP INDIANAPOLIS +1 317 684 5265 PSICUSO@BOSELAW.COM
RON SEGEV Secretary SEGEV LLP TORONTO / VANCOUVER +1 604 629 5402 RON@SEGEVLLP.COM
DR. SIMON PLANZER Assistant Secretary PLANZER LAW AG ZUG, SWITZERLAND +41 41 512 42 82 PLANZER@PLANZER-LAW.COM
MATTHIAS SPITZ 2 nd Vice President MELCHERS LAW HEIDELBERG +49 62 2118 50141 M.SPITZ@MELCHERS-LAW.COM
ERNEST C. MATTHEWS IV Vice President, Affiliate Members INTERNET SPORTS INTERNATIONAL LAS VEGAS, NEVADA +1 954 478 8758 ERNEST@ISISPORTS.COM BIRGITTE SAND Vice President, Affiliate-Regulator Members BIRGITTE SAND AND ASSOCIATES COPENHAGEN, DENMARK +45 24 44 05 03 BS@BIRGITTESAND.COM
KATE LOWENHAR-FISHER Treasurer EXECUTIVE VICE PRESIDENT, CHIEF LEGAL OFFICER, EVERI HOLDINGS INC +1 800 566-2087 KATE.LOWENHARFISHER@EVERI.COM
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IMGL MAGAZINE | SEPTEMBER 2025
PRESIDENT’S WELCOME
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Work behind the scenes bearing fruit
MARC DUNBAR President INTERNATIONAL MASTERS OF GAMING LAW
Welcome to September and the culmination of several months of work preparing for our autumn conference in Lisbon. Looking through the schedule of education and social events, it promises to be an exceptional experience, and I would like to extend my thanks on your behalf to our programming and organizing committees for their hard work. Lisbon will be a milestone for the IMLG as it marks the first time we have joined forces with our partners at SBC to co-locate our conference with the SBC Lisbon Summit. The tie-up has seen IMGL provide two groundbreaking panel sessions for their Leaders Conference as well as contributions to the Summit itself. I believe these platforms provide valuable exposure for IMGL and our members, and I am looking forward to seeing the fruits of this and other partnerships develop further. Attendees to our Lisbon conference are entitled to free access to the SBC Summit with its estimated 30,000 visitors and I encourage you to make the most of this opportunity. As I reported in the last edition of the IMGL Magazine, our various committees have been working hard behind the scenes and Lisbon will be an opportunity to hear from them at our member’s meeting. Our Nominations Committee has an important announcement concerning this year’s Regulator of the Year, our Education Committee is relaunching the Student Writing Competition in a revised format and our Publications and Marketing Committee has news of a tender for
SEO and Social Media support. Our Masterclass Committee now has dates of events at which IMGL will be hosting a masterclass. Like the Leaders event mentioned above, these are great platforms for members as opportunities to demonstrate the quality of IMGL member expertise and potentially to encounter clients requiring that expertise. There will also be updates on other important work to extend member benefits and enhance the presence of IMGL around the world of gaming including details of our conference program in 2026 which is already at the planning stage. At the member meeting, you will be able to pick up minutes of previous meetings and financial reports. These are also held in the member’s area of the IMGL website as part of our revised financial reporting process and commitment to greater transparency for members. Members are also invited to review the ongoing budget process and are welcome to explore ways to participate in the work of our committees. The founding principles of the IMGL are sound and strong but they allow for the organization to renew and refresh to match the constant and rapid change in our industry. I am grateful to all our committees for continuing to push boundaries and would support all members who explore how they can be a more active part of our future.
Marc Dunbar
IMGL MAGAZINE | SEPTEMBER 2025
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EDITORIAL
I know it when I see it!
If it walks like a duck, swims like a duck, and quacks like a duck, then it is probably a duck. You are certainly familiar with the abductive logic reasoning in the Duck Test. It is used to argue that a subject or phenomenon can be identified by observing its common characteristics and behaviors. In other words: It is what it appears to be! Lootboxes, prediction markets, prize draws. Even the provisioning of platform services. It is the gambling duck! Sometimes these characteristics may be so seemingly present (or absent!) that it is tempting to make conclusions even in the absence of a precise definition. US Supreme Court Justice Potter Steward famously argued in his concurring opinion in Jacobellis vs Ohio (1964) that criminal obscenity laws – that would effectively limit free speech – were permissible only when applied to “hard-core pornography”. He explained “I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description, and perhaps I could never succeed in intelligibly doing so. But I know it when I see it, and the motion picture involved in this case is not that.” Even in the presence of a precise definition of ‘gambling’ though, things may effectively turn out to be ambiguous and obscure. Hence, we need to take a close look at each specific case and not miss the trees for the forest.
Accordingly, in this issue, several articles look at specific examples of law in action. In the US, Elon Musk’s political action committee launched a high- profile prize draw offering lucky winners the chance to “win” US£1 million. Under the Duck Test, it appears to be waddling, swimming and quacking but Mark Balestra concludes that the courts are likely to see things differently. Another high-profile case occupying time in the US courts is that of Kalshi, which is continuing to argue that its Prediction Market offers do not constitute sports betting even though its marketing efforts allude to it. Daniel McGinn provides an analysis on cases from the district and appeals courts in New Jersey, Nevada and Maryland and concludes that a lot of water is likely to pass under that particular bridge before it is resolved. The outcome of such cases is regularly of vital importance for the company’s product or services. If the courts qualify the offer as ‘gambling’, it will usually become either illegal or subject to substantial regulatory requirements. By contrast, staying beyond the regulator’s reach may dramatically reduce legal risk, licensing costs and compliance burden. If, as in the Kalshi case, the company can demonstrate that it is operating legally, it potentially opens up US states which currently do not permit sports betting. Two of those – Texas and California – alone represent huge untapped markets for which it may be worth paying high legal fees in court proceedings.
SIMON PLANZER PHD Editor in Chief IMGL MAGAZINE
Contents 6
The forbidden Apple: liability of online service providers in Europe Federation vs States vs Municipalities: Brazil’s Supreme Court weighs in
12 20 24 32 38 42 46
State of play: Prediction Markets
Recent regulatory developments in Spain Is Elon Musk’s “Earn a Prize” an illegal lottery?
Argentina: could weak enforcement of the law endanger a regulated ecosystem?
DFS and Sweepstakes in California
Winning hearts and minds: how the gambling industry can influence the push for tighter regulations and higher taxes
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IMGL autumn conference: all roads lead to Lisbon
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IMGL MAGAZINE | JUNE 2025 IMGL MAGAZINE | SEPTEMBER 2025
EDITORIAL
The Federal vs State arguments which are being aired in the Kalshi case are not exclusive to the US. In Brazil the Supreme Court is looking at a similar situation as reported by Caio de Souza Loureiro. There, states and even municipalities are playing a form of regulatory arbitrage to attract operators to their territories. In Europe, finally, the rights of member states to regulate their gambling markets has regularly conflicted with the EU’s Internal Market principles. Robbe Verbeke analyzes a case where Apple’s safe haven as a digital platform provider under EU law was tested almost to breaking point in a Belgian court. The case centered around lootboxes and could well be tested elsewhere, too. It shows that even in the presence of an unlawful lottery, the question as to who bears responsibility for it may still be a matter of dispute. In the logic of the Duck Test, just because everyone agrees it is a duck, that does not (yet) make the provider of the duck’s habitat responsible for the duck’s behavior. Allow me to conclude with a critical note on the Duck Test. The trouble with abductive reasoning is that it only provides for a plausible, likely conclusion while not verifying the conclusion. And even beyond that logical flaw, I propose to consider one important question: are the tools of a given national gambling act suitable and intended to address the phenomenon at hand? Some legislators chose to say ‘no, they are not’. The Swiss Gaming Act, for example, expressly exempts activities from the Gaming Act that are subject to the scrutiny by the Financial Market Supervisory Authority as defined in the Financial Market Act. Equally, snowball, avalanche and pyramid schemes are exempted from the scope of the Gaming Act, too and subjected, by law, to the rules of the Unfair Competition Act. It is a legitimate question. Should we leave it to the legislator or to the judiciary to make that classification call? Simon planzer@planzer-law.com
To access our extensive archive of expert gaming law articles visit www.IMGL.org/publications
IMGL Magazine is owned, published and distributed by: The International Masters of Gaming Law PO Box 27106, Las Vegas, NV 89126 USA The IMGL is a domestic non-profit corporation registered in Nevada, U.S. with registration number NV20121147120 Editor in Chief: Simon Planzer PhD, planzer@planzer-law.com Publication & Marketing Committee: Co-chairs , Simon Planzer (Publications), Ali Bartlett (Social Networks & Digital) Members : Luiz Felipe Maia, Daniel McGinn, Luis Carvalho Staff : Phil Savage, Brien Van Dyke Head of Publications: Phil Savage phil@IMGL.org Design and production: SportBusiness Communications. Copyright: All rights reserved to IMGL. No part of this publication may be reproduced or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without prior permission from the publisher. The articles expressed in this publication do not necessarily reflect the views of IMGL but those of the authors. The publisher and editor do not accept any liability for the contents of the authors’ contributions.
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IMGL MAGAZINE | JUNE 2025 IMGL MAGAZINE | SEPTEMBER 2025
EUROPEAN LAW IN PRACTICE
The forbidden Apple
ROBBE VERBEKE SETS OUT A CASE ON THE LIABILITY OF ONLINE SERVICE PROVIDERS FOR GAMBLING FEATURES IN THIRD-PARTY APPS
T his article examines a Belgian case in which a claimant sought damages from Apple after spending nearly €70,000 on loot boxes purchased through an iPhone app. The dispute raised two key questions: whether loot boxes qualify as illegal games of chance under Belgian gambling law, and whether Apple, as operator of the App Store, can be held liable for hosting such content. The discussion explores the Belgian Gaming Commission’s position that loot boxes constitute gambling, the relevant provisions under Belgian law on games of chance, and the EU liability regime for online intermediaries under the e-Commerce Directive and the Digital Services Act. Central to the debate is whether Apple acted merely as a passive host, entitled to safe harbor protection, or whether its active role in app review and payment processing undermines that status. Although the case was settled before judicial clarification, it highlights unresolved questions regarding platform liability for illegal gambling content in the EU.
Introduction A Belgian man brought an action for extra-contractual liability against Apple Distribution International Ltd (“Apple”), claiming compensation for damages that resulted from an illegal game of chance acquired through Apple’s App Store. The claimant had not downloaded a casino app. He had downloaded a regular gaming app, in which he could purchase “loot boxes”. Over the course of a few months in 2021, the claimant spent a total of €67.813 on his iPhone – and through the in-app payment system – on loot boxes in the video game in question. According to the claimant, the mechanism of loot boxes is contrary to Belgian gambling legislation. He argued that Apple, by allowing in its Belgian App Store a game that infringes that legislation, committed an extra-contractual breach, so that it can be held liable for the resulting damage.
The case hinges on two questions: 1) Is a loot box in a video
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game really a game of chance; and if so, 2) can Apple be held liable for the losses incurred by the player as the provider of the App Store on which the gaming software was acquired? With regard to the potential liability of Apple, the judge referred a number of questions to the Court of Justice of the European Union. 1 Loot box gambling A report on loot boxes under the Belgian law on games of chance caused quite a stir when it was released back in April of 2018. In this report, the Gaming Commission concluded that certain loot boxes satisfied all the requirements to be considered gambling. Since these loot box gambling products were not licensed, they were illegal, and publishers of games with loot boxes could be held liable. The Gaming Commission defines loot boxes as “the umbrella term for one or more game elements that are integrated into a video game whereby the player acquires game items either for payment or for free in an apparently random manner. These items can be very diverse, varying from characters or objects to emotions or special characteristics.” The Belgian law on games of chance of 7 May 1999 defines a game of chance as “ any game in which a stake of any kind is wagered, whether the loss of this stake by at least one of the players or a gain of any kind for at least one of the players or organisers of the game is the result, and in which chance plays even an incidental role in the outcome of the game, the determination of the winner or the determination of the amount of the winnings.” 2 As such, for a game to be a game of chance, there must be 1) a stake, 2) a game in which chance plays an element, 3) a potential gain of any kind. Loot boxes are often (and this was the case here) offered in the form of a game, whereby chance
determines the outcome (i.e. what the player receives from the loot box). Loot boxes can be purchased for money (as was the case here since the loot boxes were purchased through the Apple eco-system via their IAP payment system). It is therefore quite straightforward to establish that two-out-of- the-three criteria are indeed satisfied. One can debate whether a loot box really offers a type of (potential) gain to the player, if the prizes in question cannot be redeemed for anything of actual monetary value. However, it cannot be disputed that these loot boxes, and the prizes they have to offer, represent some sort of value to the players purchasing them. Testament to this reality is the fact that the claimant in this case spent almost €70.000 on them. As intangible as the prize may be, it does seem to represent value, and this is what the Gaming Commission also concluded in its 2018 report on loot boxes. It followed a judgment from the Council of State regarding a type of social casino website. 3 There too, the (casino) games on offer did not pay out any actual prizes or money. The players could only win more in- game currency, with which they could continue playing. The Council of State found that, under the provisions of the Belgian law on games of chance, this constituted a potential gain, and found that the social casino website in question was rightfully considered to be illegal by the Gaming Commission. Apple liability 1) Liability regime for intermediate service providers Having established that there was illegal gambling lurking within a regular gaming app that was provided on the Apple App Store, the next question then is whether Apple itself could be held liable towards the player. European Union law provides a specific liability regime for providers of (online) intermediary services. 4 Since
1 Request for a preliminary ruling from the Ondernemingsrechtbank Antwerpen, afdeling Antwerpen (Belgium) lodged on 24 January 2025 – LS v Apple Distribution International Ltd, Case C-47/25, Apple Distribution International 2 See art. 2, 1° of the law on games of chance 3 Raad van State (België) (Council of State (Belgium)), 29 October 2015, No 232.752. 4 I.e. mere conduit, caching, and hosting services, consisting of the transmission or storage in a communication network of information provided by a recipient of the service.
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17th February 2024, this liability regime can be found in Regulation (EU) 2022/2065 of 19 October 2022 on a Single Market For Digital Services and amending Directive 2000/31/EC (‘the Digital Services Act’ or ‘DSA’), and more specifically articles 4, 5, 6 and 8 of that Regulation. Prior to this point, the liability regime was enshrined in articles 12 to 15 of Directive 2000/31/EC of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’ or ‘e-Commerce Directive’). Although there are certain differences between the wording of the Directive on electronic commerce and the Digital Services Act in this regard, the general outline is very similar. Therefore, case-law with regard to the liability regime of the Directive on electronic commerce is also applicable to the liability regime as set out in the Digital Services Act. The case at hand is still under the (old) provisions of the Directive on electronic commerce. The Directive on electronic commerce explicitly provides that it does “not apply to […] gambling activities which involve wagering a stake with monetary value in games of chance, including lotteries and betting transactions” . 5 Such an exclusion does not exist for the Digital Services Act. The referring court in the Belgian Apple case asked for clarification from the Court of Justice on whether the liability regime of the e-commerce Directive applies when the illegal content in question relates to gambling. Even if no longer relevant under the DSA, it should be pointed out that the liability regime of the e-commerce Directive has been considered in general as also encompassing liability for illegal content related to gambling. 6 This is the only
workable interpretation of the exclusion of gambling from the e-commerce Directive. The exclusion aims to make sure that there would be no unintended creation of a unified EU gambling market, with cross-border provision of services. Contrary to regular markets, this is not wanted for the gambling market, which are regulated on a national (or regional) level, with national licenses and compliance regimes. 7 The exclusion of gambling was not, however, intended to complicate and diversify the liability regime of internet service providers with regard to illegal content made available through their services. On the contrary: this liability regime can only function properly if it applies horizontally, to all types of illegal content. The fact that the DSA (which now incorporates this liability regime) does not have an exclusion for gambling, only further strengthens the argument that it was never the intention to apply different rules to illegal gambling content in this regard. Now, what does this liability regime entail? Essentially, it sets up a safe harbor for intermediate service providers. They are not liable for illegal content being made available using their services, provided that they are not actively involved and are not aware of the illegal content. Specifically with regard to “hosting”, the DSA provides that the safe harbor only applies on condition that the provider: (a) does not have actual knowledge of illegal activity or illegal content and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or illegal content is apparent; or (b) upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the illegal content.
5 Art. 1 (5), d) of Directive 2000/31/EC of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market 6 See e.g. Commission Staff Working Document on Online gambling in the internal market, 25 October 2012, accompanying document regarding the Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions “Towards a comprehensive European framework for online gambling”, SWD(2012) 345 final, point 4.1.: “While Article 1(5)(d) excludes gambling activities which involve wagering a stake with monetary value in games of chance, including lotteries and betting transactions from the scope of the directive the liability regime for information society service providers hosting or transmitting illegal content, Articles 12 to 15 of the Directive, also applies to gambling-related content.” 7 See e.g. CJEU 8 September 2009 (Grand chamber), C-42/07, Liga Portuguesa, ECLI:EU:C:2009:519.
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In addition, the recipient of the service cannot act under the authority or the control of the provider. 8 It should be noted that the European Commission has categorized the App Store as a hosting service that stores and disseminates information to the public at the request of recipients of its service. 9 2) Apps containing illegal gambling content Whereas the DSA refers to “illegal content”, the e-commerce Directive (applicable in this case) refers to the hosting of “illegal activity or information”. In one of its questions to the Court of Justice, the referring court asked for clarification as to whether, under the e-Commerce Directive, apps or software can be considered “information” and hence come within the scope of the specific liability regime foreseen by articles 12-14 of the e-Commerce Directive. It stands to reason that apps with illegal content would indeed be covered by the provisions of “illegal information” or “illegal activity” as used in the e-Commerce Directive. This has been generally considered to be true, for instance in preparation of the DSA, where it was stated that “a large array of online actors ranging from traditional electronic communications providers (e.g. internet service providers) to new online intermediaries (e.g. search engines, social media companies, software and game and cloud providers), potentially fall under the scope of the E-commerce Directive” and that the “E-commerce Directive liability rules apply to all ‘information society services’ ”. 10 The same approach was taken in a study made on behalf of the European Commission regarding the scope of the e-Commerce Directive, which refers to “Services that offer users the ability to store and
share different forms of files online (including video, audio, image, software and text documents)”. 11 The referring court also sought clarification regarding the nature of “illegal” content in this context. The e-Commerce Directive excludes, in principle, a generic type of activity, i.e. “gambling activities which involve wagering a stake with monetary value in games of chance, including lotteries and betting transactions” 12 . But at the same time gambling is only illegal if it is not properly licensed. It is a matter of national (or regional, as is the case in some Member States) law whether certain software should be regarded as illegal gambling or not. A loot box in a game can constitute illegal gambling in Belgium, and at the same time be perfectly legal in another Member State. It can be legal because it is licensed, but also because it is simply not considered to be a game of chance. In determining what is legal or illegal, there is no pan-European definition.
3) Assessment of Apple’s liability
The root of the matter is the question whether Apple can rely on the safe harbor provisions for a hosting provider. 13 This requires an assessment of the extent to which Apple had knowledge (or should be considered to have knowledge) of the illegal content in question. The referring Court also sought guidance from the Court of Justice on this issue. Should Apple (or any other service provider for that matter) take action as soon as it becomes aware of the existence of “loot boxes” in a game on the Belgian market, knowing that loot boxes may (but not necessarily) be considered games of chance? Or does such general information not suffice as actual knowledge of the illegal nature of the game in question?
8 Art. 6 of Regulation (EU) 2022/2065 of 19 October 2022 on a Single Market For Digital Services 9 Commission Decision of 25 April 2023 “designating App Store as a very large online platform in accordance with Article 33(4) of Regulation (EU) 2022/2065 of the European Parliament and of the Council” , C(2023) 2726 final, consideration (1). 10 Tambiama Madiega, “Reform of the EU liability regime for online intermediaries - Background on the forthcoming digital services act” , Euro- pean Parliamentary Research Service, PE 649.404 – May 2020, section 1.1 “Liability regime: Aim and scope of the directive” 11 VIR, “Hosting intermediary services and illegal content online - An analysis of the scope of article 14 ECD in light of developments in the online service landscape”, A study prepared for the European Commission DG Communications Networks, Content & Technology, Luxembourg, Publica- tions Office of the European Union, 2018, p. 13. 12 Art. 1 (5), d) of Directive 2000/31/EC of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market 13 Under the e-Commerce Directive or the DSA
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Article 14 of the e-Commerce Directive (as well as article 6 of the DSA), regarding hosting activities, distinguishes criminal from civil liability. The former can only be established when the provider has “actual knowledge of illegal activity or information” . The latter can however be established when the provider would be “aware of facts or circumstances from which the illegal activity or information is apparent” . In the present case, the issue is civil liability, so there is no need to demonstrate that Apple had actual knowledge. The Court of Justice has issued guidance on how the requirement that a provider must be “aware of facts or circumstances from which the illegal activity or information is apparent” should be interpreted. It found that a hosting provider cannot rely on the safe harbor exemption if it was aware of facts or circumstances on the basis of which a diligent economic operator should have identified the illegality in question and acted accordingly. This is interpreted as covering every situation in which the provider concerned becomes aware, in one way or another, of such facts or circumstances. 14 The Court also finds that “the illegality of the activity or information must be a matter of actual knowledge or must be apparent, that is to say, it must be specifically established or readily identifiable” and refers to the need to maintain a balance between the various interests at stake, which include observance of freedom of expression. It states: “Thus, first, the providers of the services concerned cannot, in accordance with Article 15(1) of that directive, be subject to a general obligation to monitor the information which they transmit or store or to a general obligation actively to look for facts or circumstances indicating illegal activity. Second, pursuant to Article 14(1)(b) of the Directive on Electronic Commerce, those providers must, as soon as they actually obtain knowledge or awareness of illegal information, act expeditiously to remove or to disable access to that information, and must do so with
due regard to the principle of freedom of expression. As the referring court has also pointed out, it is only in relation to specific content that such a provider is able to fulfil that obligation.” 15 As such, it would seem that a mere reference to “loot boxes” would not suffice to hold Apple accountable for gaming software made available on the Belgian market via its App Store. Indeed, not every loot box will constitute gambling under the definition of the Belgian law on games of chance. However, it could be argued that Apple was aware of the fact that real money, in large amounts, was being paid by players for these loot boxes. Indeed, payments go through Apple’s eco- system. 16 This could have (and perhaps should have) triggered additional scrutiny from Apple with regard to possible illegal gambling activities. The Belgian legal framework, and more specifically the interpretation of the Belgian Gaming Commission regarding loot boxes, was covered extensively in the media and could be considered as something that should have been known to Apple. Furthermore, it should be noted that the safe harbor liability regime can never apply “when the recipient of the service is acting under the authority or the control of the provider.” 17 The e-commerce directive states in consideration (42) of its preamble: “The exemptions from liability established in this Directive cover only cases where the activity of the information society service provider is limited to the technical process of operating and giving access to a communication network over which information made available by third parties is transmitted or temporarily stored, for the sole purpose of making the transmission more efficient; this activity is of a mere technical, automatic and passive nature, which implies that the information society service provider has neither knowledge of nor control over the information which is transmitted or stored.”
14 CJEU (Grand Chamber), 12 July 2011, C‑324/09, L’Oréal, ECLI:EU:C:2011:474, point 120-121. 15 CJEU (Grand Chamber), 22 June 2021, Joined Cases C 682/18 and C 683/18, Youtube and Cyando, ECLI:EU:C:2021:503, point 113. 16 See for more detail the opinion of Advocate general M. CAMPOS SÁNCHEZ-BORDONA of 27 March 2025, C‑34/24, Stichting Right to Consum- er Justice, ECLI:EU:C:2025:212, point 10-11. 17 Art. 14 (2) e-commerce Directive and art. 6 (2) Digital Services Act.
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The applicability of this provision in this case was also put forward for review by the referring court. The Court of Justice has in the past ruled that the fact “that the operator of an online marketplace stores offers for sale on its server, sets the terms of its service, is remunerated for that service and provides general information to its customers” does not push it beyond a passive intermediary, and such an operator can still enjoy the safe harbor for liability. 18 Similarly, the Court of Justice has stated that the fact “that the operator of a video-sharing platform, such as YouTube, implements technological measures aimed at detecting, among the videos communicated to the public via its platform, content which may infringe copyright, does not mean that, by doing so, that operator plays an active role giving it knowledge of and control over the content of those videos” . 19 However, the creating, selecting, viewing or monitoring of content uploaded to their platforms could place the platform provider in an active rather than passive role. The Court of Justice also finds: “Where, by contrast, the operator has provided assistance which entails, in particular, optimizing the presentation of the offers for sale in question or promoting those offers, it must be considered not to have taken a neutral position between the customer- seller concerned and potential buyers but to have played an active role of such a kind as to give it knowledge of, or control over, the data relating to those offers for sale. It cannot then rely, in the case of those data,
on the exemption from liability referred to in Article 14(1) of Directive 2000/31.” 20 Apple would likely argue that it is simply a passive host of the apps available on its app-store. However, any app that finds its way into Apple’s App Store must first pass a process of review by Apple itself. There are guidelines which must be followed, 21 and which – amongst other things – refer to the content of the apps that are intended for dissemination through the App Store. These guidelines provide, for instance, that “Apps should not include content that is offensive, insensitive, upsetting, intended to disgust, in exceptionally poor taste, or just plain creepy.” Even if these guidelines, or at least some of them, serve a commendable purpose, it is hard to ignore that Apple actively reviews apps before admitting them to the App Store. This goes beyond setting out general terms and conditions. In addition, as mentioned, Apple is also actively involved in the sense that in-app payments go through its payment system, and Apple thereby profits from players purchasing (illegal) loot boxes. This does not align with the concept of a merely passive hosting provider. It seems that Apple being liable for illegal gambling tucked away in a regular game on offer in its App Store, is not that far-fetched. We will however never know what the Belgian judge would have decided in the end, nor what the guidance of the Court of Justice would have been on the matters referred to it by the judge. Apple settled the case with the claimant. But the EU’s safe harbor for digital platforms may not be all that safe.
ROBBE VERBEKE Partner, Vlaemminck.law
For more information contact robbe.verbeke@vlaemminck.law +32 476 25 39 25
18 CJEU (Grand Chamber), 12 July 2011, C‑324/09, L’Oréal, ECLI:EU:C:2011:474, point 115. 19 CJEU (Grand Chamber), 22 June 2021, Joined Cases C 682/18 and C 683/18, Youtube and Cyando, ECLI:EU:C:2021:503, point 109. 20 CJEU (Grand Chamber), 12 July 2011, C‑324/09, L’Oréal, ECLI:EU:C:2011:474, point 116. 21 See https://developer.apple.com/app-store/review/guidelines/
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BRAZILIAN REGULATION
Federation vs States vs Municipalities BRAZIL’S SUPREME COURT WEIGHS IN ON THE TWO- OR EVEN THREE-WAY STRUGGLE TO REGULATE NATION’S LOTTERIES FINDS CAIO DE SOUZA LOUREIRO
R ecent years have seen significant activity in the Brazilian gambling sector, with new legislation, Supreme Court rulings, and updated regulations resulting in a dynamic yet unstable market. A key topic of ongoing debate involves regulatory discussions among federative entities. The process began when States appealed to the Supreme Court for the authority to operate lotteries. Currently, Brazil faces complex regulatory challenges involving the Union, States, and Municipalities. Following two Supreme Court decisions that clarified the roles of the Union and States, the Court is now considering cases pertaining to restrictions on State-level operators and whether Municipalities also possess the right to operate. Concurrently, federal authorities are engaged in efforts to harmonize regulations and coordinate supervision and enforcement regarding sports betting and online gaming operators. The results of this discussion will influence the market landscape, addressing issues of competition as well as determining the barriers and permits that companies must navigate to operate in Brazil.
This article examines the status of federative disputes in the Brazilian gambling market, with emphasis on the roles of the federal government, the States, and the newly established operations of Municipalities. It provides an overview of the relevant legal background and discusses potential future developments in a scenario that remains undefined. How the Brazilian federation works Brazil is a federation in which powers and responsibilities are distributed among three entities: the Union, the States, and the Municipalities. According to the Brazilian Constitution, these entities hold two primary types of authority: the power to legislate and the power to manage and provide public services and utilities. The Constitution reserves certain matters for legislation exclusively by the Union, while others may be legislated by the Union, States, and Municipalities. In instances where all three entities have legislative authority, general rules established by the Union take precedence over State and Municipal laws.
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The Constitution specifies which public services and utilities each federative entity may provide. The Union holds a monopoly on those deemed relevant to national interests, while States are responsible for services aligned with their own interests, and in some cases, share responsibilities with the Union (such as roads, land transportation, and lotteries). According to the Constitution, Municipalities are limited to providing services of “local interest,” generally relating to urban matters such as waste collection, traffic management, and sewage. This context is important for understanding discussions regarding lotteries, as Brazilian law classifies lotteries as a type of public service. Therefore, determining which federative entities have the authority to provide and regulate lotteries requires reference to the constitutional framework concerning powers to legislate and deliver public services and utilities. Quick note – lotteries in Brazil have a wide reach Initially, it is pertinent to clarify that Brazilian legislation adopts a broad interpretation of the term “lottery.” This encompasses not only traditional lottery formats but also fixed-quota bets, which include sports betting and online gaming. Law no. 13,756/2018 classifies “fixed-quota bets” as a form of lottery, and the subsequent Law no. 14,790/2023 further extends this definition to incorporate online games as a category of fixed-quota bets. Therefore, references to “lottery” in legislation generally encompass fixed-quota bets, except when expressly excluded. A little bit of history – how we got here Back in the middle of the last century, some laws emerged concerning the regulation of lottery services in Brazil. The first, Decreto-Lei no. 6.259/1944, authorized the Union and the States to provide lottery services. Later, Decreto-Lei no. 204/1967 denied the right of States to provide lottery services, by giving exclusivity to the Union. Since then, the Union has been the sole provider of lottery in Brazil – with some exceptions provided by the same Decreto-Lei no. 204/1997.
However, in 2020, the Supreme Court (“STF”) ruled that such a monopoly did not align with the Brazilian Constitution, since it does not provide any exclusivity to the Union. Indeed, judging by the lawsuits filed by Rio de Janeiro State and the Brazilian Association of States Lotteries, STF deemed that the Constitution did not place any restriction on the States providing lotteries. STF concluded that the Union has the exclusive powers to legislate on lotteries, as provided by the Constitution. However, these powers do not imply the Union should have a monopoly on the provision of lotteries. Hence, States can provide such services, provided that they respect the federal legislation, including by not offering any lottery type not referred to in such legislation. The recent Supreme Federal Court judgment reopened the market for States to provide lottery services, prompting several Brazilian States to begin granting authorizations and concessions to lottery operators. In 2018, Law No. 13,756 legalized sports betting in Brazil, allowing the Ministry of Finance a two-year period, extendable by an additional two years, to issue regulations. However, comprehensive regulation was implemented later, with several rules enacted in 2024, which left certain issues unresolved and continued to affect the gambling market. Subsequently, in 2023, Law No. 14,790 legalized online gaming and introduced significant amendments to previous legislation, establishing the foundation for the current regulatory frameworks. As a result of these developments, a regulated market for sports betting and online gaming commenced on January 1, 2025.
In short, Brazilian law and Supreme Court precedent state:
• Lottery, sports betting, and online gaming are legal public services. • Law no. 14,790/2023 allows federal and state governments to authorize or grant concessions to private operators. • The federal government regulates gambling, while States may run lotteries within their own borders.
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However, this order is limited to Loterj’s contracts and does not automatically impose restrictions on other states regarding the acceptance of users and bets originating from outside their respective territories. The issue of territory is closely linked to another matter coming from the authority held by States to operate or delegate lottery services. Since States can authorize companies, the requirements for operating lotteries, sports betting, or online gaming differ across States. In seeking to attract more operators, some States reduce entry requirements, allowing a broader range of companies to participate. While this does not necessarily lead to negative outcomes – there are companies which comply with State regulations – it is nevertheless the case that a company may choose State authorization over stricter federal standards. If there are no geographical restrictions, these companies can provide services across the country once they receive local authorization. In cases where permit procedures lack thorough oversight and due diligence, misconduct or damages caused by such companies may affect the entire sector. Sports betting and online gaming face significant scrutiny in Brazil, with some political figures and segments of the media questioning the permissions granted by recent laws. News coverage often does not distinguish between companies operating under regulation and those acting without authorization, and unregulated operations give rise to many of the arguments against sports betting and online gaming. Any controversy involving an authorized company – even if the authorization was issued by a single State – could be used to support increased regulation or a complete ban. The Union strikes back – restrictions from Section 35-A During the legislative process leading to Law no. 14790/2023, Congress amended Law no. 13756/2018 by introducing Section 35-A, which aims to regulate the authority of individual States. Among its provisions, Section 35-A sets out restrictions on the
Discussions between the Union and the States The STF’s rulings on three cases 1 concerning the federative powers over lotteries established significant guidelines, but did not fully resolve the ongoing debate.
According to the STF:
• The Union does not hold a monopoly over lottery operations; however, it maintains the authority to legislate on this matter. • States are permitted to provide lottery services as long as such services are confined to their respective territories. • States may enact legislation regarding lottery services without contradicting federal law, including prohibiting the operation of lottery types not specified by federal regulations. The STF’s decision has enabled States to offer lottery services, but this development has introduced several challenges. Notably, some States have not implemented measures to restrict these services to their own territories, leading authorized companies to operate without boundaries and provide offerings throughout Brazil. Territorial jurisdiction presents particular difficulties for sports betting and online gaming, as regulating internet-based bets is inherently complex. While some operators wishing to serve the Brazilian market must obtain federal authorization – entailing multiple requirements and a fee of 30 million Brazilian Reais – others pursue State or Municipal licenses, which involve lower costs and fewer obligations, yet still commence operations nationwide. The situation developed rapidly as the Union filed a new case with the STF, seeking a decision to declare the contractual terms of Loterj (Rio de Janeiro State Lottery) unlawful on the grounds that they did not explicitly prohibit authorized companies from operating beyond the borders of Rio de Janeiro. The STF subsequently issued an injunction requiring Loterj to mandate the use of geolocation technology to block bets and users located outside the State of Rio de Janeiro.
1 ADPF no. 492, ADPF no. 493, and ADI 4986.
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States’ ability to offer lottery services, including limitations on advertising and a key prohibition preventing any single company from holding more than one concession – the effect being that no company may operate lotteries in more than one State within Brazil. This regulation notably restricts competition, as it grants exclusive operational rights to Caixa Econômica Federal , the federal public bank currently administering Brazil’s national lottery. Furthermore, by barring companies already operating in one State from participating in tenders in other States, the rule diminishes competitive opportunities in newly established State lotteries. Questions have been raised regarding the constitutionality of this restriction, particularly with respect to potential undue influence exerted by the federal government over State autonomy in lottery administration. This issue is viewed as a possible infringement of the ‘federative pact’ set forth in the Brazilian Constitution. The matter has prompted an unconstitutionality claim filed with the Supreme Court by seven States and the Federal District, wherein these entities contest the imposed limitations. STF has already granted an injunction to suspend the effectiveness of two items from Section 35-A – one that introduces the limit of one concession per company and another that restricts a company operating in one State from advertising in another. On the merits, five Justices have already deemed in favour of the States. The rapporteur justice Luiz Fux suspended the effectiveness of §2, stating that: “The restriction of §2 [...] constitutes a violation of the federative autonomy of the States [...] in addition to depriving them of a legitimate means of self-financing.” Thus, an economic group may hold more than one state concession. Regarding §4, the precautionary measure was also favourable to the States. Justice Luiz Fux emphasized that globalization drives broad-reaching marketing actions and that restricting advertising only to the State territory is not reasonable. He
gave the example of the Federal Lottery sponsoring athletes in national and international competitions, concluding: “It does not seem reasonable [...] that a state lottery cannot, for instance, carry out a marketing action at a Brazilian national football team match abroad, simply because the event physically takes place outside the granting state’s territorial limits.”
The injunction currently permits:
• Granting multiple state concessions to one economic group. • Advertising outside state borders.
Third layer – municipalities Following the STF’s decision to open the lottery market beyond federal control, some Municipalities have begun authorizing companies to operate lotteries, including sports betting and online gaming. Municipalities claim that, since the Union no longer holds a monopoly, they share the authority with States to offer these services. Their argument is based on two references to Municipalities in the Justices’ decisions, despite no explicit statement granting them this power. Currently, several municipalities – including major cities such as São Paulo, Belo Horizonte, and Porto Alegre – have taken steps to operate their own lotteries. In some instances, lotteries are already active; for example, Bodó, a small city in Rio Grande do Norte, has become a destination for foreign companies interested in operating sports betting and online gaming in Brazil. Bodó serves as a case study for other Municipalities: despite its small size, it has attracted numerous companies that have paid 300,000 Brazilian Reais for authorization. Bodó does not impose geographical restrictions on these companies, allowing anyone to place bets through its regulated operators. With over five thousand Municipalities in Brazil, the market is significant, although not all will choose to operate lotteries. The presence of municipal lottery operators introduces competition that may impact federal and state lottery
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