BRAZILIAN REGULATION
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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IMGL MAGAZINE | SEPTEMBER 2025
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