BRAZILIAN REGULATION
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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IMGL MAGAZINE | SEPTEMBER 2025
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