Brazil’s Federal Court Upholds Municipal Lotteries Amid Legal Dispute

Brazil’s federal court recently addressed the ongoing dispute regarding municipal lotteries, as Supreme Federal Court (STF) minister Nunes Marques decided not to suspend their operations through a preliminary injunction. This decision highlights the contentious relationship between the federal government and regional lotteries, which shows no signs of resolution.

On March 25, the STF released Marques’ decision following a Claim of Non-Compliance with a Fundamental Precept (ADPF) initiated by Brazil’s Solidarity party. The claim sought to halt municipal lotteries until the STF could determine their constitutionality. The situation mirrors an existing conflict between Lotterj, the state lottery of Rio de Janeiro, and the federal authorities.

The Solidarity party expressed concern that municipal lotteries were contributing to a “truly chaotic scenario,” where local jurisdictions were bypassing federal betting regulations. Such actions have allegedly allowed unlicensed companies to operate within municipalities, causing financial instability for the newly regulated federal betting market and putting player safety at risk.

Despite these concerns, Marques opted not to suspend municipal lottery operations for the time being; however, he requested that the Solidarity party provide additional evidence to support its claims within ten days. Marques also called for input from the attorney general’s office before issuing a final ruling. He stated, “Given the relevance of the matter and its impact on the social order and legal certainty, it is necessary to provide the opinion of the authorities involved.” This input could significantly influence his ultimate judgment, ensuring it is thorough and fair.

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As it stands, municipal lottery operations will continue until the STF reaches a conclusive ruling on their constitutionality. Brazil is home to 26 states and over 5,500 municipalities, many of which are exploring their own regulatory frameworks to establish lotteries that could generate regional revenue. One noteworthy example is the municipality of Bodó, with a population of just over 2,000, which has been actively issuing licenses to operators. The cost for a municipal lottery license in Bodó is merely BRL5,000 (£670.29/€796.81/$867.70), in stark contrast to the BRL30 million fee required for a federal online betting license. Bodó has ignored federal government’s threats to stop its licensing processes and continues to allow its licensees to operate throughout Brazil.

Additionally, a separate case involving the Rio de Janeiro State Lottery (Lotterj) has been progressing through the STF for several months. Various entities, including the federal government and the attorney general, contend that Lotterj is not permitted to allow its licensees to operate outside the state. In a recent ruling in February, the STF upheld a preliminary injunction that prohibited Lotterj from enabling its licensees to operate nationwide. It mandated that Lotterj operators implement geolocation blocking software to prevent players from accessing sites located outside the state. Brazil’s Municipal Lotteries