STF Minister admits Loterj/ABLE action, asks Government and MP to manifest themselves

It will be the responsibility of Seae (Special Secretariat for Economic Monitoring of the Ministry of Finance) to provide initial information on the privatization of Lotex and on the mentioned exclusive competence of the Government to regulate, authorize, and inspect the lottery activity in the country. In parallel, the Federal Attorney General's Office should present the reasons on behalf of the Government for such an understanding, and the Federal Public Ministry should give its opinion on behalf of the community.

Since the federal government announced the award of the Lotex instant lottery, Able (Brazilian Association of State Lotteries) and Loterj (State Lottery of Rio de Janeiro) especially protested against the "serious damage that privatization of Lotex will cause to social projects supported by scratch cards," as recently announced Sérgio Ricardo de Almeida, president of the Lottery of Rio de Janeiro, noting that Loterj helps with more than US$ 6.16 million to social institutions "that will be kept to a minimum if our activity is suspended."

According to him, the monopoly of lotteries does not belong to the Governemt, since it is not covered by the 1988 Constitution, although it admits that it is incumbent on it to legislate on the subject, "which does not mean to prevent the operation of state lotteries, which plays a fundamental role for social actions in Rio de Janeiro ".

The privatization process of Lotex, which was scheduled to go on sale in December, is already running late because the Brazilian Court of Audit has not yet given its final approval to the bid, which is expected to lead to the first quarter of 2018. With the action, new political, technical and economic discussions may lead to further extension.

Still remains, after the action presented by Able and Loterj, to wait for a position to be taken by Febralot, the federation of lottery companies, which is ultimately an important part of the Brazilian lottery market as it represents about 13,000 points of sales in the country. That is much lower than what is expected from channels for the future Lotex, since the project provides for the installation of 60,000 points of sale, including in pharmacies, markets and other types of establishments that could be accredited to sell the scratch card.

Asked about these actions, ABLE's attorneys Roberto Carvalho Brasil Fernandes, João Carlos Dalmagro and Alexandre Amaral explained to the GMB the following:

The Brazilian Association of State Lotteries – ABLE- filed an action entitled ADPF - Arbitration of Non-Compliance with Fundamental Precept, so that the Federal Supreme Court recognizes that there is no monopoly of the Government for the exploitation of Lottery products.

The Federal Constitution prohibits monopoly in Brazil, except for the economic activities provided for in article 177 and the exclusive services provided for in article 21, XI and XII of CF / 88, and in this relationship, there is no Lottery, Drawings (article 22, XX) or Numeric Prognostic Contests (article 195, III).

The rule in Brazil is free competition and free initiative, provided for in article 170, IV and sole paragraph of the Constitution. THEREFORE, it is forbidden for the Government to monopolize lotteries in Brazil. It is not unknown to ABLE that the STF recognized that the Government has the legal jurisdiction over the matter, but the intention of the state lotteries, is only to exploit the same products legalized by the Government, within the limits of their territories. If it is good for the Government, it is also good for the States.

The same solution was adopted by the Government of Rio de Janeiro and by the Government of Piauí, whose issue has gained relevance, so that ADPF 455, 492 and ADPF 493 are currently in the STF, all of which argue that there is an offense to the federative form of Brazil, principle of autonomy and competence of states, in addition to the principle of efficiency and the constitutional fence of monopoly.

The reason for the actions is the action of the Ministry of Finance, which they see as questioning the operation of the State Lotteries, by virtue of a law of 1967, the notorious Decree Law 204. As a result, the arguers - ABLE, Rio de Janeiro and Piauí, that Articles 1 and 32 of Decree-Law 204/67 should be declared "not approved" by the Constitution, so that it no longer serves as a legal basis for the attempt to establish a monopoly on the lottery activity in the country, shivers of the fundamental precepts invoked.

 Actions 492 and 493 are pending analysis of Minister Gilmar Mendes and ADPF 455, already received, is processed in the report of Minister Luiz Fux.

Source: GMB