The Supreme Federal Court recently decided that Member States and the Federal District can exploit the public lottery service, ending an impasse that lasted for years in Brazil’s law. The Brazilian constitutional court declared nullity of the provisions of Decree Law 204/67 (art. 1, caput, and 32, caput and §1º) and held that the Federal Union's prerogative to legislate on lottery matters does not exclude material competence subnational entities.
But, after all, how far does the competence of these federated entities go in managing the lottery activity at the regional level? Our intention is to make some notes and encourage debate about the most appropriate interpretation of the STF's decision. From the outset, it is known that it is only the Federal Constitution that distributes competences among the federated entities: Union, States, Federal District and Municipalities.
Therefore, under the current Constitutional Charter, federated entities are not in the condition of subordinates or administrators of the Union, and any claim to subject States to a hierarchically inferior condition, dependent and without autonomy, is prohibited. It is repeated: only the current Federal Constitution, in theory, could change this relationship between the Union, the states and the Federal District.
Autonomy is fundamental in the recognition and promotion of regional diversity and the establishment of institutional changes at a lower level that, in case of regional success, can be adopted by the central government or other subnational entities. According to the doctrine of Anna Cândida da Cunha Ferraz, the autonomy of federated entities is constituted by the capacities of self-organization, self-government, self-regulation, and self-administration.
Material skills, in turn, as Fernanda Dias Menezes de Almeida teaches, unfold in administrative and financial order. The two orders should serve to “make feasible” the exercise of public service, in accordance with the ratio decidendi of the STF ruling in ADPF 492 and 493.
State autonomy will be expressed both to establish state Lottery Products backed by the Lottery Modes provided for in federal law, and to create a member of the Public Administration who will perform the functions of a Lottery.
The operation of this Lottery, as well as the service it administers, necessarily depends on the exercise of material competence in administrative and financial order and, therefore, the State Lottery must authorize itself, minimally, on the following rules: i) the quantity, for issuing “tickets, lists, coupons” etc., per event; ii) the periodicity of the draws; iii) the sale of lottery products in physical or non-physical environments (online); iv) the allocation of Lottery receipts [4]; v) rules for direct exploitation and conditions required of the operator for indirect exploitation of the products, whether through accreditation, authorization or contracting of permit holders and concessionaires; and vi) approval for the public interest in the creation of lottery products, supported by lottery modalities and its own layout, form of control, advertising, rules for protection and prevention of ludopathy, inspection, dissemination of results, safety and certification standards , among other topics necessary to enable the “proper” functioning of the public service.
The content of these aspects must necessarily be available to the manager of the state (or district) lottery for their evaluation, as a corollary of the administrative and financial dimension of the material competence of the states and the Federal District, because only then can the functioning of the public service be adequate and current: “adequate” to the extent that it satisfies conditions of regularity, continuity, efficiency and security; and “current”, as it guarantees the modernity of techniques, equipment and installations, as defined in article 4, paragraph 2 of federal law 8.987 / 1995 and art. 175 of CF / 88.
Only the proximity between the regional political decision maker and the lottery administration is capable of guaranteeing the above-mentioned predicates, under penalty of jeopardizing the administrative and financial competence of the federated entity in the Lottery administration at once. To violate one of these competence orders would be to infringe material competence; therefore, it would violate the STF command when it attributed material competence for the exploration and regulation of state lottery services.
If this were not the case, the Supreme Federal Court would not, in judging the aforementioned lawsuits, rule out art. 32, §1º, DL 204/67, which limited the issuances, quantities and series of tickets by state lotteries, a matter of administrative content and linked to the viability of the Lottery.
Also, in addition to being part of the list of activities essential to the lottery activity, the setting of the payout falls within the legislative competence of the Member States, especially when fixed in a more favorable way than that provided for in federal legislation. This is because the protection of the right of the consumer (and also of the public service user) is a matter of competing competence, under the terms of art. 24, VIII, of CF / 88. The setting of the allocation rate for regional social demands is also part of a list of competing legislative competences (art. 24, II, of CF / 88), since, when alluding to non-tax revenue originated from the state lottery activity, they have a legal nature pre-budget binding rule.
Therefore, the recognition of material competence and the declaration of invalidity of Decree-Law no. 204/67, art. 1º, caput and 32, caput and § 1º, recognized by the STF in the judgment of ADPF 492 and 493, is equivalent to the admission of the undoubted administrative and financial competence, attributed exclusively to the State (and District) Lottery, within the scope of its territory, to make possible the public lottery service.
In fact, given the systematic division of competences established by the STF court, with final judgment on February 2, 2021, the Union is given the opportunity to exercise a consensual dialogical role with subnational entities, within the scope of a federalism of cooperation, aiming to implement fundamental rights in a complementary manner, in varying degrees of protection, in attention to federative diversity and plurality, with a focus on meeting the needs of the citizen.
Roberto Carvalho Brasil Fernandes
Alexandre Amaral Filho
Rafael Biasi
Lawyers of Brasil Fernandes Advogados Associados
