During a recent public hearing in the Sports Committee of the Chamber of Deputies, José Francisco Manssur, the special advisor to the Ministry of Finance, warned sports betting companies not to purchase licenses from state lotteries to operate throughout the national territory. According to him, the issue could be subject to legal challenges.
And that's precisely what is about to happen, following the request from the Minister of Finance, Fernando Haddad, to the Attorney General of the Union (AGU).
The head of the ministry wants the AGU to take action to prevent sports betting companies from obtaining licenses through Loterj – the State Lottery of Rio de Janeiro, to offer bets across the entire country, with the betting concentration on Loterj's website, essentially considering that the operation is taking place in Rio de Janeiro.
To achieve this, when bettors register on the websites of companies accredited by Loterj, they must acknowledge that their bets are being recorded on Loterj's servers in Rio de Janeiro. This setup essentially makes it appear as though the bet itself is being made on a site licensed by the Rio de Janeiro Lottery.
As expected, the federal government is taking action to try to prevent this practice, and it will depend on how the Attorney General of the Union acts to combat what, in the assessment of José Francisco Manssur, would be considered illegal.
Manssur was categorical: "The federal government is very concerned about the issue of state lotteries, and I do not advise betting companies to have the understanding that they can apply for a local license to operate throughout Brazil."
According to him, "the government will not allow it, and we are already reacting and will take this matter to court."
The granting of a license by Loterj is based on the amendment to the tender notice for the operation of sports betting in Rio de Janeiro, which opened the possibility for companies to offer their bets throughout Brazil, as the actual bets would be placed on Loterj servers located in Rio de Janeiro, through websites authorized by the state authority with the .br domain.
In the case of Loterj, this is what has been happening, and accredited betting companies are taking advantage of the tender, with the challenge from Caixa Econômica Federal being rejected due to not meeting procedural deadlines. Under Loterj's jurisdiction, accredited betting companies pay a grant fee of R$5 million (US$ 1m), with a 5% tax on the Gross Gaming Revenue (GGR).
In contrast, the Lottopar in Paraná is granting licenses with the same grant fee, but the operation should be limited to bets made within the state's boundaries.
Source: GMB
