VIE 22 DE NOVIEMBRE DE 2024 - 03:25hs.
For Rio de Janeiro, government promotes unfair competition

Loterj goes to court aiming to overturn authorized ‘Bets’ on national Finance list

The Rio de Janeiro State Lottery (Loterj) filed a public civil action in the 13th Federal Civil Court of the Federal District requesting the annulment of the national list of authorized ‘Bets’ – as operators are called in Brazil -, published by the Secretariat of Prizes and Bets (SPA) of the Ministry of Finance. The lawsuit points out that the authorization of these companies occurred without the due bidding process and promotes unfair competition, contrary to the decision of the Federal Supreme Court (STF) on the need for bidding.

Linked to Governor Cláudio Castro's administration (PL), Loterj argues that only companies accredited by Rio de Janeiro can be considered regulated to operate nationwide until the end of the year. All others should be blocked by Anatel (Brazilian Telecommunications Agency), which is mentioned but not requested in the lawsuit. When reached, the SPA of Ministry of Finance declined to comment on ongoing legal actions.

The Cláudio Castro and Lula administrations are already engaged in a legal battle regarding the legality of the authorization, granted by Rio, for accredited companies in the state to operate nationwide, after paying a concession fee of R$5 million (US$ 870,000).

The federal government advocates for the enforcement of a federal law that limits the activities of regionally accredited betting companies to the boundaries of each state — the government has filed an action in the Supreme Federal Court (STF) to prevent nationwide operations by betting companies registered in Rio.

Loterj argues that, when it launched its public notice, this restriction did not exist because a provisional measure (MP) that initiated the regulatory process had not yet been issued. However, as Folha revealed, Loterj's notice was amended the day after the MP was issued, to remove the state-level restriction.

In the petition, submitted on Tuesday (29) this week to the Federal Court in the Federal District, Loterj requests the immediate suspension of the national list of fixed-odds betting companies until a prior bidding process is conducted and the federal concession fee of R$30 million (US$ 5.2m) is paid.

The list includes companies that submitted a request for accreditation with the Treasury by September 17, showing willingness to participate in the regulated market starting next year. Other websites, by exclusion, were deemed illegal, prompting the Treasury to request Anatel to block them.

This Thursday (31/10), the SPA sent Anatel a new list of illegal sports betting and online gaming sites to be blocked. The first list, sent on October 11, contained just over 2,000 domains.

The Ministry of Finance also includes in the list of regular sites those accredited by states, such as Loterj houses. However, the dispute between the federal government and Rio pertains to nationwide operations.

In the lawsuit, Loterj also requests that the federal government, Finance, and the Secretary of Prizes and Bets, Regis Dudena, be prohibited from "delegating the execution of public lottery services, either expressly or tacitly, to private agents without a prior bidding process" and from taking measures aimed at "promotion, advertising, defense, or encouragement of the commercialization of fixed-odds betting services by unlicensed companies."

Loterj's argument criticizes the rationale that companies listed by the Treasury are "authorized" to operate in Brazil until December 31. The Rio de Janeiro lottery argues that no prior bidding process took place for this "authorization” - the petition consistently places the term in quotation marks.

"Even though no license has been granted at the federal level and not a single real has been collected as a fixed or variable concession fee by the Union, the 'national list' of companies 'authorized' to operate nationwide until the end of the year and during the so-called 'adjustment period' was widely and profusely disseminated," writes lawyer Natália Fernandes Santiago, head of Loterj's legal advisory department.

She argues that "there is a flagrant regime of unconstitutionality in the exploitation of the activity by third parties included on the Union's list," and that, therefore, companies listed exclusively by the Union are "unauthorized to carry out this activity."
 


"Consequently, these companies should have their sites blocked by Anatel, and their activities suspended, as the Union has already done for those that did not express federal interest and are not accredited by the states," she continues.

For Loterj, there is "undeniable unfair competition" between companies deemed fit by the Treasury to operate during the "adjustment period" without a bidding process and the companies accredited by Rio, which, according to the agency, underwent "the rigor of a bidding process, payment of fixed and variable concession fees, tax collection, inspections, and compliance with all the requirements of Brazilian law."

Betting offerings have been permitted in Brazil since late 2018 but have remained unregulated and unsupervised. Last year, the regulation process was initiated by the Lula administration.

In practice, today, Rio de Janeiro and the Union are competitors in the accreditation of online betting companies for nationwide operations. Rio has been using its advantage of charging a fixed concession fee of R$5 million, compared to the Union’s R$30 million, to attract more companies.

Some experts argue that the SPA of the Ministry of Finance fails to comply with federal legislation on fixed-odds betting. This is because, by publishing a list with 100 companies, totaling 219 authorized bets until the end of the year, the Secretariat allegedly did not conduct an analysis of the companies’ documentation, technical, and financial capacities, nor did it charge the R$30 million concession fee as required by the federal law enacted in 2023.

The law states that the authorization to operate betting is only valid upon meeting all requirements. "Articles of Law 14,790 clearly outline the need for formal authorization. The Ministry of Finance's positive list not only disregards this requirement but also creates a dangerous precedent of implicit authorization in a sector that requires strict regulation," said Álvaro Costa, an administrative law specialist.

Regarding the concession payment, the Ministry of Finance's regulations give interested companies a maximum of 30 days to make the payment after being notified that their application review is complete. Failure to meet this deadline results in the application being filed or the authorization being revoked, as outlined in Article 13.

In a statement, Finance said: "Among the law’s requirements is the establishment of a transition period of no less than 180 days for companies to comply with the legal rules to be published through ordinances."

The law also recognized state licenses issued before July 2023, including those of Loterj, allowing these companies to continue operating after paying the R$5 million concession fee for a period of up to five years and covering federal fees and taxes monthly.

The positive list was formulated based on SPA/MF Ordinance No. 1,475 and includes companies that applied for authorization through the Betting Management System by the publication date of the ordinance, demonstrating their interest in adjusting to the legislation.

For Mariana Santos, an economist at the Federal University of Santa Catarina, the lack of concession and tax collection from these companies results in a significant revenue loss considering Brazil's sports betting market. "In addition to the legal violation, there is a potential multibillion-dollar loss in tax revenue, not to mention the risk of destabilizing a sector that sought regulation," she said.

Source: GMB