Brazil, with its population of 203 million and remarkably high internet penetration, presents itself as a market full of opportunities for the gaming industry. The legalization of fixed-odd betting in 2018, under the lottery modality, marked the beginning of a new era for this market in the country. This fixed-odd betting lottery model, where the amount to be received by the bettor is known in advance, found an easier path to legalization due to the constitutional permission of the lottery system in Brazil.
The decision of the Federal Supreme Court (STF) in 2020 “breaking the Union's monopoly” and confirming the states' permission to explore lotteries, added a layer of complexity to the already intricate betting scenario in Brazil. The ruling, based on three main premises — the need for coexistence between federal and state lotteries, the territorial limitation of state lotteries, and the exclusive competence of the Union to legislate on the subject — opened doors for states to regulate their own lottery operations. bets, as long as they respected federal regulations.
This development led some states to move quickly, establishing their own rules for gambling, including differences in license fees and tax percentages compared to what was being proposed for federal licenses.
The promise that services could be explored beyond their territories drew attention and, more than that, concern from the federal government, culminating in Law 14790, of December 2023, which seeks to harmonize the exploitation of lotteries across the country, establishing clear standards for state operation within territorial limits and in compliance with federal guidelines.
In short, this narrative and promise from the states caught the attention of the Government which, in an attempt to put a lid on the matter, included an entire chapter in the Law dedicated to the way in which lotteries are operated by the states.
Amid the debate about the future of the Brazilian sports betting market, a pre-eminent question emerges: will we be moving towards a model of state licenses similar to that adopted by the United States, or will we see the development of a collaborative framework at the federal level? This issue, intrinsically complex due to the legal and political nuances involved, demands an in-depth analysis of recent legislative and judicial trends to be properly understood.
Current legislation and court decisions suggest a tilt toward a system of federative cooperation, where the autonomy of states to regulate and explore sports betting within their territories is recognized, but this autonomy operates within limits clearly delineated by federal guidelines. This framework ensures that while states can advance their own betting regulations, such efforts must not contravene principles and standards established by the federal government.
Therefore, today it can be stated with a certain objectivity that, in fact, it is viable and legally permitted for each Brazilian state to explore the betting market on an individual basis. However, I emphasize that, from the current legal perspective, the possibility of Brazilian states establishing a totally independent licensing system, similar to the American model — where each state has full autonomy to define and apply its own regulations without subordination to federal guidelines — seems unfeasible.
This understanding highlights the need for synergistic collaboration between different levels of government, aiming to create a cohesive and effective regulatory environment for sports betting in Brazil. The interaction between state and federal legislation must be guided by the principle of complementarity, ensuring that, even with permission for individual exploration by each state, there is alignment with national standards and objectives. Such an approach not only enables a robust and regulated betting market, but also preserves the integrity of the country's legal system and federal harmony.
This delicate balance between state autonomy and federal guidelines reflects the complexity of the Brazilian betting market, requiring careful navigation on the part of operators, regulators and other stakeholders. As Brazil continues to shape its gaming and betting landscape, collaboration and dialogue between all involved will be key to ensuring the healthy and sustainable development of this promising market.
Fernanda Meirelles
Lawyer, partner in the TMT area | Media & Gaming from FAS Advogados in cooperation with CMS
