The Brazilian Institute for Responsible Gambling (IBJR) was born from the union of bet365, Flutter, Entain, Betsson Group, Betway Group, Yolo Group, Netbet Group, KTO Group, Rei do Pitaco, Novibet, and LeoVegas with the aim of fostering debate on the regulation of sports betting in Brazil.
Currently, in addition to the founding companies, the board is completed by Pay4Fun, Grupo OKTO, and OneKey Payments (payment solutions), the media group Better Collective, the agency Clever Advertising, and the digital and sports marketing company Volta Pra Marcar.
OFFICIAL STATEMENT
POSITIONING NOTE ON THE RECENT CONFLICT BETWEEN THE MINISTRY OF FINANCE AND THE RIO DE JANEIRO STATE LOTTERY (LOTERJ)
In recent days, it has been widely reported by specialized media that the Ministry of Finance (MF) has sent a formal notification to the Rio de Janeiro State Lottery (LOTERJ), recommending the immediate cessation of the accreditation of lottery modalities operators in the manner provided for in the norm issued by the state government (in this case, State Decree No. 48.806/2023).
Currently, LOTERJ would be admitting the accreditation of the so-called "bets" with the state authority without imposing territorial restrictions on their respective activities, so that companies accredited in the State of Rio de Janeiro could operate throughout Brazil – in clear violation of what is established by federal regulations.
Article 35-A of Federal Law No. 14.790/2023 is explicit in establishing that the States and the Federal District "are authorized to operate, within their territories, only the lottery modalities provided for in federal legislation," and its paragraph 4 determines that "the sale and advertising of lottery tickets by the States or the Federal District carried out in physical, electronic, or virtual media shall be restricted to persons physically located within the limits of their circumscriptions, or to those domiciled within their territoriality."
Requiring bettors to declare that their bet is made in the State of Rio de Janeiro, regardless of their domicile or actual location, makes no logical or legal sense.
Not only that, but the aforementioned Rio de Janeiro authority would also be adopting grant values and tax rates significantly different from those established by the Federal Government, generating tension over the establishment of a possible "tax war" among federative entities – which, consequently, increases levels of legal uncertainty to the detriment of the entire sector.
The Brazilian Institute of Responsible Gaming (IBJR), which has been increasingly concerned with the issue, has also become aware that LOTERJ has been sending letters to various companies – including fixed-odds betting operators and other companies indirectly involved in the sector, such as financial and payment institutions – requesting the immediate cessation of the operation of platforms that, without a license granted by LOTERJ, are allegedly operating irregularly in the State of Rio de Janeiro.
The failure to comply with LOTERJ's unreasonable request by the aforementioned companies would result in the initiation of various sanctioning administrative proceedings, subjecting them to administrative sanctions that, in the best understanding of IBJR, lack appropriate legal grounds.
This is because, although the Supreme Federal Court (STF) has recognized the competence of the States and the Federal District to operate lotteries (as a public service), the competence to legislate on the matter remains exclusive to the Union, pursuant to Article 22, XX, of the Federal Constitution.
In other words, although the States have material competence to operate lottery activities and regulate such exploitation, it is evident that state legislative/regulatory activity must adhere to the national guidelines established by the Union (and, consequently, cannot contradict them).
Therefore, IBJR reminds that Federal Law No. 14.790/23 is explicit and clear in the sense that "the Ministry of Finance shall establish conditions and deadlines, not less than 6 (six) months, for the adaptation of legal entities that are in activity to the provisions of this Law and the regulations established by it in specific regulation."
The acts performed by LOTERJ instigate disorder, raise unnecessary doubts, and harm the process of regulating the fixed-odds betting industry in Brazil. They jeopardize the effectiveness of the legal framework consolidated by Federal Law No. 14.790/23 and bring legal uncertainty to the market, creating a negative environment for business and for the planning of operators wishing to request, under the law, authorization to operate regularly in the Brazilian territory.
Given the recent events, IBJR understands that:
- It is illegal to argue that fixed-odds betting operators licensed by LOTERJ (or any other authority other than the Ministry of Finance) have the right to operate this lottery modality and offer these services to consumers located anywhere other than the territory of the State of Rio de Janeiro;
- It is illegal to argue that, at the present date, only fixed-odds betting operators licensed by LOTERJ have the right to operate this lottery modality and offer these services to consumers located in the territory of the State of Rio de Janeiro; and
- The MF is correct in demanding an urgent stance on LOTERJ's questionable legality, especially due to the risk of such decisions jeopardizing the authorization process for fixed-odds betting operators at the federal level, contaminating the significant sectoral advances that have been achieved with the National Congress and the Federal Government for the regulation of this important sector of the economy.
Brazilian Institute of Responsible Gaming (IBJR)
Source: GMB
