Governors from six states and the Federal District have challenged changes introduced by Law 14.790/2023 that regulates sports betting and online gambling in Brazil, at the Supreme Federal Court (STF).
In the lawsuit, the governors argue that the law, sanctioned in December last year and amending sections of Law 13.756/2018, restricts the same economic group from obtaining a concession to operate lottery services in more than one state. They contend that this restriction reduces the participation of companies in tenders and fosters a competitive environment among states, where some are likely to lose more than others.
"These consequences will primarily affect states with less economic power. This is because, with private operators being granted concessions in only one state, it is expected that the more capable economic agents will prioritize states with larger populations and higher purchasing power, to the detriment of less attractive states," the governors argue.
Similarly, they consider the changes to advertising rules disproportionate. The current law prohibits advertising for betting services in states other than where the service is actually provided.
The governors argue that the lottery service is provided when a person purchases a ticket, while advertising only seeks to attract potential users. Therefore, by restricting advertising to users located within the territorial limits of the federation entity, the law violates reasonableness.
Additionally, they point out that the ban affects free competition as it prevents lotteries from exploiting their advertising potential to attract new users. The Direct Action of Unconstitutionality (ADI) 7640 has been assigned to Minister Luiz Fux and is signed by the governors of São Paulo, Minas Gerais, Acre, Paraná, Mato Grosso do Sul, Rio de Janeiro, and the Federal District.
In his initial ruling, Minister Luiz Fux presents the reasons for the ADI filed by the governors and states that "the matter is of great relevance and has special significance for social order and legal security."
Thus, he requires the federal government, the Senate, and the House of Representatives to "provide information within ten (10) days. After that, the Attorney General of the Union and the Prosecutor General of the Republic should be notified to express their opinions, each within five (5) days."
Caio de Souza Loureiro, a partner in the gaming & eSports area at TozziniFreire Advogados, states that the ADI demonstrates the impact that the prohibition in paragraph 2 of article 35-A causes and the actual harm to the right to offer lotteries.
"This right was recognized by the STF in 2020, when it was understood that the Union does not have a monopoly over lotteries. Thus, the prohibition now being discussed in the ADI seems to be an attempt to circumvent the Supreme Court's ruling."
According to Loureiro, the article undermines the freedom of states even without prohibiting operations at the state level, as it restricts the number of operators who can provide services and prohibits a single operator from holding more than one concession, even in different states.
"Worse, it may even prevent interested parties from participating in tenders, as operators may already be committed to concessions in other states. It is important to remember that the pool of operators capable of providing lottery services is not large. By imposing an unreasonable restriction, the provision encourages a lack of qualified participants in the tenders conducted by the states," Loureiro asserts.
Source: GMB
