The essence of human activity is the constant evolution and change in behavioral patterns, which imposes on the legal operator the difficult task of monitoring the consequences that these new relationships bring to the legal world and, therefore, conjecturing the changes that will need to be implemented. in order to follow this evolution.
At this point, the Legislative Branch plays a fundamental role in implementing these changes in the legal system. The activity of legislating is so delicate that it can be compared to the work of an artist: both must start with a clear vision of the result they intend to achieve; by carefully selecting the tools and techniques that will be employed; and, finally – but no less important – must take care to project a vision of the impact their work will have on the lives of others.
This is because, just as a work of art can influence an entire generation (did Tarsila do Amaral foresee that Abaporu would be the symbol of Brazilian Modernism?), the activity of legislating involves "experimenting with human destiny"[1].
This legislative activity needs to be carried out with meticulous care, respecting the appropriate urgency of the issue, but without renouncing the necessary delicacy in structuring it in line with the entire legal system (read: not only the established law but also the judicial decisions already rendered), under penalty of introducing into the legal world norms doomed to unconstitutionality[2].
This concern with legislative technique, however, does not seem to have been observed in the creation of Law No. 14,790/23, a norm eagerly awaited by the lottery market for finally initiating the regulation of the sports betting market.
The new legislation brought not only an important milestone for the heating up of the regulatory market of bets but also a disturbing discussion in the legal field arising from two provisions: §§2º and 4º of Article 35-A.
The discussion has already reached the Supreme Federal Court in the records of Direct Action of Unconstitutionality No. 7640/SP[3] and will reignite discussions that had already been addressed by that Court and, until then, seemed definitively resolved.
To better contextualize the reflection proposed in this analysis, it is important to remember that the Supreme Court, when judging ADPFs No. 492 and 493 and ADI 4986 in 2020, attributed a public character to the provision of lottery services, which can be exploited by the Union, States, and the Federal District, with the exclusive legislative competence on the matter being attributed to the federal entity.
Law No. 14,790/23 started well by delimiting in Article 35-A, §1º, that "The exploitation of lotteries by the States and the Federal District may be carried out through concession, permission, or authorization [...]," correctly applying in the new law the limits established by the Supreme Court's decision: public lottery services can be indirectly provided by the private sector through concession, permission, or authorization.
The problem begins to arise from §2º, which introduced the following restriction: "To the same economic group or legal entity, only one concession will be allowed in only one State or the Federal District."
And it continues in §4º, limiting the realization of advertisements in the States and the Federal District within their jurisdictions: "The commercialization and advertising of lotteries by the States or the Federal District carried out in physical, electronic, or virtual media will be restricted to people physically located within their jurisdictions or those domiciled in their territoriality."
The provisions, which were not included in the first version of the bill sent to the House of Representatives, were inserted by the Federal Senate through Amendment 135 of the Economic Affairs Committee and were approved in full upon its return to the House[4].
The analysis of the legislative process shows that its creation occurred, apparently, without the presentation of the legal and economic justification for its imposition, which raises discussions not only about the unconstitutionality very well outlined in the initial action but, especially, about the consequences that its application may cause in the country's legal and economic structure.
This scenario, which will now be analyzed by the Supreme Court, gave rise to the reflection that inaugurates this article and brings with it two elements that often go unnoticed in the minds of the "creators" of legal measures:
(I) the important role of the Legislative Branch in creating mechanisms aimed at implementing new economic measures and
(II) the care that this activity needs to adopt, especially to avoid the creation of norms that are inconsistent with pre-existing ones and result in harmful effects on the economy.
The demand for the creation of mechanisms that allow expanding the State's revenue potential certainly exerts significant pressure on the Executive and Judicial Branches. The legislative task, in turn, is complex and requires the skill to draft norms that can not only be understood by all but especially bring the intended effect with their creation, and not the opposite[5].
Therefore, it requires not only the use of good technique but also the use of tools that allow anticipating the results of its implementation.
It is unquestionable that the lottery market, and especially the regulation of the sports betting sector, has the potential to drive the country's numbers, not only from a fiscal perspective with its revenue potential[6] but also with the creation of new jobs for the implementation of activities within the country.
A preliminary survey by a specialized recruitment consultancy indicates that from 2023 to 2024, the demand for professionals in the sector grew by 37%[7] – not to mention other indirect jobs that will be needed as the activity grows.
All this potential requires (or should have required) the use of tools from economic science that help, at least in part, predict the financial consequences of creating new legal measures (law and economics).
Every norm (both law and judicial decision) is born with an objective and brings impacts and incentives to society, which imposes on its creator the obligation to gather information beyond the legal aspects of the matter to be legislated – such as the economic, social, and political repercussions that will result from that measure.
The legislative decision to limit the operation of operators to only one State of the Federation (or in the Federal Union) simultaneously and, furthermore, to prevent advertising beyond their limits, ends up resulting not only in a privilege to the Federal Union[8] but a severe impediment to the growth of this economic activity in the other States of the Federation.
It is possible to list, in advance, at least two consequences: a decrease in competitiveness, with operators prioritizing operations in States with greater economic projection to the detriment of those with less projection; a drop in the revenue expected for the States and difficulty in implementing policies designed based on that revenue.
Judicial decisions and legal norms impact the economy. Keeping up with the evolution of society and how it organizes itself is a delicate task that requires care from those who have been granted the power to regulate these changes. From the moment this care was not observed in its original sphere, it is up to another to measure these impacts and make the necessary corrections in the course of the work to avoid the birth of an aberration that brings more harm than benefits, a task that is expected to be well designed again by the Supreme Federal Court.
[1] JAHRREISS, APUD MENDES, Gilmar Ferreira. Theory of Legislation and Constitutionality Control: Some Notes. Virtual Legal Journal – Brasília, vol. 1, no. 1, May 1999.
[2] “It should be noted, on the other hand, that the demands of modern life not only impose on the legislator a duty to act but also demand a quick and effective response to the problems posed (duty to act with possible promptness and effectiveness). It is precisely the hurried (and often thoughtless) formulation of normative acts that ends up causing their greatest deficiencies: incompleteness, incompatibility with the existing system, incongruence, unconstitutionality, etc.” (MENDES, Gilmar Ferreira. Theory of Legislation and Constitutionality Control: Some Notes. Virtual Legal Journal – Brasília, vol. 1, no. 1, May 1999.)
[3] Action proposed on 05/03/2024 by the Governors of the States of São Paulo, Minas Gerais, Acre, Paraná, Mato Grosso do Sul, Rio de Janeiro, and the Federal District, reported by Minister Luiz Fux.
[4] The opinion of the Constitution and Justice Committee of the House of Representatives voted for the full approval of the Senate amendment on the grounds that it "promotes important improvements to the text of the Substitute originally approved by the House of Representatives."
[5] The seriousness of legislative activity has already been compared to the care of handling a bomb: “Such is the power of law that its drafting requires very strict precautions. Whoever makes the law is as if they were handling explosive materials. The consequences of lack of foresight and lack of skill will not be as spectacular, and almost always only indirectly will they affect the handler, but they can cause irreparable damage” (LEAL, Victor Nunes. Legislative Technique. In: Studies in Public Law. Rio de Janeiro, 1960.)
[6] The message from the Minister of Finance to the President of the Republic when sending the first draft of the bill (EMI 94/2023) points out in item 22 that “the regulation of fixed-odds betting has great revenue potential, contributing to the improvement of the country's fiscal and economic situation. And, as a consequence, it helps prevent tax evasion, money laundering, and other crimes and offenses related to illegal gambling.”
[7] https://www.estadao.com.br/economia/sua-carreira/apostas-esportivas-empregos-nprei/. Accessed on 05/20/2024.
[8] On this point, it is interesting to note that in the judgment of ADPF No.
Danielle Franco
Head of administrative law at GVM Advogados
