As a manager at the helm of Loterias do Paraná (Lottopar), an agency linked to the State Secretariat of Administration and Social Security of the Government of Paraná, I am convinced that state lotteries will be more beneficial for municipalities and the Union, boosting the economy and job creation with social returns.
However, always with actions guided by the current legislation, as a way to provide legal security for licensed operators working in Paraná. These concessionaires authorized to operate in our State are required to follow the determinations of federal, state laws, and state decrees related to the subject.
According to the laws in force and recalling an important decision by the Supreme Federal Court, published in December 2020, states and the Federal District have the right to operate lottery activities within their territories.
This means that the Union does not have exclusivity in establishing lotteries and exploring their modalities. However, it is important to highlight that this STF decision does not extend to municipalities. In other words, even with this decision, municipalities are not authorized to create their own lotteries.
As mentioned earlier, municipalities do not have the competence to legislate on the subject and, in my view, there is no market size for municipal lotteries. The prize tiers are also not attractive enough to draw bettors to municipal lotteries.
There is another important aspect to consider: by creating their own lotteries, municipalities would give up the Service Tax on Any Nature (ISSQN) and other more substantial social contributions for a much smaller taxation.
It is also necessary to consider that the amounts collected by the State Lottery are allocated to municipalities through actions and investments by the Government of Paraná in public security, popular housing, and social actions. In other words, with the state lottery, municipalities benefit from tax collection, social contributions, and social returns.
Another advantage of the state lottery over municipal lotteries is its reach. The lottery games authorized, monitored, and supervised by Lottopar reach all regions of the State.
As stated in the Notice, the concessionaire is obliged to implement its dedicated physical points of sale in the ten mesoregions of the State, as well as non-dedicated resale points such as newsstands, convenience stores, and other locations authorized by Lottopar.
To legally support our position against some municipal movements to create their own lotteries, I leave a quote from one of Brazil's leading lottery market lawyers, Dr. Roberto Brasil Fernandes, author of the book "Lottery Law," where he highlights:
“Within the presented normative framework, the only alternative for municipalities is to seek collaboration with the state in which they are located, or with the Union, to receive a portion of the revenue collected in their territory, in addition to charging the ISSQN on the lottery business. It is concluded, therefore, that in addition to the foundations of the STF decision not supporting the issue, it is noted that the Constitution itself does not support the competence of municipalities to operate lotteries, since it does not attribute them residual competence, as is the case with the States and the Federal District.”
In an interview with the Lottopar communication team at the Cibelae Congress in Argentina in April this year, Dr. Roberto Brasil Fernandes further reinforces that “what municipalities are doing is a legal adventure, not provided for in the Constitution and much less in the STF decision. I was one of the lawyers who filed ADPF 493 with the Supreme Court, and the court's understanding is very clear: only States have the right to commercialize lottery modalities. There is no Supreme Court provision that supports the municipalities' attempt to create their own lotteries, clearly being a legal adventure by the mayors.”
We understand, therefore, that from a legal standpoint, according to Decree-Law No. 6,259, of February 10, 1944, in its art. 4º, “Only the Union and the States may operate or grant lottery services, prohibiting them and the latter from having more than one lottery operation or concession,” municipalities, by venturing into a matter that does not concern them, may create a legal battle.
On the other hand, the state lottery is not a competitor to municipalities; on the contrary, it is a safe and responsible source of entertainment with social returns that benefits the municipalities. The funds collected by Lottopar will be invested in municipalities through Government of Paraná actions, such as improving public security, building popular housing, and social actions. The municipalities themselves benefit.
Lottopar today is capable of offering a lottery market with legal security for the concessionaires investing in our State, security for bettors, and positioning Paraná at the forefront in Brazil with many pioneering and innovative actions, placing Lottopar among the best state lotteries in Brazil.
Our constant pursuit is for a secure, responsible lottery market with the highest levels of compliance and governance, which is why we are the only lottery in Brazil associated with three of the largest lottery and sports betting associations in the world.
We were the first state lottery in Brazil associated with the World Lottery Association (WLA), the largest lottery association in the world; the first lottery associated with the Union of Lotteries for Integrity in Sports (ULIS), which promotes education against match-fixing, and we are also associated with Cibelae, the Ibero-American corporation of state lotteries and bets, the largest in Latin America.
The Fundamental Precept Non-Compliance Actions (ADPFs) 492 and 493 were judged by the Supreme Federal Court (STF) and resulted in the recognition of the competence of the states and the Federal District to operate lottery activities within their territories. This means that, as established by the STF decision, it is not exclusive to the Union to establish lotteries or operate lottery modalities.
However, it is crucial to highlight that this STF decision does not extend to municipalities. In other words, while states and the Federal District have the authorization to operate lotteries within their jurisdictions, municipalities do not have this same authorization.
The reason for this distinction is related to the division of competencies established by the Brazilian Federal Constitution. While states and the Federal District have the autonomy to legislate on certain matters, including lottery activities, municipalities are subject to a different range of competencies, with less authority over certain areas, such as lotteries.
Therefore, although the STF decision has a significant impact by recognizing the competence of states and the Federal District in this context, it does not grant municipalities the ability to create and operate their own lotteries. This is an important distinction to consider when interpreting the scope of this decision.
Daniel Romanowski
President of Lottopar
