In yet another development of the legal clashes between sports betting and online gambling operators and Loterj, three companies filed a writ of mandamus to suspend the administrative sanctioning processes by the local authority. LeoVegas, PokerStars and Betfair won the injunction, granted by the judge of the 20th Federal Court of Rio de Janeiro, Sergio Bocayuva Tavares de Oliveira Dias.
Such sanctions are set out in art. 12 of State Decree 48,806/2023 and involve a warning, a fine of up to 20% of the GGR, a ban on carrying out commercial activities in Rio de Janeiro and an impediment from participating in bidding whose purpose is the accreditation, concession or permission of public services in the state, among others.
In the judge's understanding, the competence to legislate and authorize the operation of sports betting and online gaming lies with the Union, through the Ministry of Finance, which would also have the power to police and monitor the activity.
For Sergio Bocayuva, there is a deadline for companies to adapt that runs until December 31, 2024 and only after this date will sports betting and online gaming operators be subject to penalties if they do not have their federal licenses.
In his order, the judge points out that “federal legislation not only establishes the duties of the Federal Administration to regulate the matter, but also its administrative role to authorize the functioning or operation.”
As it is up to the Ministry of Finance, through the Prizes and Betting Secretariat, to regulate and supervise the sector, Sergio Bocayuva understands that: “in the use of its powers [the Ministry of Finance], establishes, in relation to companies that are already in operation in the national territory, as a final term for adapting to the operating regime, the date of December 31, 2024, I consider that Loterj is creating regulatory embarrassment and obligation for betting operators in the space of federal competence.”
The judge admits that states have the power to operate lotteries, but that they do not have the normative power to monitor the economic activity itself and that they could only do so to protect consumers, which would not be the case with Loterj.
“What can be seen from the documents gathered is that the enforcement authority, quite simply, demands authorization and applies sanctions because the petitioner does not submit to the authorization requirement illegally established at the state level,” says Bocayuva.
Thus, he decides:
“Thus, in a summary examination, typical of urgent protections, I consider the grounds presented by the plaintiffs, reinforced by the Union, sufficient to demonstrate the verisimilitude of the alleged right. In addition to verifying the verisimilitude of the law, I recognize the periculum in mora, given the imminent risk that the plaintiffs will be prevented from operating in national territory.”
“Given the plausibility of the allegations and the periculum in mora, I GRANT THE REQUEST FOR ANTICIPATION OF PROTECTION, suspending the administrative sanctioning processes initiated by Loterj against the plaintiffs, due to the exploitation of the lottery modality of fixed-odd betting.”
“Decision should not prevail”
In conversation with GMB, the president of Loterj, Hazenclever Lopes Cançado, believes that “the decision should not prevail because there was an overlap of contradictory court orders, in an apparent subversion of the institutionally established hierarchical order.”
For the president of Loterj, a decision by a federal judge against the agency's actions would not be appropriate. “The Court should have immediately dismissed the Writ of Mandamus. The jurisdiction in these two Writs of Mandamus lies with the State Court, not the Federal Court,” he explained.
“Whoever reforms a judge’s decision is himself, the Panel, or the Superior Courts,” understands Hazenclever.
Loterj will appeal the decision in Rio de Janeiro and Brasília. “We are demonstrating the seriousness of the decision, asking for an urgent assessment,” says Hazenclever.
For now, only operators that use Vivo's provider services are blocked, only on cell phones. Loterj intends for all websites that operate without a license to be blocked, both via cell phones and landlines.
The authority understands that there is a circumvention of the law due to deliberate non-compliance with the order through the practice, by operators, of creating alternative domains and instructing users to circumvent the access effectively blocked due to compliance with the court order and, due to the reluctance of service providers. connection with complying with the court order. “A court decision is fulfilled and then discussed,” highlights Hazenclever.
“We have been with licensed companies for 14 months, with more than R$2.6 billion in premiums paid and revenue not only for Rio de Janeiro's coffers, but also for the Union, through federal taxes. We generate taxes for the federal government. For every real that our licensees pay to Rio de Janeiro, they pay more than R$8 to the Union,” he concludes.
Source: GMB
