The sector's regulation is recent. The Ministry of Finance established the rules in May 2024, giving betting companies until December 31 of that year to comply.
The national license, issued by the Ministry of Finance, costs R$30 million (US$5,4m) and lasts for a maximum of five years, according to a decree published on May 21, 2023. The state license, issued by Loterj in Rio de Janeiro, costs R$5 million (US$ 890,000) and also lasts for five years, according to a notice published on April 26, 2023.
Many companies do not yet have a license to operate in Brazil. This includes Betano, which acquired the naming rights for the 2024 Brasileirão and has its brand displayed in all championship games. The company’s website is inaccessible to users in Rio.
The company says it has obtained aa provisional court to resume operations, but according to a document obtained by Poder Sports MKT, the request was partially met. Judge Rodrigo de Godoy Mendes, of the 7th Court of Rio, suspended only the administrative sanctioning process (through which the Rio government can punish the company) and not the blocking.
According to Loterj, besides the website blockage, Betano and other unregistered companies cannot have their brands on club uniforms or advertising boards in Rio stadiums. This will affect various advertising contracts. The Brasileirão currently includes four teams from Rio, including leaders Flamengo and Botafogo, as well as Fluminense and Vasco.
Loterj's president, Hazenclever Cançado, stated to Poder Sports MKT that most advertising agencies are not complying with the order but confirmed that all have been notified:
"It should be our duty that all [advertising agencies] have been notified. If some have not been notified, it is because they are keeping a low profile and have not yet been located."
"The clubs have been notified and in Rio, they can only work with advertising on their shirts and in stadiums with companies accredited by Rio, Loterj, or the Union."
Of the four Serie A clubs from Rio, only Flamengo is sponsored by a legally registered betting company in the state: Pixbet. The club's contract with the company is the largest in Brazilian football, worth R$105 million (US$18,7m) in 2024 alone.
The other three clubs are sponsored by:
- Vasco (Betfair) – R$47 million in 2024 (US$8,3m)
- Botafogo (Parimatch) – R$27.5 million in 2024 (US$4,8m)
- Fluminense (Superbet) – R$42 million in 2024 (US$7,4m)
Betfair, Parimatch, and Superbet are not registered in Rio de Janeiro. Loterj notified Vasco, Botafogo, and Fluminense on May 20, requesting that the clubs cease advertising for "lottery activities not accredited in the state of Rio de Janeiro."
The notification signed by Cançado also mentions official sites and products. Flamengo was also notified, even though Pixbet is registered with Loterj.
Brax notified
One of the agencies that disobeyed Loterj's order is Brax Sports Assets. The company holds the rights to advertise in the stadiums of 17 Serie A clubs and negotiates sponsorship deals with six unaccredited betting companies in Rio:
- Betano
- Betnacional
- Superbet
- 1Xbet
- Aposta Ganha
- Bet7k
The company has been notified at least twice to cease displaying advertisements for unregistered betting companies.
The first notification was on December 8, 2023: “Your company is notified to cease the advertisement or promotion of any website or application offering lottery betting products within the state of Rio de Janeiro without the authorization of Loterj within 48 hours, under penalty of the sanctions provided in article 12 of the aforementioned decree.”
The company was notified again on March 26, 2024, about the initiation of an "administrative sanctioning process," which could result in penalties such as:
- Warning
- Fines ranging from R$50,000 to R$2 billion (US$9,000 to US$355m)
- Administrative sanctions, such as a ban on business activities
A survey by Poder360 showed that Brax's advertising contracts with Brazilian clubs and the CBF for commercial exploitation of stadium advertisements exceed R$2.6 billion (US$462m).
In a note to Poder Sports MKT, Brax stated that it sees no irregularities in exposing brands not registered with Loterj, since, according to the law that regulated sports betting in Brazil, companies have until December 31, 2024, to comply with the rules.
National vs. state license
According to Loterj, the license to operate in the state would allow not only operations in Rio de Janeiro, but also national operations, as well as the one issued by the Ministry of Finance – whose grant is worth R$30 million (US$5,3m).
“Our physical operation, such as scratch cards and prizes, is within the limits of the state of Rio de Janeiro. Our online operations – sports betting and online casinos – have no state limits. It is national. Today, the grant is R$5.2 million (US$921,000) for national exploration,” said Hazenclever Cançado.
Poder Sports MKT accessed a booklet that Loterj distributes to companies interested in operating in Rio de Janeiro, which reinforces the thesis that accreditation would have national coverage. The Ministry of Finance notified the Rio government on March 21, 2024, asking Loterj to stop accrediting betting companies.
Loterj confirmed it was notified and responded on April 5. In the document sent to the Ministry, Loterj stated that there is no overstepping of competencies and that it is supported by a 2020 Supreme Court decision, which stipulates that lottery operations are not exclusively a federal matter.
The agency also stated that its actions are limited to the state of Rio de Janeiro. “There is no evidence in the case of this agency’s notice of any violation or overstepping of its territorial competence,” it said.
“The material and state prerogative to explore and regulate lottery activities in their territories – observed by federal legislation – considers that it is up to the state of Rio de Janeiro, through its duly constituted agency, to regulate this service within the state,” Loterj wrote.
In a note to Poder Sports MKT, the Ministry of Finance stated that states have the freedom to regulate their respective territories, but “any service provision at the national level, without federal authorization, will be illegal.”
The deadline for state accreditation is August 13 – with the possibility of extension. As of July 29, only five betting companies operated according to Loterj rules in Rio de Janeiro:
- Apostou RJ
- Bestbet
- Marjosports
- Pixbet (Flamengo’s main sponsor)
- Rio Jogos
Two other companies will start operating in August:
- Blaze
- Caesars Sportsbook/BiG Brazil
Betting companies prioritizing national accreditation cannot operate in Rio de Janeiro until they obtain a state license. “As long as they have applied for the national license, they cannot operate here. Once they have the license and are registered, they are also legal here [in Rio de Janeiro],” Cançado said.
Understanding the betting house blockade
The sanction was applied by Anatel (National Telecommunications Agency) following a court order at Loterj's request. The ban affected at least 115 companies in the sector.
At the end of June, Loterj obtained a court decision to take down the websites of betting companies without official registration to operate in Rio. It believes that companies must register with the state system.
The agency based its action on a state decree regarding betting regulations issued before the approval of the national law regulating sports betting in Brazil (Law 14.790 of 2023). The text stipulates that, in Rio de Janeiro, Loterj oversees the sector.
At the time, a provisional measure (MP 1.182 of 2023) on the subject was in effect. Both the current law and the 2023 MP stated that the Ministry of Finance is responsible for overseeing these companies and granting new licenses.
“Fixed-odds betting will be explored in a competitive environment, with prior authorization to be issued by the Ministry of Finance, under this Law and the regulation referred to in § 3 of art. 29 of Law No. 13.756, of December 12, 2018,” says Article 4 of Law 14.790 of 2023.
Companies criticize the blocking
ANJL (National Association of Games and Lotteries), representing 17 betting companies, told Poder360 that Loterj's stance goes against the law that regulates the sector in the country. It also mentioned that the regulatory deadline extends until the end of the year.
“The suspension of the sites occurred without the companies ever being heard, either in the judicial process or by Anatel, at a time when the market is under regulatory process in Brazil, with a transition period guaranteed nationally to operators until December 31, 2024,” it stated.
The association also said that the situation creates legal uncertainty and that, although the Supreme Court jurisprudence states that lottery operations should not be a federal monopoly, regulation is the Union’s responsibility.
What the parties involved say
Poder Sports MKT reached out to Botafogo, Fluminense, and Vasco via email and text messages to inquire why Loterj's order was not complied with. No responses were received by the time of publication. The text will be updated if any responses are provided.
Betano stated it would not comment.
Brax claimed there are no irregularities in its operations.
Source: Poder360
