The exploitation of lotteries in Brazil, an activity that, historically, has always been intrinsically linked to the concept of public service, regulated and supervised by the State for the benefit of society, especially in Rio de Janeiro, reveals a trajectory full of regulatory milestones and judicial decisions that directly impacted the current scenario.
The Rio de Janeiro State Lottery (Loterj), founded as the successor to the Autonomous Lottery Department of the State of Rio de Janeiro and the Lottery of the former State of Guanabara (Loteg), has played a crucial role in this context, reflecting the complexity of the regulatory system over the years.
1. Historical and regulatory context of Loterj
Decree-Law No. 138 of June 23, 1975, established that the Lottery service in the State of Rio de Janeiro will be operated by the Lottery of the State of Rio de Janeiro – Loterj, as the successor to the Autonomous Lottery Department of the State of Rio de Janeiro – Loterj and the Lottery of the State of Guanabara – Loteg, operated in accordance with the provisions of § 1, art. 12, of Complementary Law No. 20 of 1974.
The aforementioned operation was initially ratified by Federal Decree No. 5,409 of March 29, 1940 and, subsequently, with the approval of the Regulation of the Lottery Service of the State of Guanabara (SELE), by State Decree No. 827, of January 18, 1962, came into force with the publication of Ratification Decree No. 1,029, of May 18, 1962, under the terms of art. 3 of Federal Decree-Law No. 6,259 of February 10, 1944, which determines that:
“The concession or operation of a lottery, as a derogation from the rules of Criminal Law, which prohibit games of chance, will always emanate from the Union, by direct authorization regarding the federal lottery or by ratification decree regarding state lotteries.”
However, during the military dictatorship, Federal Decree-Law No. 204 of 1967 prohibited the creation of new state lotteries, centralizing control in the Union. This was an attempt to organize and standardize the operation of lotteries in the country.
With the enactment of the Federal Constitution of 1988, the Union's authority to legislate on "consortium and raffle systems", including "bingos and lotteries" was reaffirmed and expanded (art. 22, item XX). However, the Constitution also opened space for states to continue operating pre-existing lottery modalities, as long as they were within federal regulations, given the absence of a monopoly on operation.
2. Operating lotteries as a public service
From the beginning, lottery operation was considered an activity of public interest, operated under the supervision of the State to ensure that the resources generated were reverted to the benefit of society. This vision was consolidated by Decree-Law No. 204 of 1967, which centralized control of lottery operations in the Federal Government, while allowing the continuation of existing state lotteries.
This public service nature requires that lottery operations be conducted under the principles of legality, impartiality, morality, publicity and efficiency, as provided for in Article 37 of the Federal Constitution. In this context, Loterj is responsible for operating its lottery operations with transparency and efficiency, directing resources to social and cultural projects in the State of Rio de Janeiro
3. The Federal Supreme Court (STF) decision in Action Against a Violation of a Constitutional Fundamental Right (ADPF) 492 and 493: Much more than confirmation
The publication of Binding Precedent No. 2 by the STF in 2007, declaring the unconstitutionality of state laws that provided for lottery and consortium systems, including bingo and lotteries, reinforced the role of the Union in regulating these games.
However, the judgment of ADPFs 492 and 493 in 2020 brought a new perspective by confirming that federated entities can operate lotteries, as long as they do not create new modalities and respect constitutional principles.
The judgment of ADPFs 492 and 493 by the STF in 2020 represented a milestone in the history of state lotteries. The decision not only confirmed the right of the states and the Federal District to operate lotteries created before the enactment of the 1988 Constitution, but also opened up new possibilities for other federated entities.
The STF understood that, although the Union has exclusive authority to legislate on consortiums and raffles (art. 22, XX, of the CF/88), including bingo and lotteries, the federated entities have autonomy to operate lottery modalities created by federal law, as long as they respect the limits of the federative pact.
This means that the federated entities, including Rio de Janeiro through Loterj, can compete on equal terms with the Union, competing for the preference of bettors.
More than that, the decision expanded the scope of action of the federated entities, allowing them to operate not only traditional modalities, but also new modalities of games of fortune, as long as they are compatible with constitutional and infra-constitutional norms.
This understanding represents a true opening of doors for states and municipalities, allowing them to innovate and diversify their offerings in the lottery market, following the general rules of the Union.
This evolution in case law has allowed state lotteries, such as Loterj, to continue to operate their modalities within a clearer and more defined regulatory environment, ensuring the maintenance of their activities and contributing to the financing of social projects, without embargoes.
4. Prohibition of the exploitation of physical tickets outside the state territory
The sale of physical tickets for state lotteries is restricted to the limits of the respective state, as established by the old Decree-Law No. 6,259, of February 10, 1944. This limitation is justified by the principle of legality, which requires that the public administration act strictly within the limits of the law.
Failure to comply with these rules, with the sale of physical tickets outside the state territory, would represent a violation of the exclusive competence of the Union to legislate on lotteries at the national level and possible conflict between the federated entities.
From the point of view of the principle of efficiency, this restriction may seem limiting. The impossibility of expanding the sale of physical tickets beyond state borders may reduce the revenue potential and limit the social impact of state lotteries.
However, this limitation is a reflection of the need to control and organize lottery activities in the country and especially the lack of authority to supervise and control operations beyond the respective territory where the public service is provided.
However, technological advances and the regulation of fixed-odds betting have brought new dynamics to the sector, allowing state and municipal lotteries to expand their operations beyond physical borders, through the digital environment.
5. Expansion into the digital environment: Online games
Recent legislation, particularly Law No. 13,756 of December 12, 2018, improved by Law No. 14,790 of December 29, 2023, which regulates fixed-odds betting and online games, has opened up new possibilities for the exploration of games of chance in Brazil, especially in the online environment.
Unlike physical tickets, the exploration of online games transcends physical and territorial borders, allowing federated entities, directly or through concession, permission or accreditation, through bidding. As an example, the State of Rio de Janeiro, under the responsibility of Loterj, as a state autarchy, expands its reach and explores new markets, formed by consumers who virtually access the platforms of providers located in the state.
The exploration of online games, unlike physical tickets, does not face the same territorial restrictions, allowing for more efficient and profitable operations. This is fully in line with the constitutional principles of administrative autonomy and efficiency, among others, which seek to optimize the collection of resources and increase the social impact of lotteries.
By exploring online games, federated entities can benefit from a constantly growing market, without the territorial restrictions imposed on physical tickets.
From a legal standpoint, this expansion must occur in strict compliance with the principle of legality, ensuring that operations respect federal regulations and consumer rights.
By adopting digital platforms for the sale of lottery products, Loterj can reach a wider and more diverse audience, increasing its collection and efficiency without violating legal restrictions and, on the contrary, would not be forced to spend more on mechanisms to restrict access and control in order to collect less.
6. Conclusion
The evolution of the STF's understanding of the exploration of lottery modalities by federated entities, including municipalities, together with the current legislation, offers a challenging and promising scenario for the lottery market.
Loterj, with its consolidated history and legal basis, must continue to operate within the legal limits, respecting the territorial restrictions for the sale of physical tickets, but exploring to the maximum the opportunities offered by the digital environment.
This balance between legality and efficiency is essential for Loterj to continue playing its role in society, contributing to the financing of social projects and ensuring the sustainability of its operations in an increasingly competitive and dynamic market.
Paulo Horn
Founding partner of Paiva & Horn Advogados Associados. President of the Sports, Lottery and Entertainment Committee of the OAB/RJ, Member of the Brazilian Association of Political and Electoral Law (ABRADEP) and of the Constitutional Law Committee of the OAB/RJ. He held the positions of administrative and financial director, chief legal advisor and vice-president of the Rio de Janeiro State Lottery - Loterj. Master in Urban Law from UERJ.
