As expected, the sports betting and online gaming market woke up this Tuesday (17) concerned about the measure taken by the Prizes and Betting Secretariat of the Ministry of Finance, which prohibits the operation of betting sites as of October 1 without authorization or that have not requested the application from the federal government.
Ordinance 1,475 defines that betting sites will only be able to operate with prior authorization to be issued by the agency itself.
As of October 1, companies that have not requested authorization from the Prizes and Betting Secretariat will be classified as illegal until their operation is authorized by the Treasury. Betting sites that operate in Brazil without authorization will be subject to the penalties provided for by law, which provides for fines of up to R$2 billion (US$ 360m) per violation.
Those who requested authorization, but were not yet operating, will have to wait to start operating in January — that is, if they obtain authorization from the ministry and upon fulfilling all requirements.
Paulo Horn, president of the Sports, Lottery and Entertainment Committee of the OAB/RJ, examined the ordinance and pointed out that it is unconstitutional because it brings forward the deadline for bookmakers to comply.
According to him, “the measure violates the principle of legality, the hierarchy of norms, legal certainty and the limits of regulatory power.”
The lawyer recommends that the Ministry of Finance “reevaluate its position regarding the bringing forward of the deadline and seek the necessary legislative modification to guarantee compliance with the Constitution, ensuring stability and confidence in the norms that regulate the betting sector.”
Legal opinion
Analysis of the unconstitutionality of SPA/MF Ordinance No. 1,475/2024 in relation to Law No. 14,790/2023
I. Introduction
This opinion aims to analyze the unconstitutionality of SPA/MF Ordinance No. 1,475, dated September 16, 2024, which advances the deadline established by Law No. 14,790/2023 for the adaptation of betting houses, setting it for October 1, 2024, instead of December 31, 2024, as determined by the legislation.
II. Legal analysis
Principle of legality
The principle of legality, enshrined in Article 5, Section II, of the Federal Constitution, establishes that "no one is obliged to do or refrain from doing something except by virtue of law." This principle is reinforced by Article 37 of the Constitution, which establishes legality as one of the pillars of public administration.
The advancement of the deadline for the adaptation of betting houses, as established by the ordinance in question, contradicts this principle, as it modifies a legal provision without the proper legislative authorization.
The Federal Supreme Court, in several decisions, reaffirms the importance of the principle of legality. In RE 596.468/SC (Rel. Min. Ayres Britto, May 14, 2009), the STF stressed that "the principle of legality is the corollary of the rule of law and the submission of Public Administration to the law, preventing any state action that exceeds legal limits."
Similarly, in ADI 1.923/DF, (Rel. Min. Celso de Mello, April 3, 2003), the STF emphasized that administrative legality means that public officials can only act in accordance with the law. In this ruling, it was made clear that "it is not lawful for the Public Administration to issue acts that violate the limits established by legislation."
Public Administration is strictly bound by law, and the principle of legality, forming one of the pillars of the Democratic Rule of Law, prevents administrative acts from creating obligations or restricting rights without the proper legal provision.
These decisions reinforce the idea that Public Administration cannot innovate or restrict rights and obligations beyond the limits established by law.
Hierarchy of norms
The Constitution, in its Article 59, establishes the hierarchy of norms, placing ordinary laws at a higher level than administrative acts and infra-legal norms, such as ordinances.
Law No. 14,790/2023, by setting a deadline for adaptation, provides legal certainty to operators in the sector.
SPA/MF Ordinance No. 1,475, by advancing this deadline, despite the justified concern, disregards this hierarchy, resulting in blatant unconstitutionality.
As José Afonso da Silva teaches, "the hierarchy of norms is a fundamental principle of the legal system, ensuring the supremacy of higher norms over lower ones" (SILVA, José Afonso da. Curso de Direito Constitucional Positivo, 2020). The Federal Supreme Court (STF), in ADI 4,874 (Rel. Min. Gilmar Mendes, September 27, 2012), has already ruled on normative hierarchy, stating that "administrative acts cannot alter or suppress rights guaranteed by law, under penalty of violating the legal order."
Legal certainty
Legal certainty is an essential principle that ensures predictability and stability in social and economic relations. Changing deadlines through an ordinance creates insecurity, as sector operators who prepared to meet the established legal deadline face a scenario of uncertainty. The STF has already ruled that "legal certainty is a necessary condition for the stability of social relations" (STF, ADI 2,135, Rel. Min. Gilmar Mendes, December 6, 2006).
In a more recent decision, in ADI 6,793 (Rel. Min. Ricardo Lewandowski, August 5, 2020), the STF reaffirmed that "abrupt and unpredictable changes in the rules applicable to a given sector undermine legal certainty, negatively affecting citizens' confidence in the norms governing their activities."
This jurisprudence applies to the present case, where the advancement of the deadline by ordinance undermines normative stability.
Limitations of regulatory power
Although the Ministry of Finance has the authority to regulate the betting activity, this power is limited by current legislation.
The advancement of the deadline set by Law No. 14,790/2023 exceeds the regulatory authority's limits, constituting a usurpation of legislative competencies, which are the exclusive domain of the Legislative Branch.
Alexandre de Moraes explains that "the regulator's role is to implement and detail norms, respecting the guidelines already established by law" (MORAES, Alexandre. Direito Administrativo, 2018). The STF, in the ruling of ADI 4,162 (Rel. Min. Marco Aurélio, February 14, 2019), declared a normative act unconstitutional for exceeding regulatory power, stating that "regulations cannot innovate within the legal system, under penalty of usurping the legislative function."
III. Conclusion
In light of the above, it is concluded that SPA/MF Ordinance No. 1,475, by advancing the deadline for the adaptation of betting houses, is unconstitutional. The measure violates the principle of legality, the hierarchy of norms, legal certainty, and the limitations of regulatory power.
It is recommended that the Ministry of Finance reconsider its position regarding the advancement of the deadline and seek the necessary legislative modification to ensure compliance with the Constitution, ensuring stability and confidence in the norms governing the betting sector.
Paulo Horn
OAB/RJ 68.386
Founding partner of Paiva & Horn Advogados Associados. President of the Committee on Sports Betting, Lotteries, and Entertainment of the OAB/RJ. Member of the Brazilian Association of Political and Electoral Law - ABRADEP and the Constitutional Law Committee of the OAB/RJ. Former administrative and financial director, chief legal advisor, and vice-president of the Lottery of the State of Rio de Janeiro - Loterj. Master in City Law from UERJ.
