In Brazilian federalism, the territorial element has always been the guiding principle of the complex division of responsibilities between the Union, States, Federal District, and Municipalities. However, the virtual environment challenges this logic. In the digital sphere, relationships transcend borders, making it difficult to determine which level of government holds jurisdiction. This tends to drive legal, economic, and political disputes, with entities competing to protect (or expand) the scope of their own powers.
A prime example is the regulation of lotteries, particularly fixed-odds betting (bets), whose online proliferation has generated conflicts between the Union and the States.
In 2020, the Supreme Federal Court reaffirmed the Union's authority to legislate on lotteries. However, it also recognized that States may operate lotteries as public services and regulate them within their territorial limits, provided they comply with federal regulations.
This interpretation is easily applied to traditional paper-based lotteries and televised draws. But how can territorial limits be enforced when bets are placed online?
These questions are at the heart of an ongoing debate with multiple fronts. In Civil Action No. 3696, the Union challenges the legality of Loterj's Accreditation Notice No. 01/2023, arguing that the absence of geolocation has allowed operations beyond state borders. This, according to the Union, violates Article 35-A of Federal Law No. 13.756/2018, which restricts the sale and advertising of lotteries to residents or individuals physically located within the State.
Loterj contends that a simple declaration from the bettor stating that the bet is being placed in the State of Rio de Janeiro should suffice. However, the Union insists that geolocation is essential. This stance has so far been upheld by the case’s rapporteur, Minister André Mendonça, who pointed out that waiving geolocation artificially expands the State’s territorial scope.
Discussions about the scope of Article 35-A also appear in Direct Action of Unconstitutionality (ADI) No. 7640, which challenges the prohibition on state lotteries advertising outside their territorial limits. In October 2024, Minister Luiz Fux granted an injunction suspending, among other provisions, the term "advertising" in paragraph 4 of Article 35-A. In practical terms, this means that state lotteries can advertise nationwide.
However, the minister made an exception: his ruling on interstate advertising applies to lotteries in general but not to ‘Bets’ – as operators are called -, whose legal framework is the subject of ADI 7721 and must be debated within that case. In ADI 7721, the STF issued a precautionary measure to prevent advertising targeted at minors and to block betting using funds from social programs like Bolsa Família, but it did not specifically address territoriality.
The exact meaning of Minister Luiz Fux’s exception remains unclear. On one hand, it could be interpreted to mean that for state-run bets, the territorial limit of Article 35-A of Law No. 13.756/2018 still applies to advertising. On the other hand, an alternative reading suggests that this form of gambling is governed entirely by a different legal framework, derived from Law No. 14.790/2023. If this interpretation prevails, it would appear to conflict with the premise adopted by Minister Mendonça in Civil Action No. 3696, which upheld the applicability of Article 35-A of Law No. 13.756/2018 to bets.
At this stage, there are more questions than answers. It remains unclear how to reconcile, on one hand, the States’ authority to operate and regulate lotteries as public services and, on the other, the Union’s exclusive power to legislate on lotteries. What is certain is that the disagreements mentioned are just the tip of the iceberg. The issue of bets is highly relevant, and its regulation is not only legitimate but also necessary. It is essential that stakeholders and institutions act with clarity, coordination, and sensitivity in addressing the challenges of the digital era.
Alice Voronoff
Master’s and Ph.D. in Public Law from UERJ, postdoctoral researcher in Law at the University of Coimbra, and partner at Gustavo Binenbojm & Associados (GBA)
Rafaela Canetti
Master’s and Ph.D. candidate in Public Law at UERJ and senior attorney at GBA
