After a lengthy legal dispute, Rio de Janeiro’s state lottery, Loterj, appears to have admitted defeat; releasing an ordinance instructing its operators to cease operations nationwide.
By Will Underwood
The legal contention surrounding state vs federal licensing for new operators in the Brazilian market has (potentially) reached its conclusion – following an ordinance published in early February by the Rio de Janeiro Official Gazette (DORJ). Now, after a near year-long legal dispute, a new ordinance published by DORJ last week has seen the state of Rio seemingly throw in the towel on its national licensing ambitions.
The decision comes following a lengthy battle between the state government of Rio de Janeiro and the wider Federal Government over the legality of the Loterj (Rio’s state lottery) gambling licence. Indeed, prior to the opening of the Brazilian online gaming and sports betting markets in the new year, licensees operating in the state of Rio via registration with Loterj were utilising a loophole within the previous regulatory framework to extend their operations nationwide.
Needless to say, this quickly sparked tension between state and federal governments once a fee of BR 30m ($5.3m) was announced for the federal Brazilian operator’s licence – as the Rio licence comes at a much lower price of BR 5m but could, theoretically, allow operators to access markets across the country. Additionally, a Loterj licence comes at a much lower tax rate of 5% when compared to the 12% tax operators are obliged to pay once they are registered with a federal licence.
Prior to the release of the ordinance, which allowed for the submission of applications for the federal Brazilian licence in October 2024, there was a big question mark over whether operators looking to get certified in the nation would opt for the penny-pinching route of the Rio de Janeiro licence. In the end, most played it safe and paid the extra fee, which then begged the subsequent question of just how long the Loterj licence would remain in place – and could they win their legal battle against the Federal Government?
Not (that) long is seemingly the answer, as the Federal Government on 2 January – less than 48 hours after the opening of the Brazilian online gaming and sports betting markets – passed a preliminary decision to ban Loterj licences from operating nationwide via Supreme Federal Court Minister André Mendonça. Further to this, the ruling also stipulated a requirement for the reintroduction of geolocation tracking to monitor the activity of Loterj licencees, to ensure that their operators were only active within the state borders or Rio de Janeiro.
Naturally, Loterj quickly and firecelyopposed the decision, launching a number of appeals – but to little effect.
Now, it would appear that Loterj has thrown in the towel with the publication of Ordinance Loterj/GP No 658
Article Oneof the ordinance, which orders Loterj-licensed brands to cease operations outside of the state of Rio de Janeiro with immediate effect. Loterj seems to have conceded defeat on the geolocation tracking front, too, as the ordinance’s first article also stipulates that the practice will be utilised to ensure its operators adhere to the new restrictions.
Article Two of the new ordinance goes on to clarify that any Loterj-licensed companies that cannot or will not adopt these new features geolocation tracking measures will see their operations banned with immediate effect.
Looking forward, these measures will now remain in place for as long as Minister André Mendonça’s preliminary decision lasts. However, with Loterj now facing opposition from not only the Federal Government, but also the Brazilian Institute of Responsible Gambling (IBJR), it is hard to now envisage the ruling being overturned.
Stability has become something of a rallying cry for gambling stakeholders in Brazil following a tempestuous road to regulation, which initially began under Jair Bolsonaro’s Presidency and ended on 1 January 2025. Perhaps unfortunately for Loterj and its licensees, throughout the final quarter of 2024, the industry began to face bad press following news that many recipients of the Bolsa Familia welfare programme had been spending money gambling. This sparked widespread criticism around addiction issues in the nation and even prompted threats from current President Luiz Inácio Lula da Silva to backtrack on the new regulation mere months before its proposed implementation.
Thus, the idea that the Federal Government would – after such a turbulent journey to a regulated market – allow Loterj to continue exploiting the legal loophole that had previously enabled their operators nationwide distribution, was always going to be unlikely. Still, it’s another day, another story out of Brazil – and this latest development serves as a quick reminder that anyone looking to make it in this market will need to keep their finger on the pulse at all times.
