The Federal Supreme Court in Brazil has immediately suspended the operators of all municipal lotteries in the country following a filing made by the Solidarity Party which suggested these lotteries were flouting betting regulations.
Minister Nunes Marques made the decision on Wednesday, immediately suspending all municipal laws and decrees that create, authorise or regulate lotteries and sports betting.
The preliminary injunction following the Solidarity Party filing a Claim of Non-Compliance with a Fundamental Precept (ADPF). This suggested municipal lotteries were creating a “truly chaotic scenario”, with operators flouting federal betting regulations.
According to Marques, the authority of municipalities to legislate on matters of local interest does not extend to betting activities. He said this had led to a “drastic weakening” of the federal government’s oversight of gambling in Brazil.
Marques’ injunction introduces a daily fine of BRL500,000 ($94,065) for municipalities and companies providing betting at that level. Additionally, mayors and presidents of accredited companies face a BRL50,000 daily fine for continuing to operate lottery activities in municipalities.
The ADPF had the support of the Attorney General’s Office, which argued municipal lotteries undermine consumer protection and federal oversight.
Marques’ decision will now be submitted to a referendum in an extraordinary plenary session to ratify the suspension of municipal lotteries.
The injunction covers all municipal normative acts, bidding procedures, contracts and activities that contribute to the ongoing operations of municipal lotteries.
State lotteries are protected from such a move, thanks to Article 35-A of the Law No 14,790/2023, which says only the “states and federal district” are authorised to operate lottery activities within their territories, excluding municipalities from doing the same.
Bodó efforts spark scrutiny of municipal lotteries in Brazil
The Solidarity Party warned over 5,500 municipalities could decide to launch lotteries if urgent action wasn’t taken.
One municipality that took steps to launch a lottery was Bodó, which has a population of just over 2,000.
It became a point of national interest after issuing a number of licences to operators at a fee of just BRL5,000, significantly below the cost of a federal licence, which stands at BRL30 million.
In October, however, Bodó’s mayor decided to suspend its municipal lottery activities after it was warned by the Secretariat of Prizes and Bets (SPA), the federal betting regulator.
Marques stated the “local interest” of municipalities centred on citizens’ immediate needs, such as public transport and urban planning rather than lotteries.
Municipal governments argued that local autonomy to provide lottery services could strengthen tax collection to fund local services, although it appears their arguments will ultimately fall short, provided the preliminary suspension is made permanent.
“This situation, it seems to me worthy of the attention of this Supreme Federal Court, presents an urgent scenario capable of causing not only the deepening of the alleged unconstitutionality, but also the aggravation of the scenario of legal uncertainty, considering the dissemination of institutional practice in the municipalities, the multiplicity of challenges and the potential flexibility in the control and supervision of ongoing activities,” Marques’ decision read.
The SPA, National Association of Games and Lotteries and the National Telecommunications Agency will be informed of the decision so they can adopt the appropriate measures.
The future of municipal lotteries in Brazil is in major doubt after they were suspended by the Federal Supreme Court on a preliminary basis.