Brazil Court Rules That Municipal Lotteries Can Continue

BRASILIA — In a significant legal decision, Supreme Federal Court (STF) Minister Nunes Marques has ruled not to suspend the operations of municipal lotteries in Brazil, following a Claim of Non-Compliance with a Fundamental Precept (ADPF) filed by the Solidarity party. The ruling, released on March 25, 2025, allows regional lotteries to continue their operations while the Court further deliberates on their constitutionality, deepening the ongoing dispute between federal authorities and local jurisdictions over the regulation of betting activities.

The Solidarity party, which filed the claim, has argued that the expansion of municipal lotteries across the country is creating a “truly chaotic scenario” by enabling jurisdictions to bypass federal gambling regulations. Specifically, the party claims that municipalities are allowing unlicensed operators to function within their borders, potentially destabilizing Brazil's newly regulated federal betting market and jeopardizing player safety.

A Complex Legal Dispute

The dispute centers on whether municipal lotteries violate Brazil’s constitution by operating outside the scope of federal regulations. While the Solidarity party has urged the STF to suspend these local operations until the issue is resolved, Minister Marques opted not to issue a preliminary injunction to halt their activities. However, he has requested that the Solidarity party provide further evidence supporting their allegations within the next 10 days.

Marques also called on the Attorney General’s office to offer its opinion on the matter, emphasizing the importance of gathering input from relevant authorities before making a final ruling. He stated that the input would be essential in shaping his ultimate decision, ensuring that it is made with full consideration of all factors and without prejudice.

“Given the relevance of the matter and its impact on the social order and legal certainty, it is necessary to provide the opinion of the authorities involved,” said Marques in his decision. This further deliberation is expected to inform the Court's final judgment on the constitutionality of municipal lotteries.

The controversy highlights the growing tension between federal and municipal authorities over gambling regulation in Brazil. The country has 26 states and more than 5,500 municipalities, many of which are exploring the potential of establishing their own lotteries to generate regional revenue. One notable example is the municipality of Bodó, which, despite its small population of just over 2,000 residents, has issued numerous licenses to operators.

In Bodó, the cost of obtaining a municipal lottery license is significantly lower than securing a federal online betting license — BRL5,000 ($867.70) compared to the federal fee of BRL30 million. This discrepancy has led to concerns that local municipalities, like Bodó, could undermine the integrity of Brazil's broader gambling regulatory framework by offering cheaper, less regulated licenses. Despite warnings from federal authorities, Bodó has continued to issue these licenses and permit operators to conduct business within the municipality.

Ongoing Legal Challenges

The dispute between the federal government and municipal lotteries is not new. A similar case involving the Rio de Janeiro State Lottery (Loterj) has been ongoing for several months. The STF has previously ruled to restrict Loterj from allowing its licensed operators to offer services beyond the state’s borders. In February 2025, the Court upheld a preliminary injunction that mandated Loterj operators to implement geolocation blocking technology to prevent players from accessing gambling services outside of the state.

This ongoing case has highlighted the complexities of regulating gambling in Brazil, especially as the federal government works to create a cohesive legal framework for the industry. Federal authorities, including the Attorney General’s office, have repeatedly argued that allowing local lotteries to operate without sufficient oversight could disrupt the integrity of the national market and lead to further regulatory challenges.

Given the relevance of the matter and its impact on the social order and legal certainty, it is necessary to provide the opinion of the authorities involved.

The Path Forward

Minister Marques’ decision to allow municipal lotteries to continue operating while awaiting further evidence from the Solidarity party leaves the future of these local operations uncertain. The case remains highly contentious, with federal regulators and municipal governments at odds over the scope of their respective authorities. The final ruling by the STF, which will likely come after additional hearings and input from legal experts, could have wide-reaching implications for Brazil’s gambling landscape.

As municipalities like Bodó continue to issue licenses, and as other states and cities follow suit, the Brazilian government faces increasing pressure to establish clearer and more uniform regulations for the gambling sector. In the meantime, the STF’s deliberation will continue to shape the direction of Brazil’s evolving betting landscape, as it seeks to balance regional interests with national oversight.

The outcome of this case is likely to set a significant precedent for how Brazil approaches the regulation of municipal lotteries and betting activities in the future. For now, both the federal government and regional jurisdictions will have to navigate a legal framework that is still in flux.