Brazil State Lotteries Clash with Federal Gambling Regulations

Last week, the National Association of Municipal and State Lotteries (ANALOME) issued a strong rebuttal against the Brazilian government's new requirement that licensed online gambling operators must use the “bet.br” domain. The association’s statement, released on March 22, condemned the domain mandate as an unfair measure that tarnishes the reputations of state and municipal operators and threatens their financial contributions to public sectors.

Since the legal launch of Brazil’s regulated online gambling market on January 1, operators licensed by the federal government have been required to use the “bet.br” domain for their online betting platforms. The intention behind this rule was to create a clear distinction between licensed operators and illegal ones. However, ANALOME claims that the use of this domain has inadvertently cast a negative light on companies holding state or municipal licenses, which often operate under different domain names.

The Dispute: A Violation of Autonomy?

According to ANALOME, the federal mandate imposing the “bet.br” domain infringes on the autonomy of state and municipal governments, which have traditionally managed their own lotteries. The association argues that the new requirement violates the principles of legality, free initiative, and the constitutional autonomy of federative entities (states and municipalities).

The press release highlights concerns that this limitation not only damages the reputation of state-run operators but also risks jeopardizing the financial contributions these lotteries make to vital public sectors, including health and education. ANALOME also claims that the federal government's regulations, such as those outlined in the latest financial transaction reporting ordinance, are part of a broader attempt to centralize control over the industry and eliminate competition from local operators.

This criticism follows the release of Normative Ordinance No. 566 on March 21, issued by the Secretariat of Prizes and Bets (SPA), which sets the guidelines for financial institutions to report illegal gambling transactions. ANALOME believes this ordinance is a strategic move by the SPA to strengthen its monopoly over Brazil's lottery operations. The association asserts that this undermines the autonomy of state and municipal lotteries, and as a result, calls for the SPA to revoke the ordinance.

Seeking Dialogue and a Fair Solution

In its official statement, signed by ANALOME president Camilo Roma de Brito, the association proposed the creation of a working group to facilitate technical dialogue between state and municipal representatives and the SPA. This group would be tasked with analyzing the potential impacts of Normative Ordinance No. 566 and working toward a regulatory framework that both ensures legal security and respects the autonomy of local governments.

“We believe that technical dialogue is essential to develop a fair regulatory framework,” the statement read. “This proposal does not exclude guidance on appropriate legal measures, but demonstrates our commitment to consensual solutions.”=

This dispute is part of a larger, ongoing battle between federal authorities and state-run lotteries. In February, the Rio de Janeiro State Lottery (Loterj) faced a significant setback when the Supreme Federal Court (STF) upheld a preliminary injunction preventing Loterj licensees from offering online bets beyond the borders of Rio de Janeiro. This injunction also mandated geolocation tracking to ensure compliance with the ruling.

We believe that technical dialogue is essential to develop a fair regulatory framework.

What to Expect?

In addition, earlier this month, Brazil's Social Democratic Party (Solidariedade) filed a Claim of Non-Compliance with a Fundamental Precept (ADPF) with the STF, requesting a ruling on whether municipal lotteries are constitutional. This legal challenge could lead to a nationwide ban on municipal lotteries until the STF delivers a final ruling.

As Brazil’s online gambling market continues to evolve, the tensions between federal regulations and local autonomy appear poised to escalate, with state and municipal lotteries fighting to maintain their place in the burgeoning industry. ANALOME's latest call for dialogue reflects the ongoing need for compromise and a balanced approach to gambling regulation in Brazil.