At the end of 2020, the Federal Supreme Court ruled definitively on the exploitation of lottery games in Brazil, understanding that such activity is not the exclusive competence of exploitation by the Union.
Supported by the Supreme Court's decision, states such as Sao Paulo, Maranhao, Distrito Federal and Pernambuco are already articulating to launch their own lotteries, in partnership with the private sector, in the form of service concessions.
Undoubtedly, lottery games are potential sources of fundraising for Public Administrations, especially in times like the one we are experiencing, of economic crisis and serious budgetary and fiscal problems.
For this reason, it is natural that state governments, supported by the STF, now begin to move towards having their own lotteries, which must be done in a responsible and transparent manner, through partnerships with serious and traditional private institutions, in order to avoid possible embezzlement of public money and ensuring the smoothness of the entire process. At the same time, it is essential to ensure the social character of the allocation of part of the funds collected.
It is necessary to be very careful with the interpretation of the STF decision, which understood that the Union does not have exclusive competence for lotteries, as it does not extend to municipal administrations.
At the time of the judgment of ADPFs (Allegation of Non-Compliance with Fundamental Precept) 492 and 493, the STF recognized the competence of the Brazilian states and the Federal District for the exploitation of the lottery activity. However, it should not be inferred that the municipalities were also covered by the decision. Especially because the Federal Constitution of 1988 does not grant municipal administrations the so-called "residual competence". In this sense, it is necessary to reaffirm the constitutional principle of the predominance of interest, as taught by Professor Sylvio Motta:
"Technically, it is the principle that guides the division of powers within a federal State. Thus, matters of predominant local interest must be regulated by the Municipality, as seen in article 30, I. On the other hand, matters whose interest is regional, covering more than one Municipality, are the responsibility of the Member State, and, finally, matters of predominant national interest are the responsibility of the Union" (Motta, Sylvio. "Constitutional Law: Theory, Jurisprudence and Questions" / Sylvio Motta. 27. Rev. ed. and current. — Rio de Janeiro: Forense; São Paulo: MÉTODO, 2018, p. 506.).
Article 25, item 1, of the Constitution states that "the powers that are not prohibited by this Constitution are reserved for States". In addition, when we look at article 30 of the Constitution, it is not possible to adapt the exploitation of lottery products as one of the municipal competences affirmed there. City halls are only responsible for stipulating locations and hours of service for lottery activities, in addition to specific taxation, and may even receive part of the revenue from lottery operations by the states.
Thus, the initiative of some municipalities such as Guarulhos (SP) and Porto Alegre, which, through their respective City Councils, approved the implementation and operation of their own lotteries, is worrying. There is, to date, no legislative or jurisprudential support for the creation of municipal lottery services.
In this way, without consistent legal basis, the institution of lottery games by City Halls presents a high degree of legal uncertainty, a risk to municipal administrations themselves, in addition to their partners and investors, since their conception emerges in the legal world with several vices that can cause an abrupt interruption of any contract signed with the municipalities. As the popular saying goes, caution and chicken soup never hurt anyone.
Given this scenario, it is strongly recommended that Brazilian municipalities pay attention to the legislation in force and do not carry out their own lottery exploration projects, due to legal uncertainty and numerous risks involved. The matter may be re-discussed in due course, but as long as there are no solid legal guarantees, the exploitation of municipal lotteries will be an adventure that is inconsistent with the role of City Halls. (RJ).
João Rachid Motta
Head of legal at MCE Intermediações e Negócios
(Especial para ConJur)
