JUE 25 DE JULIO DE 2024 - 09:54hs.
Action by Federal Attorney General's Office

Federal Government appeals to the Court against blocking of betting sites not licensed by Loterj

The Federal Attorney General's Office (AGU) filed an internal appeal with the Federal Regional Court of the 1st Region to be a party and try to suspend the Court's decision to order the blocking of sports betting and online gaming sites in Rio de Janeiro not authorized by Loterj. By court decision, the National Telecommunications Agency (Anatel) ordered internet operators to block 233 URLs in the state.

The action in which Loterj obtained a favorable decision to block sports betting and online gaming sites operating in Rio de Janeiro without a license from the municipality determined that Anatel should verify the operational legitimacy of the companies listed in the petition (total of 233 operations) and If not, order the suspension of activities at the state level.

In the request to join the action, the AGU points out that the decision of the Federal Supreme Court that ended the Union's monopoly is exclusively about the operation of lottery activities and “prohibits the issuance of state legislation on the matter, given the exclusive competence of the Union.”

The AGU points out in its justification that Loterj “confuses the Union's legislative competence on the subject with the material competence of the State of Rio de Janeiro to operate a related service.”

The Federal Attorney General's Office highlights in its petition that it is the responsibility of the Prizes and Betting Secretariat of the Ministry of Finance “to authorize, allow and grant, regulate, standardize, monitor, supervise, inspect and sanction, in accordance with the Law, lotteries in all its modalities.”

The AGU points out that the Prizes and Betting Secretariat has established a regulatory agenda that is ongoing, having already completed the first phase, which involved the criteria for laboratory accreditation, rules for payment transactions, technical and security requirements for betting systems and the most recent (Ordinance 827), “which establishes rules, conditions and opening the procedure for requesting authorization to operate fixed-odd betting throughout the national territory,” as stated in the request to the Court.

For the AGU, once these criteria were established, the deadline for submitting license requests was set at December 31, 2024, and companies that apply by August will have their requests analyzed and approved – or not – by the end of the year. . Those that are licensed will be able to operate from January 1, 2025 in accordance with the regulations issued by the Prizes and Betting Secretariat.

In its petition, the AGU states that “Loterj's appeal to request the blocking of bookmakers' websites contradicts the provisions of Law No. 14790/23 and the regulations approved by SPA Ordinance No. 827/2024.”

Furthermore, the Attorney General's Office points out that the accreditation of companies to operate sports betting and online games disrespects the federative pact as it established that approved companies could operate in any Brazilian state in a virtual way, establishing the registration of bets as being made. in Rio de Janeiro.

In its statement in the appeal, the AGU points out that “Loterj apparently disregards the federative pact, which is reinforced by excluding the requirement for the geolocation service to prove the bettor's presence in Rio de Janeiro, replacing it with a mere declaration of science of the bettor. Therefore, in the absence of proof of territoriality, bettors from other Federative Units can place bets online, through operators authorized by the State of Rio de Janeiro.”

The AGU also lists requirements determined by laws 13,756/2018 and 14,790/2023 that give the Ministry of Finance (Secretariat of Prizes and Bets) the competence “to authorize, supervise and sanction agents operating in the national territory.”

In its justification, the Federal Attorney General’s Office reinforces that:

“Furthermore, it is important to draw attention to a fundamental point. In addition to the legislation being express about the territoriality of lottery exploitation, territoriality is also a result of the classification of the lottery as a public service. Public services, even those that allow profit to be made, are provided - usually - within the borders of the political entity that established them. It makes no sense for a State's public service to be carried out beyond its borders. After all, public service is not the exploitation of economic activity by the State.”

And it adds: “despite the Union having exclusive legislative competence to deal with the subject of “lotteries”, States are allowed to operate lottery services, as long as they comply with the governing federal legislation and the territoriality of lottery operation.”

The AGU is categorical, in its justification, in stating that “Loterj is incapable of demanding the suspension or blocking of websites that allegedly irregularly exploit the fixed-odd betting lottery market at national level, therefore exceeding the territoriality of this service. It should be added that the governing federal legislation gave a grace period for companies that were in operation to adapt to the legal and regulatory provisions issued on fixed-odd betting in the national territory.” And highlights:

“Art. 24. For the purposes of the provisions of the sole paragraph of art. 9 of Law No. 14,790, of 2023, the deadline for legal entities that were active in Brazil to adapt to the legal and regulatory provisions in force on the fixed-odd betting lottery when Law No. 14,790 was published, begins. on the date of publication of this Ordinance and ends on December 31, 2024. Sole paragraph. From January 1, 2025, legal entities that are active in Brazil without due authorization from the Secretariat of Prizes and Bets of the Ministry of Finance for the commercial exploitation of the fixed-odd lottery betting modality will be subject to the relevant penalties.”

AGU’s understanding is that:

“Thus, during the current adaptation period, which began in May 2024 and will end on December 31, 2024, there is no legal scope for blocking the websites of legal entities covered by art. 24 of Ordinance SPA/MF nº 827, of 2024, who exploit the service without due authorization. This is because Law No. 14790/2023 gave a real grace period for these companies to adapt to the legal and regulatory provisions, issued on fixed odds betting, throughout the national territory.”

AGU understands that “the State of Rio de Janeiro has the right to materially exploit the lottery modalities provided for in federal legislation. However, even if it issues its own regulations, state regulations must comply with federal legislation, as recommended by art. 35-A of Law No. 13756/18. Within the scope of federal legislation and, specifically with regard to fixed odds bets, §3 of art. 17 of Law No. 14790/2023, determines that “companies providing internet connection and internet applications must block electronic websites or exclude applications that offer the fixed-odd betting lottery in disagreement with the provisions of this article after notification from the Ministry of Finance.”

“It should be noted, therefore, that federal legislation, which, in fact, has national scope, requires notification from the Ministry of Finance for the blocking of electronic sites or the deletion of applications, which is why Loterj would not have the authority to demand the blocking of websites, without a specific court order and without federal regulation. It should be noted that state legislation, as it has territorial jurisdiction limited to the circumscription of the Member State, cannot be enforced against federal bodies."

In its conclusions, the Federal Attorney General’s Office asks:

“In view of the above, the UNION requests the acceptance of the PRELIMINARY PROCEDURE INTEREST IN JOINING THE FACT and the reconsideration of v. appealed decision, with its consequent reform, with the aim of REVOKING the partially granted early appeal protection or, if this is not understood, after its regular processing, the trial before this Egrégia Panel is promoted and the internal appeal is PROVIDED.”

Source: GMB