JUE 25 DE JULIO DE 2024 - 09:47hs.
Blocking websites not licensed by Loterj

Rio intensifies its push for betting accreditation and challenges the federal government

The government of Rio de Janeiro, through Loterj, has intensified an effort to expand the accreditation of online betting houses in the state, in confrontation with the federal regulation process. The most striking was the court's decision to order the blocking of websites not licensed by the municipality. So far, the Union has not taken effective measures related to this movement.

After circumventing federal rules and judicial understanding by accrediting, in the state, betting houses that can operate throughout Brazil (and not just in Rio de Janeiro), Loterj has resorted to several pressure actions in this billion-dollar market.

Rio notified betting houses – against which it opened administrative proceedings – and also pressured companies and football clubs in Rio that have bets as sponsors to adhere to accreditation in the state. Even influencers were notified for starring in advertisements for houses not registered in the state.

The Claudio Castro (PL) government is still advancing in the judicial sphere. Last week, a decision was obtained in the Federal Court for Anatel (National Telecommunications Agency) to order the blocking in Rio of all betting sites not legalized by Loterj – currently, five companies are authorized in the state.

The decision, dated July 2, was made by judge Pablo Zuniga Dourado, from the TRF (Federal Regional Court) of the 1st Region, in an appeal by Loterj after a request denied in a lower court.

Anatel has already notified internet operators about the block. According to market information, the action could affect 300 websites, but there have been no takedowns yet.

The measure causes controversy. States are allowed to have lotteries and accredit bets, but it is up to the federal government to regulate and general market legislation.

While the federal process is not over, it is established that websites can operate even without accreditation – which has been happening since 2018, after the approval of a law in Congress that triggered the proliferation of this type of business.

Last year, Brazilian spending on online gaming and betting reached around R$54 billion (US$ 9.85bn).

The Ministry of Finance controls the process. The deadline for registration is open, and, according to published rules, bets can operate throughout the national territory until December 31, 2024, even without accreditation.

ANJL – National Association of Games and Lotteries, which represents gaming operators, says in a statement that the decision already impacts betting houses and brings "huge legal uncertainty to the sector." The entity emphasizes that the federal regulatory process is ongoing.

"[The decision and the blockade] were based exclusively on the arguments of a state authority, based on a mistaken interpretation of the legislation, which does not comply with federal laws.”

Company representatives are divided on the practical effects: on the one hand, they believe that the decision may be innocuous because the blocking orders would not be able to reach cell phone access; on the other, they fear that it could result in deforestation throughout the country, not just in Rio.

Loterj insists that it acts legally and in defense of the state's interests in the search for greater revenue. The Rio lottery is willing to go all the way to the last court in search of more space in this market, including if the disputes reach the STF – Federal Supreme Court.

This action targeted Anatel, which, in a statement, said it had complied with the court order and would not comment on the merits. The president of Loterj, Hazenclever Lopes Cançado, told Folha that he intends to sue the companies directly.

"It may be that the Union cannot order those who are not yet accredited to be removed from the air because they were inert [with the delay in the process], but in Rio we can. Because we have the regulations," he says. "We are trying to prevent unfair competition with those who operate legally."

Cançado argues that other states that already have regularized lotteries could also require that only those accredited in the state can operate in the territory. In addition to Rio, Paraná, Minas, Paraíba and Maranhão built their legal frameworks. "The fight is not about a license, it's about not paying taxes," he says, referring to the fact that, while federal regulation does not end, betting houses operate without paying taxes or fees.

The president of Loterj admits that the objective of the pressure is to seek more accredited people and increase revenue for Rio. He says that other companies approached the state after the TRF-1 decision.

When contacted, the Ministry of Finance stated that states can regulate their betting markets for their respective territories, but they must be subject to federal law. "Regulation at national level is exclusive to the Ministry of Finance, through its Prizes and Betting Secretariat, as stated in various provisions of the laws," says the note.

The ministry also questions the Loterj rules that opened a loophole so that a bet accredited in the state can receive bets from anywhere in the country. "A state is not authorized to provide this service outside its territory. This would be a failure to comply with the law and the federative logic itself.”

But, apart from a letter sent to the Rio government and conversations with members of the Rio government, the Lula administration took no other action.

The federal regulation process began in the middle of last year, when the federal government published a provisional measure (which later resulted in law), with the general guidelines for accreditation and taxation rules.

Rio had already launched a notice in April 2023 to accredit companies in the state. But, one day after the federal provisional measure, a correction was made to the notice and began to provide that bets would only need to inform that the operations are carried out in the state, without geolocation restrictions – thus allowing bets from across the country.

Because of this rectification, even made after the provisional measure, the Rio government insists that it has the authorization – the only one in the country – to accredit national operating houses.

To be accredited in Rio, companies pay a grant of R$5 million (US$ 915k), in addition to percentages on bets. In the federal process, this value is R$30 million (US$ 5.5m).

In the attack against those who are not accredited, Loterj also notified payment method companies (which carry out financial operations) of the betting houses and forwarded a complaint to the Central Bank.

The Rio Lottery made a tender, surrounded by questions, to choose a single company to handle payments for all websites registered in the state. The competition disqualified a competitor who proposed more resources for a peculiar reason: the absence of a zero after the comma, as Folha revealed.

There were only two competitors. The requirement related to zero after the comma eliminated one of them and handed the service over to a company with only three years of existence, a history of suspicions in other competition in Paraná and political ties that were not transparent. Loterj says there is no irregularity.

Source: Folha