The judicial decision that prohibited more than 100 online betting houses — ‘Bets” as they are called in Brazil — from operating in Rio de Janeiro has caused problems beyond the state's borders. The blocked companies claim that consumers from other locations, such as Bahia, Maranhão, and Paraná, also lost access to the platforms.
At least two telecommunications companies, Claro and the American AT&T, sent letters to the court informing them that they cannot prevent these companies from accessing only Rio de Janeiro, as determined by the ruling of Judge Pablo Zuniga Dourado of the Federal Regional Court of the First Region (TRF1).
By ordering the block, the judge granted a request from the Lottery of the State of Rio de Janeiro (Loterj). In 2023, Loterj established a series of norms for the bets to "regulate via Loterj" in the country — including operating in other states. The regulation required the payment of a fee of R$ 5 million (US$ 890k) to Rio, plus 5% per month of the Gross Gaming Revenue (GGR, the revenue minus the prizes paid to players).
The amount charged by Loterj is much lower than the R$ 30 million (US$ 5.3m) fee established at the federal level by the Ministry of Finance, which is working on regulating this market in the country based on legislation approved by Congress. The tax levied on GGR will also be higher under federal executive norms, at 12%, applicable nationwide.
As a consequence of the judge's decision, the National Telecommunications Agency (Anatel) last month asked telephone operators to block 115 platforms not registered with Loterj from operating in the state.
Since the block, however, the bets have reported access problems in other states. At the same time, at least two bets found a workaround: they created new URLs (website addresses) to continue serving bettors in Rio. O GLOBO found alternative links for at least two companies, Betano and Bet365.
Technical infeasibility
On July 5, AT&T sent a letter to the court informing them that it cannot implement the block as determined. To prevent access to the platforms in Rio, all other states would be impacted, said the company, which did not respond to GLOBO's request for comment.
In another document sent to the judge on July 10, Claro also stated that it cannot comply with the court order as formulated, due to limitations in the company's infrastructure. When contacted, Claro said it does not comment on judicial decisions.
On July 19, Anatel responded in a letter to the judge that some companies among its authorized ones, such as Claro, Vivo, and TIM, claimed technical infeasibility to comply with the sentence.
A week later, the judge reiterated that the block cannot extend beyond Rio and ordered Anatel to address the access issues in other states. In the process, Anatel urges the operators to find a way to centralize the block only within the boundaries of Rio.
According to Anatel's president, Carlos Manoel Baigorri, initially Vivo, TIM, and Claro communicated that they could not limit access to the platforms only to Rio de Janeiro, but Vivo and TIM found a way to do so. The exception among the major national operators was Claro. He says the priority of the operators should be to comply with the sentence.
"Our position is that the judicial decision needs to be complied with (...) When we receive the judicial decision, we say: block. Oh, I can't block only in Rio de Janeiro. Man, the decision is to block in Rio. Block where you have to block, but block Rio," Baigorri told GLOBO after an event at Fiesp on Monday.
When contacted, TIM and Vivo responded that they continue to comply with the court decision. Oi said it does not comment on ongoing legal actions. Loterj stressed that it only requested the block in the state of Rio and that the providers need to comply with the court order.
Consumers can complain
Consumer law specialist lawyer Gabriel de Britto Silva believes that the technology problems preventing the implementation of the block only in Rio weaken the sentence and demonstrate the infeasibility of having several states creating individual norms to accredit the bets.
Although other federative units are following the same path and creating internal rules to authorize companies to operate only in that state, Rio is the only one accrediting platforms to operate in other parts of the country.
Brunno Giancoli, professor of Law at Ibmec SP and legal consultant, says that the blocks cannot prevent access by consumers outside Rio. Internet users who had their access interrupted, as well as bets that were unduly impacted by the blocks, can appeal judicially to restore access to their accounts, in his view.
The CEO of Esportes da Sorte, Darwin Filho, says there is concern in the sector that affected consumers in other states will file lawsuits against the bets, especially because bettors lost access to the money deposited in their accounts: "There are millions of consumers without the possibility of accessing their accounts. It is an unreasonable and disproportionate measure, given that the federal legislation itself provided for a transition period for active companies to adapt to the regulatory norms."
Users complain on social media
O GLOBO found social media posts from consumers having trouble accessing bets in states such as Minas Gerais, Amapá, Paraná, Bahia, Maranhão, and São Paulo. The National Association of Games and Lotteries (ANJL) said that at least eight members reported access problems outside Rio.
Betano reported having faced access issues in other states but did not specify which ones. At Galera.bet, the block affected, besides Rio, Espírito Santo, Minas Gerais, and Bahia. According to CEO Marcos Sabiá, the suspension of accounts in other states impacts not only the company's revenue but also its relationship with consumers. “The federal government urgently needs to take a position on this issue. This makes foreign operators look at Brazil and not see seriousness,” says the executive.
'Blocking only in Rio is almost impossible'
Information technology analysts agree that it is possible to block access in just one state, but it is not a simple task. The problem lies in ensuring regular access for consumers from other locations. This is primarily due to the complexity of telecom operators' networks: the systems serving Rio are not always concentrated in Rio to avoid interrupted access in case of local network issues.
“The block in Rio can be replicated in other places,” summarizes Pedro Diógenes, technical director for Latin America at technology company CLM. “And technologies don't always work 100%. It's not easy to determine the extent of the block. Does it go up to a certain street? Where does the state end? Configuring the equipment to precisely match the boundaries of a street, city, or state is not simple.”
Thiago Souza, a technology professor at Ibmec, says that internet providers use a group of IP addresses that are dynamically allocated to users. In other words, when you connect to the internet now, you receive an IP, but you might get a different IP when you reconnect later: “Although an operator can associate a range of IP addresses with a specific region, this association is not exact. For example, someone in Juiz de Fora might receive an IP address from the metropolitan region of Rio de Janeiro, which could lead to an access block.”
It is possible to bypass the block
Representatives of betting houses and analysts agree that the blocks in the state continue to function. However, internet users who connect to a VPN (a kind of remote IP) can mask their presence in Rio and continue accessing the blocked platforms normally, reminds Alexandre Caramelo, professor of MBAs at FGV.
“Additionally, online betting platforms have found a way to keep operating in Rio by creating a new network address, as at least two in the sector have done: Betano and Bet365. It works because it is a new server, and the route to that server is not blocked,” explains Vinicius Padrão, a Digital Law professor at the State University of Rio de Janeiro (Uerj).
Blocking and the impact on advertising contracts
As reported by 'Poder360', the court decision is expected to affect several advertising contracts. Of the four Rio de Janeiro clubs competing in Serie A, only Flamengo is sponsored by a betting house regulated by Loterj: Pixbet. Flamengo's contract with the company provides for R$ 105 million (US$ 18.6m) in 2024 alone.
Vasco is sponsored by Betfair (R$ 47 million in 2024); Botafogo has Parimatch (R$ 27.5 million in 2024); and Fluminense is sponsored by Superbet (R$ 42 million in 2024). Betfair, Parimatch, and Superbet are not regulated in Rio de Janeiro.
Loterj notified Vasco, Botafogo, and Fluminense on May 20, requesting that the clubs stop advertisements related to "lottery activity not accredited in the State of Rio de Janeiro." The notification also mentions official websites and products.
As the regulation of sports betting in Brazil is still very recent, specialists consulted by Lei em Campo assert that clubs, federations, and associations should take some precautions when signing sponsorship deals with betting companies.
Fernanda Soares, a lawyer specializing in sports law and a columnist for Lei em Campo, emphasizes that clubs must be vigilant to ensure that the betting house is in compliance with state authorities before signing any sponsorship contract.
According to the specialist, clubs should protect themselves by including some defense clauses in contracts. "It is important to include clauses in the contract that obligate the betting houses to maintain their licenses to operate in Brazil and clauses that allow for early termination of the contract in case of loss of the operating license. This prevents the club from being forced to advertise a betting house with unauthorized operations and potentially being penalized for it," she adds.
Licenses
In May 2024, the Ministry of Finance announced the rules and set a deadline until December 31 of this year for companies to become regularized. The national license, issued by the Ministry of Finance, costs R$ 30 million (US$ 5.3m) and is valid for a maximum of five years. The state license (with a registration deadline of August 13), issued by Loterj in the case of Rio de Janeiro, costs R$ 5 million (US$ 885k) and is also valid for five years.
Companies criticize the block
The National Association of Games and Lotteries (ANJL), which represents 17 betting houses, told 'Poder360' that Loterj's position goes against the law that regulates the sector in the country. It also mentioned that the regulatory period extends until the end of the year.
"The determination to suspend the sites occurred without the companies ever being heard, either in the judicial process or by Anatel, at a time when the market is undergoing a regulatory process in Brazil, with a nationally guaranteed transition period for operators until December 31, 2024," said the association.
The association also stated that the situation creates legal uncertainty and that, despite the STF (Supreme Federal Court) jurisprudence stating that the exploitation of lotteries should not be a federal monopoly, regulation falls under the Union's jurisdiction.
Source: GMB
