Loterj deems Justice injunction of Bets as unwarranted & inapplicable

Loterj, the State Lottery of Rio de Janeiro, has issued a direct appeal to dismiss the judgement of Supreme Court Justice André Mendonça to restrict Rio-licensed operators from participating in the Bets regime.

On 2 January, following the launch of the Bets regime, sanctioned as the new federal framework to regulate online gambling in Brazil, Justice Mendonça granted a ‘preliminary injunction’ against Loterj licences.

Mendonça deemed the judgement necessary to resolve a long-standing conflict between the federal government and Loterj, as Rio de Janeiro’s state lottery authority, over the regulatory jurisdiction of online gambling. This dispute had remained unresolved by the Attorney General’s Office.

The preliminary injunction has suspended Loterj licences from offering lottery and online gambling services outside of Rio’s state boundaries. The demand was initiated on 2 January, with Loterj given five days to ensure that state licences implement geolocation restrictions to limit state lottery activities exclusively to Rio.

Loterj issued an immediate appeal, demanding that Justice Mendonça clarify how his decision was made on such long-standing conflicts. The organisation argued that his ruling suffered from “omissions, ambiguities, and material errors” in how restrictions can be applied to the remits of state licences.

Submitting its appeal, Loterj argued that Mendonça had no grounds to intervene in a way that would cause significant harm to state revenues generated by lottery and gambling services, impacting the business of 25 licensed operators, including Serie A Brasileiro football sponsors such as Pixbet and Esportes da Sorte.

Loterj further argued that Justice Mendonça’s demand to reintroduce geolocation tracking is both impractical and unnecessary, as it exceeds the requirements outlined by existing legislation:

“Nor is it reasonable to impose multimillion-dollar risks on this organisation and the State of Rio de Janeiro through a simple preliminary measure. It is respectfully requested that, in any scenario, the ordered measures be modulated to, at this initial stage, at least preserve the perfected legal acts, understood as the Accreditation Terms already signed as a result of regularly concluded bidding processes up to the date of the measure’s issuance, at least until the final judgement of the case,” stated Loterj.

The Federal Supreme Court (STF) is expected to address the matter in its plenary session scheduled for mid-February, where a more definitive ruling could be made.

Outstanding judgements underscore the broader tensions between state and federal authorities in Brazil over the regulation of online gambling, interpreted under the new framework of the Bets regime.

Loterj concluded its statement by calling for a fair and balanced resolution that respects state autonomy while ensuring the sustainable growth of Brazil’s emerging online gambling market.

Mendonça highlighted the federal government’s overarching authority to oversee lottery activities across Brazil while acknowledging that states have the right to conduct lotteries within their own jurisdictions. T

he Justice argued that Loterj’s more lenient licensing criteria undermined effective supervision and control of lottery operations, posing a potential risk to the integrity of the federal regulatory framework.

The differences between federal and state licences further illustrate the challenges. A federal lottery licence costs BRL 30 million for five years and carries a 12% gross gaming revenue (GGR) tax, along with rigorous due diligence and compliance requirements. In contrast, Loterj licences cost significantly less—BRL 5 million for the same period—and impose a lower 5% GGR tax, with fewer regulatory restrictions.

Whether Justice Mendonça’s preliminary injunction will withstand further legal challenges remains to be seen, as stakeholders across the country closely monitor developments at a pivotal stage for the nascent online gambling marketplace of Bets.