Brazil’s Rio de Janeiro State Lottery, also known as Loterj, is facing mounting legal challenges as it grapples with a Supreme Federal Court (STF) ruling that restricts its ability to operate beyond state borders. The court’s decision, which mandates the use of geolocation tracking to restrict betting activities within Rio de Janeiro, has ignited tensions between state regulators and the federal government. The most recent legal back-and-forth highlights concerns about compliance and enforcement, particularly as the five-day deadline for Loterj to act has already passed.

The court’s injunction and Loterj’s non-compliance:

According to Games Magazine Brazil, on January 2, STF Minister André Mendonça issued a ruling that suspended the national operations of gambling companies licensed by Loterj. These operators were prohibited from accepting bets from outside the state of Rio de Janeiro, a move designed to ensure that state-run lotteries operate within their territorial boundaries. The decision also required the implementation of geolocation systems to ensure that bets are placed exclusively by individuals within Rio’s borders.

This ruling came after months of legal disputes between Loterj and federal authorities over whether the state lottery had the right to extend its operations outside of Rio de Janeiro. The STF’s decision was bolstered by the Attorney General’s Office (AGU), which filed the case, arguing that Loterj was overstepping its jurisdiction by allowing operators to accept nationwide bets. Minister Mendonça clarified that while states are permitted to regulate their own lottery activities, they must adhere to federal regulations that define the territorial limits of their operations.

Despite the clear court order, Loterj has failed to comply within the stipulated five-day deadline, prompting the State of Paraná to take action. Paraná, which is participating as an amicus curiae in the case, has filed a motion urging the Supreme Court to impose a daily fine of R$50,000 (US$8,500) to enforce compliance. Paraná argues that Loterj’s continued defiance of the court’s ruling is a direct affront to the STF’s authority, especially given that more than two weeks have passed since the deadline.

Loterj’s primary defense centers on the technical difficulties it faces in implementing geolocation measures. The state lottery claims that it is unable to enforce the “geolocation lock” within its accredited operators’ platforms, citing issues with monitoring bets made outside of Rio. However, the State of Paraná has contested this argument, pointing out that other state lotteries have already successfully implemented geolocation tools. The state emphasized that such technologies are readily available and can be implemented without significant government intervention.

“Such claims constitute an attempt to gain time and postpone compliance with the court decision,” the State of Paraná’s filing asserts, arguing that the technology needed to enforce geolocation is not only feasible but has already been used by other states.

Minister Mendonça has consistently rejected Loterj’s claims that compliance is impractical. He pointed out that these technical challenges are unfounded and that Loterj’s delay in adhering to the decision is an intentional attempt to sidestep the court’s ruling.

Ongoing legal battles and Loterj’s appeal:

In response to the ruling, Loterj quickly filed an appeal, asserting that the decision contained legal flaws and should be reconsidered. Loterj’s argument hinges on the assertion that there was no explicit legal requirement for geolocation technology in its 2023 legislative framework, and it questioned whether such measures were truly necessary.

However, the STF rejected Loterj’s appeal on January 7, noting that the lottery’s objections were based merely on disagreement with the initial ruling rather than on substantive legal grounds. The Supreme Court maintained that the five-day deadline for compliance remains in effect, reinforcing its position that Loterj must comply with the court’s ruling without delay.

Loterj’s appeal further argued that the five-day compliance deadline was unreasonably short, which the STF also dismissed. The Court’s decision to enforce this deadline is critical to ensuring that the national gambling market operates in accordance with federal regulations, and it is clear that the STF is determined to see its injunction fully implemented.