Brazil’s Federal Supreme Court has rejected an appeal by Rio de Janeiro’s state lottery (Loterj), upholding federal requirements for geolocation systems on online betting platforms. Loterj was challenging an injunction that invalidated recent changes to its lottery system.
The original ruling, issued by Minister André Mendonça, strengthens federal jurisdiction over lottery and gambling regulations and requires compliance with laws limiting operations to state territories.
These changes allowed users to self-identify their locations without the use of geolocation technology, which the federal government argues undermines the integrity of the territorial restrictions imposed by law.
Loterj argues that geolocation systems are clearly not required by law and defended its regulatory adjustments as being in compliance with the law.
However, the court ruled that Loterj’s changes violated federal laws that require states to limit lottery participation to individuals not physically located or resident within their territories.
Mendonsa explained that geolocation technology, while not explicitly required by law, is the only effective mechanism to enforce these territorial restrictions.
Allowing users to self-identify their locations creates a “fiction” of territorial boundaries and undermines federal oversight.
In its decision, the Court reiterated that states only have the authority to operate lottery systems within their geographic and legal boundaries. It also reaffirmed the federal government’s exclusive authority over multi-jurisdictional gambling, preventing states from expanding their influence beyond their borders.
The Court also invalidated Loterj’s revised terms and ordered the organization to restore geolocation controls within five days.
The decision is a show of force by the federal government, which asserts its dominant role in gambling regulation and underlines the judicial system’s commitment to maintaining jurisdictional clarity.
Mendonsa stressed that geolocation technology is critical to ensuring legal and transparent lottery operations.
He added that failure to implement these measures risks perpetuating jurisdictional conflicts and undermining the constitutional framework for public services.
The decision has significant implications for state lotteries in Brazil. It confirms the need for technological solutions to maintain legal boundaries and signals a more rigorous approach to enforcing federal gambling laws.
The federal government welcomed the decision as a necessary step to maintain fair lottery governance across the country. However, Loterj expressed disappointment, citing financial and operational challenges in implementing geolocation systems.
On January 1, Brazil entered a new era of regulated online betting, with the launch of a legal market overseen by the Secretariat of Prizes and Betting (SPA).
Regis Dudena, head of the SPA, expressed optimism about the potential of the regulations to eliminate the black market in Brazil. He highlighted measures such as blocking IP addresses and Pix transactions, which will make the environment unsuitable for illegal operators.
In addition to the work of the SPA, the new government agency will help regulate the gambling industry.
On January 8, the Official Gazette of the Union (DOU) published a joint resolution outlining the responsibilities of the newly formed GTI-Bets task force.
The group is mandated to ensure compliance and maintain the integrity of Brazil’s regulated betting sector. Its responsibilities include verifying tax compliance by authorized operators and identifying illegal actors who may be involved in crimes such as money laundering.
GTI-Bets will also support the development of a compliance program to streamline tax obligations for licensed operators.
In addition, the group will propose a coordinated enforcement action through the Undersecretary of Inspection to curb illegal activity and create a dedicated information sharing channel between the relevant agencies.
The task force is composed of three representatives appointed by the SPA, Sufis and the General Coordination of Research and Investigation. The latter two are part of the Federal Tax Service.
GTI-Bets will submit reports to the supervisory secretariats every two months and a final report at the end of its mandate, ensuring transparency and accountability in its operations.
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