The future of municipal lotteries in Brazil is in serious doubt after the Federal Supreme Court (STF) temporarily suspended all such operations. The move follows a filing by the Solidarity Party, which argued that municipal lotteries were violating federal betting regulations.
Supreme Court Decision and Fines
On Wednesday, Minister Nunes Marques immediately suspended all municipal laws and decrees that create, authorize, or regulate lotteries and sports betting. The preliminary injunction followed a Claim of Non-Compliance with a Fundamental Precept (ADPF). It highlighted a “truly chaotic scenario” caused by operators flouting federal rules.
Marques emphasized that municipalities’ authority to legislate on local matters does not extend to betting activities. Consequently, he introduced a daily fine of BRL500,000 ($94,065) for municipalities and companies providing unauthorized betting services. Additionally, mayors and presidents of accredited companies face BRL50,000 in daily fines for continuing lottery operations.
Federal Oversight and Legal Backing
The Attorney General’s Office supported the ADPF. They argued that municipal lotteries undermine both consumer protection and federal oversight. Marques’ decision will now be submitted to a referendum in an extraordinary plenary session. This will determine whether the suspension should be ratified permanently.
The injunction covers all municipal normative acts, bidding procedures, contracts, and other activities that facilitate ongoing lottery operations. However, state lotteries remain unaffected. Article 35-A of Law No 14,790/2023 limits lottery operations to the states and the federal district, explicitly excluding municipalities.
Bodó Case Sparks National Attention
Concerns over municipal lotteries intensified after Bodó, a small municipality with just over 2,000 residents, issued licenses to lottery operators for BRL5,000. This amount is far below the BRL30 million federal licence fee. The move caught national attention and prompted federal authorities to intervene.
In October, Bodó’s mayor suspended its lottery activities following a warning from the Secretariat of Prizes and Bets (SPA). Marques stated that municipal “local interest” should focus on immediate citizen needs. These include public transport and urban planning, rather than lotteries.
Local Autonomy vs Federal Authority
Municipal governments argued that allowing lotteries could strengthen local tax collection and fund essential services. Nevertheless, Marques noted that the preliminary suspension is likely to stand. The broader legal framework prioritizes federal oversight and consumer protection.
“This situation, worthy of the Supreme Federal Court’s attention, presents an urgent scenario capable of aggravating legal uncertainty and institutional inconsistency,” Marques wrote.
Next Steps for Federal Authorities
Following the injunction, the SPA, National Association of Games and Lotteries, and the National Telecommunications Agency will implement the decision. They will adopt the appropriate regulatory measures to enforce the suspension.
