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Rio de Janeiro's state lottery and the Brazilian attorney general's office are at loggerheads over last week's Federal Regional Court decision that ordered Brazil's telecoms regulator to block access to sports betting and online casino sites operating without a state licence.
On Monday (July 8), the Brazilian Attorney General’s Office (AGU) filed a legal motion to overturn the court's decision, which asked telecoms authority Anatel to block an initial 115 named sports-betting and online gaming platforms that have not been licensed by Rio de Janeiro state lottery LOTERJ.
Although Rio has issued several local licences to operators, most of the 100-plus sites are instead active in Brazil on the basis that new federal legislation provides a clear pathway for them to remain operational during a transition period to a national licensing regime that will become fully effective at the end of this year.
The AGU wrote that Brazil's constitution "removes the legislative competence of the Federated States and the Federal District [over lotteries], but not the material competence for the exploitation of such a public service".
This means the AGU wants to establish that it is up to the federal government to legislate for and regulate fixed-odds betting, although Brazilian states retain the ability to operate their lottery products locally.
Although it has said it has taken steps to comply with the federal court ruling, ANATEL also lodged its legal appeal on Wednesday, arguing that it lacked legal and technical authority to block
LOTERJ responded via a social media post that criticised the AGU’s position.
“The petition from the Attorney General’s Office attempts to mislead the [federal regional court]. Contrary to what the federal government claims, the request was made exclusively for blocking within the State of Rio de Janeiro,” wrote the lottery authority in a since-deleted post on social media that was captured by the Brazilian gambling industry blog BNLData.
The statement referred to the AGU's assertion in its filing that “it is clear that LOTERJ is incompetent to demand the suspension or blocking of websites that allegedly illegally operate the fixed-odds lottery betting market nationwide, thus going beyond the territoriality of this service. Only the Ministry of Finance can request the blocking of websites or the exclusion of applications that offer fixed-odds lotteries in disagreement with the legislation.”
LOTERJ stated: “If the providers were unable to restrict the blocking to the State alone, this is not LOTERJ’s responsibility, but rather a failure to comply with the court order.
“LOTERJ reiterates that the blocking is exclusively for betting platforms that do not have a state and/or federal license to operate in Rio de Janeiro.”
At least one major internet service provider has publicly stated that it cannot impose localised blocking strictly for the state of Rio de Janeiro.
AT&T Brazil declared on Friday that it would be technically impossible for ISPs to only block sites within Rio and that blocking is only possible on a nationwide basis, “which does not appear to be what was determined by the [court]”.
The blocking orders sought by LOTERJ mark a significant escalation of a broader legal dispute regarding the scope of the state's authority to establish its own licensing system for sports betting and online gaming.
Whereas the state of Parana, which has a similar licensing framework, requires its operators to geoblock players outside the state's borders, LOTERJ has maintained that its licensees can accept bets from throughout Brazil as long as customers legally acknowledge that their betting transactions are occurring within Rio de Janeiro.
Additional reporting by James Kilsby.
