In a decisive move, Brazil’s Supreme Federal Court (STF) has upheld a preliminary injunction restricting the Rio de Janeiro State Lottery (Loterj) from issuing licenses beyond its state borders. This ruling concludes a protracted legal battle between Loterj and the federal government over the extent of state-level regulatory authority in the nation’s burgeoning iGaming sector.
The conflict intensified in October 2024 when the Attorney General’s Office (AGU) initiated Original Civil Action No. 3,696, challenging Loterj’s practice of granting licenses for nationwide operations. Loterj contended that its Accreditation Notice 01/2023 authorized it to license operators across Brazil, a claim now invalidated by the STF’s recent decision.
On January 2, STF Minister André Mendonça issued a preliminary injunction halting Loterj’s nationwide activities and mandating geolocation measures to ensure compliance within Rio de Janeiro’s boundaries. Despite initial delays due to a requested review by Minister Dias Toffoli, a majority of seven STF ministers, including Flavio Dino, Gilmar Mendes, and Toffoli, have now affirmed Mendonça’s injunction. 
Implications for Loterj and the iGaming Industry
This ruling significantly impacts Loterj’s operational scope and financial model. Previously, Loterj offered a more cost-effective licensing alternative, with a five-year authorization priced at BRL5 million, compared to the federal license fee of BRL30 million for the same period. Additionally, Loterj’s licensees benefited from a lower tax rate of 5% on gross gaming revenue, in contrast to the federal rate of 12%. The STF’s decision effectively nullifies these advantages, confining Loterj’s licensing authority to within state lines.
In response to the ruling, Loterj has issued an ordinance directing its licensees to comply with the STF’s mandate, ceasing operations outside Rio de Janeiro and implementing geolocation tracking to enforce these restrictions. This development underscores the federal government’s commitment to centralizing regulatory oversight of Brazil’s iGaming industry, aiming to establish a uniform legal framework and mitigate jurisdictional conflicts.
Industry Reactions and Future Outlook
The STF’s decision has elicited varied responses from stakeholders within the iGaming community. Daniel Romanowski, president of the Paraná State Lottery, suggested that this outcome likely concludes Loterj’s legal challenges, stating that their rebuttals are now effectively “done.” Conversely, Loterj’s president, Hazenclever Lopes Cançado, has criticized the ruling, expressing concerns over potential market instability and the emergence of unfair competition from operators based in tax havens.
For CEOs and decision-makers in the iGaming sector, this ruling signifies a pivotal shift toward centralized regulation in Brazil. Operators currently holding or considering state-issued licenses for nationwide activities must reassess their strategies in light of the STF’s definitive stance. Engaging with federal licensing processes and ensuring strict adherence to geolocation requirements will be essential steps for continued compliance and market participation in Brazil’s evolving iGaming landscape.
