Online sports betting is at the center of a federative dispute in Brazil, even though it is still awaiting regulation. The Rio de Janeiro Lottery (Loterj) refused a request from the Ministry of Finance regarding the limits of online betting in the states. So, this could take the issue to the Federal Supreme Court (STF).
Dispute between Fazenda and Loterj over sports betting
This billion-dollar market will be taxed this year, which will generate revenue for federal and state tax authorities. Therefore, this discussion makes the online sports betting sector of great interest to governors for improving their financial situations, and also for the Union, which seeks to reduce the public deficit.
The dispute between the Treasury and Loterj revolves around the scope of state lotteries, which were made possible by the STF in 2020 by breaking the Union’s monopoly.
Therefore, the Treasury requests that Loterj modify the betting accreditation notice so that they are restricted to local bettors. This is a determination of the legislation approved by Congress.
Loterj claims that the law preserved the terms of state concessions made before the issuance of the Provisional Measure (MP) that regulated the activity at a national level.
Therefore, Loterj’s notice offered more favorable conditions to companies than those established by the federal government, such as:
- A grant of R$5 million; by the Union, R$ 30 million is required
- A 5% tax on GGR (Gross Gaming Revenue); by the Union are 12%
So, if state lotteries are not restricted to their territories, the federation units will compete with each other and with the Union. In other words, this competitive environment is seen positively by Loterj, but with concern by the economic team.
The Ministry of Finance fears that this will end up making national regulatory work unfeasible and reducing the federal government’s revenue potential.
Interest of the Centrão
Loterj criticizes the Ministry of Finance’s lack of concrete action against illegal gambling. She advocates more strategic and coordinated action in partnership with other regulatory and public safety bodies.
But the Sports and Finance departments are in a dispute over the operationalization of sports betting. In any case, the Prizes and Betting Secretariat is working to publish a regulatory agenda with eleven more ordinances, scheduled for the first half of the year.
The AGU is monitoring the case and will evaluate the possibility of taking the matter directly to the STF, due to federal issues involved.
Therefore, the dispute between the Treasury and Loterj over online sports betting reflects the challenges of regulating this fast-growing market in Brazil. This is because the decisions made will have an impact not only on the states, but also on federal revenue and the operation of companies in the sector.
