Loterj Appeal Denied by Brazil Supreme Court

January 1, 2025, marked the launch of regulated online betting in Brazil. Streamlining regulations, combatting harm and illegal gambling, the country implemented new rules for online gambling activities, which are now regulated by the Secretariat of Prizes and Bets, also known as SPA. However, the new regulations raised concerns for some, including the State Lottery of Rio de Janeiro, Loterj.

Supreme Court Rejects an Appeal from the State Lottery of Rio de Janeiro

The start of 2025 brought a preliminary injunction against Loterj issued by Supreme Court Justice André Mendonça. Per that ruling, the operator was instructed to ensure that its licensed operators do not offer their services outside Rio de Janeiro. Not unexpectedly, Loterj disagreed with the preliminary injunction, filing an appeal.

Unfortunately, for Loterj, its appeal was rejected by the Brazil Supreme Court earlier this week. Previously, the operator maintained the position that the use of geolocation technology, which was requested by the injunction order, wasn’t necessary as customers of Loterj-licensed operators had the option to declare their location personally.

Not unexpectedly, the Court disagreed. Rejecting the appeal, the Court acknowledged that the self-declaration of a customer’s location violates Brazil’s existing laws. Per the regulation currently in effect, customers of state lottery-licensed operators need to be physically located within the relevant state.

When appealing the injunction order, Loterj warned that the ruling had “omissions, ambiguities, and material errors.” It also argued that the use of geolocation technology wasn’t necessary or covered specifically by the established laws. The Supreme Court disagreed with that point as well, explaining that without geolocation there’s no way to effectively enforce the federal laws regarding territorial boundaries applicable to licensed operators.

Operators Need to Implement and Enforce Geolocation

The release of the preliminary injunction order granted Loterj-licensed operators five days to implement geolocation to ensure their compliance. In its appeal, the State Lottery argued that five days are insufficient for the implementation of such systems.

However, rejecting the appeal, the Supreme Court reiterated the enforcement of the five-day deadline for the implementation of geolocation. Currently it is unclear whether or not Loterj will be able to comply with that request. Also, it is yet to be seen whether the State Lottery may be subject to regulatory action if it fails to comply with the geolocation requirement requested under the preliminary order.

Brazil’s new gambling regulations are expected to benefit the growth of the sector. Federal-level licenses would be subjected to extra scrutiny, while operators that hold licenses in different states will be able to continue to offer their services to customers within the relevant jurisdiction.

Brazil’s gambling sector is expected to continue growing in the next few years. If that happens, the market in the country would be recognized as one of the largest on a global scale.