Loterj Ordered to Cease Operations Outside Rio de Janeiro

The Supreme Federal Court (STF) has reaffirmed its decision regarding the territorial limitation of Loterj’s activities within Rio de Janeiro. Justice André Mendonça issued a stern directive against Loterj and its president, Hazenclever Lopes Cançado, giving the organization five days to implement measures preventing users from accessing Loterj-licensed operators outside Rio’s borders.

Loterj Must Immediately Comply with the Ruling

According to the newest SFT ruling, Loterj faces fines of R$500,000 ($84,000) for each day of non-compliance. The lottery’s president is also subject to a similar R$50,000 ($8,400) penalty. This decision marks the end of a long-running legal battle regarding the place of regional state lotteries within Brazil’s broader gambling ecosystem. 

Justice Mendonça dismissed Loterj’s latest appeal on 24 January, noting that prior rulings had correctly resolved the matter and the lottery’s latest attempt did not present substantial new information. The court also denied Loterj’s request for additional time and guidance in applying the geolocation restrictions, reiterating that the original ruling’s directives were clear and compliant with the law.

Regulatory parameters, especially in a sensitive activity such as online betting, cannot be lowered under the pretext that some companies would have difficulty complying with the rules, especially when several other competitors already comply with them.

Justice Mendonça

Despite the Supreme Court’s mandate that geolocation technology was necessary to ensure compliance with national gambling regulations, Loterj remained resistant to adopting such measures. The lottery unsuccessfully argued that such systems would be unnecessary and impractical. However, Justice Mendonça was adamant that geolocation was imperative to upholding the integrity of state-based lotteries.

Loterj’s Objections Fell on Deaf Ears

The Brazilian Attorney General’s Office (AGU) initiated the case due to fears of Loterj overstepping its jurisdiction by accrediting operators to provide lottery services throughout Brazil. The AGU argued such a development would infringe on the national regulator’s prerogative to oversee all gambling activities, opening a back door for companies to circumvent the nation’s updated licensing process.

Loterj has consistently defended its stance, arguing its activities always complied with legal requirements. The lottery also attempted to assert that customers could self-declare their locations, avoiding the need for geolocation. This newest court ruling is a significant blow to the organization, restricting its revenue potential, limiting its activities, and reducing its attractiveness to operators.

The Supreme Court’s ruling also sets a precedent for other regional lotteries attempting to expand their reach. By confining nationwide regulation to the Secretariat of Prizes and Bets (SPA), the Brazilian government retains greater control over the gambling sector, enabling it to protect consumer well-being, crack down on potential violations, and ensure all licensed operators face fair and equitable conditions.