The future of municipal lotteries across Brazil faces significant uncertainty following their suspension by the Federal Supreme Court on a provisional basis.
The Court swiftly ordered the suspension of all municipal lottery operations nationwide after a petition from the Solidarity Party claimed these lotteries were violating betting laws.
On Wednesday, Minister Nunes Marques issued an order to immediately suspend all municipal laws and decrees related to the creation, authorization, or regulation of lotteries and sports betting.
This preliminary injunction was issued in response to the Solidarity Party’s filing of a Claim of Non-Compliance with a Fundamental Precept (ADPF), which argued that municipal lotteries were causing chaos by disregarding federal betting regulations.
Marques emphasized that municipalities’ authority to legislate on local issues does not extend to betting activities. He noted this has led to a “drastic weakening” of the federal government’s oversight of gambling in Brazil.
Under the injunction, municipalities and betting operators face a daily fine of BRL500,000 ($94,065). Mayors and officials of licensed companies that continue operating lotteries can be fined BRL50,000 daily.
The ADPF was supported by the Attorney General’s Office, which contended that municipal lotteries undermine consumer protection and federal oversight.
The Court’s decision will now be subject to a referendum during an extraordinary plenary session to formalize the suspension of municipal lotteries.
The injunction applies to all municipal legal acts, bidding processes, contracts, and activities related to ongoing lottery operations.
However, state lotteries are exempt from this ruling due to Article 35-A of Law No 14,790/2023, which authorizes only states and the Federal District to operate lotteries within their jurisdictions, explicitly excluding municipalities.
The Solidarity Party warned that over 5,500 municipalities could consider launching lotteries if swift action was not taken.
One such municipality, Bodó, with a population of just over 2,000, drew national attention after issuing several licenses to operators at a fee of BRL5,000—far below the federal license cost of BRL30 million.
In October, Bodó’s mayor suspended its municipal lottery activities after being warned by the Secretariat of Prizes and Bets (SPA), the federal betting regulator.
Marques pointed out that local governments primarily focus on citizens’ immediate needs, such as public transportation and urban development, rather than lotteries.
Municipal authorities argued that operating lotteries could enhance tax revenue to fund local services. However, these arguments seem unlikely to hold, especially with the preliminary suspension now set to become permanent.
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Marques stated, “This situation, it seems to me worthy of the attention of this Supreme Federal Court, presents an urgent scenario capable of causing not only the deepening of the alleged unconstitutionality, but also the aggravation of the scenario of legal uncertainty, considering the dissemination of institutional practice in the municipalities, the multiplicity of challenges and the potential flexibility in the control and supervision of ongoing activities.”
The Secretariat of Prizes and Bets, the National Association of Games and Lotteries, and the National Telecommunications Agency will be notified of the Court’s decision to implement appropriate measures. municipal lotteries Brazil Suspension
