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Brazil’s Attorney General, Paulo Gonet Branco, presented an opinion before the Federal Supreme Court (STF) in favor of the unconstitutionality of lotteries at the municipal level all over Brazil. The political party Solidariedade initiated the case, ADPF 1212, seeking to know whether municipalities are constitutionally allowed to create and operate lottery services. The decision would restructure the regulatory environment of games of chance in Brazil and redefine the limits of municipal autonomy.
The Jurisdictional Legal Controversy
Central to the case is a constitutional competence controversy, who may offer lottery services in Brazil. Previous STF rulings had established that the states and the Federal District had the authority to regulate and examine lotteries in their respective territories. But that ruling did not necessarily encompass municipalities.
According to the Office of the Attorney General (PGR), such a new trend of local governments creating their own lotteries represents what it calls a “disorderly proliferation” of local gaming operations. The rationale is that the issue needs to be addressed at the federal level in order to ensure regulatory uniformity and constitutional standards.
“Relaxing territorial requirements erodes surveillance and regulation of lottery activity, potentially at the expense of federal balance“, the PGR’s position before the court states.
Broader Implications for Federalism
The Attorney General’s position is the same as that of the Office of the Solicitor General (Advocacia-Geral da União – AGU), which also supports the lawsuit claim. The AGU presents the argument that operating lotteries cannot be considered a “matter of local interest“, as it cites that it has complex financial and regulatory dimensions that transcend the scope of municipalities.
Solidariedade, the sponsoring party, refers to individual examples where city administrations have authorized extensive lottery networks without federal oversight. Perhaps the most extreme example is that of the small municipality of Bodó, in the state of Rio Grande do Norte, which reportedly authorized 38 companies to operate “consortia and sweepstake systems“, roughly one per 62 residents.
The complaint further invokes a series of city laws that authorize online gambling, demonstrating that such businesses occur beyond local activities and must be under broader regulatory oversight.
The STF’s Early Ruling
The case is being dealt with by Justice Nunes Marques, who has not yet issued an injunction against the cities. In his initial decision, Marques acknowledged the relevance of the issue and its potential social and legal implications.
“Given the relevance of the case and its impact on social order and legal certainty, it would be appropriate to seek the opinion of the authorities involved before a final determination is made“, which is what the Justice stated in his decision.
Following the procedure provided under Article 6 of Law 9.882/1999, Marques ordered both the AGU and the PGR to present their formal versions within ten days before the court could issue a final ruling.
A Landmark Decision in the Making
The cities sued are São Paulo, Belo Horizonte, Porto Alegre, Campinas, Guarulhos, São Vicente, Anápolis, Foz do Iguaçu, Pelotas, Caldas Novas, Poá, Miguel Pereira, and Bodó, among others that have instituted or proposed local lotteries.
A final ruling by the STF will have wide-ranging consequences. It will establish whether municipalities can use the constitutional principle of “local interest” to offer lottery services or leave it to the states and the federation.
This case can ultimately establish the new benchmarks of Brazilian federalism in the regulation of gaming cases, not only who gets to operate lotteries but also how fiscal oversight, taxation, and consumer protection will be regulated across jurisdictions.
As administration-politics tensions rise, the court’s decision will provide a clear precedent for how the very intricate, complex lottery market in Brazil should find equilibrium between local liberty and central control.
Source: BNL Data
