Brazil betting industry weighs Supreme Court challenge to Lula ban

Brazil’s betting industry is preparing a coordinated legal response to the country’s newly imposed gambling ban, with operators weighing a Supreme Court challenge aimed at preventing their websites and applications from being shut down on 6 October.

Representatives of operators, trade associations and associated businesses met after President Luiz Inácio Lula da Silva signed Provisional Measure No. 1,394 on 25 September. Around 180 industry representatives reportedly agreed to coordinate their response rather than immediately launching separate proceedings.

The industry’s immediate objective is to secure an injunction suspending the measure and allowing regulated operations to continue. However, the precise form and venue of the proposed challenge had not been finalised.

Options under consideration reportedly included a direct action of unconstitutionality before the Supreme Federal Court and a collective writ of mandamus. More than one industry association could participate in coordinated proceedings, while operators were being encouraged to avoid bringing individual claims before the collective strategy had been settled.

The National Association of Games and Lotteries has said it is taking the necessary legal steps to challenge the prohibition. ANJL president Plínio Lemos Jorge has put the likelihood of coordinated action at 98%.

Operators are expected to argue that the measure abruptly dismantles a regulatory system established by the government and violates constitutional principles including legal certainty and economic freedom.

Lawyers are also examining whether the government sufficiently demonstrated the relevance and urgency required for issuing a provisional measure. The industry intends to challenge the evidence used to justify the ban and argue that federally supervised operators should not be treated in the same way as illegal companies.

Another potential dispute concerns the termination of authorisations issued by states and the Federal District.

In 2020, the Supreme Court ruled that the federal government has exclusive legislative authority over lotteries but does not possess an exclusive right to operate them. States may provide lottery services within limits established by federal law.

The relevance of that precedent to the new prohibition remains uncertain because the present dispute concerns whether the federal government can remove fixed-odds betting from the national lottery framework altogether.

The case also carries substantial financial consequences. Operators paid R$30m for each five-year federal authorisation, with 85 authorisations generating R$2.55bn for the government. Each authorisation allowed its holder to operate up to three betting brands.

Provisional Measure 1,394 states that terminating the authorisations on public-interest grounds does not entitle operators to full or partial repayment of the fees or compensation from the state.

Finance Minister Dario Durigan has described the authorisations as a precarious administrative relationship that remained valid only while the underlying activity was permitted.

ANJL has nevertheless raised the possibility of claims covering the authorisation payments and investments in personnel, technology, compliance systems and commercial agreements. Those claims could become more prominent if the courts refuse to suspend the prohibition or Congress allows it to remain in force.

Attorney General Jorge Messias has said the measure underwent rigorous legal review and that the government is prepared to defend it.

Unless a court intervenes, licensed betting platforms must become inaccessible from 6 October. The industry is also preparing to lobby Congress, creating a two-track challenge to the prohibition through the courts and the legislative process.