Party files lawsuit with Brazilian Supreme Court against municipal lotteries
The Solidariedade party a centre-left party in Brazil has filed a lawsuit in the Supreme Federal Court (STF) questioning the operation of municipal lottery services. The party claims that recent local laws regulating these establishments violate federal order and create “a truly chaotic scenario” that harms tax collection and distribution.
Minister Nunes Marques will be the rapporteur for the action presented by Solidariedade. In the action, Solidariedade requests that all municipal laws and decrees establishing lottery systems for drawing or betting be provisionally suspended via a preliminary injunction until the Supreme Court adjudicates on their unconstitutionality. The party argues that these local rules encroach upon the exclusive competence of the Union to legislate on the matter.
“There are a number of municipalities that open up the public structure to unauthorized companies for the purpose of exploiting lottery activity, thereby illegitimately appropriating citizens’ resources through municipal laws that are, in fact, illicit,” the party states.
The lawsuit compiles various cases where private companies won bids to operate lottery services granted by municipalities, even without the proper authorization from the Ministry of Finance. According to Solidariedade, while the ministry sets a value of R$ 30 million for these concessions, in some cases, companies pay only R$ 5,000.
If the municipal lotteries are not invalidated, Solidariedade argues that companies authorized to operate nationally will be incentivized to expand into municipalities as well. This would result in a greater risk for consumers due to the lack of guarantees about the legitimacy of the services offered, as each city would have its own regulations.
In 2020 the STF unanimously ruled that the Union did not hold a monopoly on lottery games, allowing states to create and operate their own lotteries as long as they complied with federal regulations. The ruling emphasized that lotteries can be a significant source of revenue for states, especially during times of fiscal constraints. States are taking advantage of the Supreme Court decision which grants them the right to offer lottery games and sports betting. However, the licensing process has been the focal point of debate touching upon a much broader issue – state versus federal control.
A number of municipalities have created or are in the process of creating their own local city lotteries as well since the STF decision. These include Anápolis in the state of Goiás, Belo Horizonte the capital of the state of Minas Gerais, Caxias do Sul in the state of Rio Grande do Sul, and Cuiabá in the state of Mato Grosso.
