Brazil betting ban triggers legal battle with industry

Brazil’s online betting industry and the federal government opened competing legal fronts Monday over President Lula’s sweeping ban on online gambling, as industry groups asked the Supreme Court to suspend the measure. In contrast, the government sued 17 operators for at least R$1 billion in collective damages.

They are the first legal actions on the issue since President Lula issued the executive order on Friday, another major policy move made days before the first round of the presidential election.

At the Supreme Court, the industry groups are seeking an injunction to suspend the measure until Congress either converts it into law or the court reviews it. No justice has been assigned yet, but the companies want the case assigned to Justice Luiz Fux, who is already handling other industry-related cases.

If the court rejects their main request, the betting companies are asking it to either exempt operators already authorized to do business in Brazil—currently, 85 companies operating 186 brands—or to delay enforcement of the ban for six months.

The National Association of Games and Lotteries, representing 32 authorized companies, filed the petition in cooperation with the Brazilian Institute for Responsible Gaming.

Among its arguments, the association says the executive order violates legal certainty, freedom of enterprise, the principle of proportionality, consumer protection, and Brazil’s federal system. It describes the measure’s timetable as “abusive.”

In a statement, the group argued that the government had overnight eliminated a market that had attracted investment, paid taxes and created jobs, while leaving millions of gamblers exposed to an illegal market with no protections.

The association also argues that no urgency justified the executive order; that such a measure cannot address criminal matters; that the government failed to estimate its budgetary or financial impact; and that it encroaches on the administrative powers of Brazil’s states.

The Attorney General’s Office acted preemptively, asking the judge handling the case to give the president’s office and the institution 72 hours to present their arguments before making a decision.

Government seeks compensation for health costs

On another front, the federal government filed a civil lawsuit in federal court in Pernambuco state because, according to the Attorney General’s Office, Brazil’s Northeast is among the regions most affected by problem and high-risk gambling because of its greater concentration of vulnerable groups.

According to the institution, the 17 companies named in the lawsuit account for about 80% of Brazil’s fixed-odds betting market.

The Attorney General’s Office also reports that 10.9 million of the 28 million Brazilians who currently gamble exhibit patterns of high-risk or problem gambling. According to the institution, between January 2018, when betting was legalized in Brazil, and December 2025, treatment for pathological and excessive gambling through Brazil’s public health system increased by 140%.

The government argues that the compensation betting companies must provide under current legislation does not cover the costs the public health system bears.

According to the Attorney General’s Office, the exact amount the companies would have to reimburse the public health system for material damages, should the government prevail, would be calculated at the end of the proceedings. The institution cites preliminary Health Ministry studies estimating losses of at least R$2.6 billion.

The government is also asking the court to order the companies to repay twice the amounts wagered by people diagnosed with gambling disorder.

Task force targets illegal platforms

Throughout the day, the government released details of actions taken by a task force created to cut off access to unauthorized platforms and prevent new online addresses from offering betting to Brazilians.

The task force identified 506 websites suspected of offering unauthorized betting and seven social media advertisements that began circulating on the day the measure was issued, despite the measure’s ban on new advertising.

The government said it would continue monitoring the platforms to ensure that advertisements are removed and proposed a technical meeting with representatives of major technology companies. A report prepared by the ministries involved recommends immediately removing advertisements first published after the provisional measure took effect.

The government also blocked messaging app channels that promoted online betting. Together, they had 212,000 members.

In an extraordinary edition of the official gazette, President Lula also issued a decree establishing a new interagency committee to police illegal fixed-odds betting and advertising.

The committee’s responsibilities include sharing information on individuals and companies involved in operating, offering, intermediating, or promoting fixed-odds betting; maintaining a unified database of internet domains, applications, and bank or payment accounts; and establishing joint protocols for blocking websites and apps.

The committee will also be able to propose standardized procedures for notifying platforms, service providers, and financial institutions, and for referring evidence of possible administrative, tax, or criminal violations to the appropriate authorities.

*By  Giullia Colombo and Sofia Aguiar— Brasília

(Jéssica Sant’Ana contributed to this report.)

Source: Valor International

https://valorinternational.globo.com/