IBJR Sides with STF Against Loterj in Geolocation Compliance Dispute

The ongoing discussions could be pivotal in shaping Brazil’s burgeoning legalized gambling sector as the nation seeks to ensure legacy lottery providers align with updated regulationsImage Source: Shutterstock.com

TheBrazilian Institute of Responsible Gaming(IBJR), which represents roughly 75%of Brazil’s gambling operators, has aligned itself with theSupreme Federal Court(STF) in its ongoing dispute with the Rio de Janeiro State Lottery (Loterj). Despite an official court ruling mandating the use ofgeolocation technology, Loterj has vehemently resisted implementing such measures, citing technical limitations.

The Court Stood by Its Decision

The STF recently reaffirmed its decision mandating state lotteries like Loterj to ensure their operations remainconfined within state bordersby implementing geolocation solutions. Such tools prevent customers from accessing the company’s services unless they are physically located within its jurisdiction. Brazilian authorities thus view geolocation as a vital milestone toward safeguarding theterritorial integrityof local gaming markets.

Despite the ruling, Loterj has maintained its critical stanceregarding geolocation technology, claiming such solutions were unnecessary and impractical. The lottery argued that customers could instead self-reporttheir locations to ensure compliance. However, this proposition has substantial drawbacks, as it does not prevent users from entering the wrong information.

The STF’s ruling stipulates significant financial penaltiesshould Loterj continue to resist. The lottery faces fines ofR$500,000($84,000) for each day of non-compliance. Loterj’s president is also subject to a similar R$50,000 ($8,400) penalty. Justice Mendonça, who presided over the ruling, was adamant that such a measure was integral to enhancing consumer protection and fostering a fair and equitable gambling market.

Geolocation Solutions Are Common and Readily Available

The IBJR has asked to intervene in the ongoing dispute as amicus curiae, a “friend of the court,” to provide insight and expertisepertinent to the case. According to the IBJR, Loterj licensees have easy access to a broad selectionof geolocation technologies available on the market. This assertion contradicts Loterj’s prior statements and significantly weakens its arguments. 

While questionable, Loterj’s stance makesbusiness sense. Strictly limiting the lottery’s operations to Rio de Janeiro would significantlyimpact its bottom line, as Loterj-licensed operators could previously offer their services throughout Brazil. This change makes a Loterj license much less desirableand ensures companies wishing to operate nationwide must go through the Secretariat of Prizes and Bets (SPA).

The IBJR’s intervention could be the final nail in the legal saga surrounding Loterj’s position within the broader Brazilian gambling ecosystem. Most sngakeholders agree that leaving a back doorfor companies lacking the necessary licensing to operate nationwide could undermine the burgeoning gambling industry, justifying the STF’s ruling and the steep fines threatening Loterj.