Regulatory Radar | Fixed-Odds Betting – Ed. 22

This was the week the Supreme Court heard every side and signalled that it would rather not decide alone. The rapporteur made his personal view against betting clear, but left room for a transition period and for limiting the temporal effects of any ruling, and the Court is expected to wait for Congress. On the same day as the hearing, a federal appeals court reinstated one operator’s licence.

Special report: what the Supreme Court public hearing revealed

On Tuesday (Nov 3), Justice Luiz Fux, rapporteur of the challenges to the provisional measure that banned fixed-odds betting (a presidential decree with immediate force of law that Congress must approve within 120 days) and to the 2023 Betting Law, heard 34 speakers over the course of the day. Our team reviewed the full transcript of the session. Below is what each side said and what is likely to weigh on the outcome.

What the rapporteur said

• Personally against betting, but “one vote”. Fux repeated that, in his view, betting should be banned and that there is no fundamental right to operate games of chance. He stressed, however, that his is one vote out of eleven and that the full Court will have to rule on eight cases.
• Legal certainty and limiting effects at the centre. He said the measure raised issues the Court has not yet examined: legal certainty, legitimate expectations, and whether the constitutional requirements of relevance and urgency for a provisional measure were met. He recalled that the Court often limits the temporal effects of its rulings and cited a case in which a state was given six to eight months to adapt.
• “Deciding not to decide”. In both his opening and closing remarks, he said that the virtue of courts is sometimes to send an issue back to its “proper forum”. If the Court must decide, he said it will do so “rationally” and prudently.
• What he will take to his colleagues. Economic and financial balance, the illegal market and organised crime, athletes’ salaries and the disadvantage against foreign clubs, women betting at the expense of essential goods, legal certainty, and the risk of “predatory litigation”. He said the door to further hearings is not closed.

Government and supporters: “regulation was not enough”

The Attorney General’s Office (AGU) argued that the Betting Law became unconstitutional by giving too little protection to health and families (the “dragon” proved “impossible to tame”) and defended the measure in full, with a transition only to return funds to bettors. The Ministry of Finance, represented by its economic policy unit rather than by the Secretariat of Prizes and Bets (SPA), the sector regulator, attributed regressive and over-indebtedness effects to betting and said the measure had been “validated at the ballot box”. The Health Minister defended keeping the ban with no transition, citing a rise in demand for public health services and risks among women. The Ministry of Justice said platforms, including licensed ones, were used by organised crime and that the ban lifts the “fog” between legal and illegal operators. ABRAS (supermarkets), CNC (commerce) and CNI (industry) supported the measure. The Prosecutor General’s Office (PGR) took no position.

Industry and sport: transition, illegal market and licence fees

• A 10-day deadline. Clubs including Flamengo, Fluminense, Grêmio, Botafogo, São Paulo, Corinthians and Vitória compared the measure’s 10-day deadline to remove sponsorships with transition periods of 10 to 56 months in Europe. The Brazilian Football Confederation (CBF) proposed the 2030 World Cup cycle as a horizon and suggested mediation at the Supreme Court itself.
• Sport is not casino. Grêmio, the CBF, the Brazilian Paralympic Committee and bodies linked to the levies paid to sport proposed banning online casino while keeping sports betting under stricter rules.
• Legal arguments. ANJL, IBJR, ANSEJA, ABERT and the mayors’ association challenged the urgency of a measure issued nine days before the election, and its refusal to refund the BRL 30 million licence fee. ABERT (broadcasters) argued that advertising restrictions require an act of Congress. The state lotteries’ association and the mayors’ association alleged a breach of the federal pact. ANSEJA suggested operation by the state-owned bank Caixa as a less restrictive alternative.
• Athletes and integrity. FENAPAF, the players’ federation, asked the Court to order the Ministries of Finance and Sport to disclose amounts collected but not passed on to athletes. Several speakers warned of the loss of match-fixing monitoring.
• A data dispute. ABRAS attributed a 5.4% to 6.5% rise in food sales to the ban. ABLE (an economic freedom association) disputed this: the increase predated the measure and coincided with other income measures. Both sides used the same national survey on gambling disorder to reach opposite conclusions.
• A roadmap for the day after. The economic regulation laboratory of the Rio de Janeiro State University (UERJ) proposed two scenarios. If the measure is upheld, a 180 to 360-day transition with no new bets. If the market reopens, eight conditions, including a spending cap per taxpayer ID valid across all operators, a ban on betting with credit, continuous checks against the federal social programmes registry, centralised self-exclusion, and an end to affiliate pay linked to bettors’ losses.

What this means: an injunction by the rapporteur restoring the market is unlikely. If the Court rules, the most plausible scenario is upholding the ban with a transition, or leaving the matter to Congress. Arguments on legal certainty, contracts and athletes resonated with the rapporteur; “responsible gambling” arguments barely did. The UERJ list is likely to become a benchmark for any reopening, and it is worth starting to estimate the cost of complying with it.

Federal appeals court reinstates a former licensee: what the decision says

On Nov 3, while the hearing was under way at the Supreme Court, a judge of the 3rd Panel of the Federal Regional Court of the 3rd Region (São Paulo) stayed a first-instance decision that had denied an injunction to an operator holding a licence valid until 2029. The decision, issued by a single judge and provisional, grants the main request, not merely the alternative request to keep systems running to refund balances. For that company only, it sets aside the termination of the licence, the measure’s restrictions and the Ministry of Justice’s blocking order. It also orders the restoration of domains and of financial and payment services until the final ruling, with regulatory oversight maintained.

The grounds are: the investments made cannot be ignored in the name of a public interest that would have emerged “only now”; the short deadline breaches legal certainty, reasonableness and proportionality; the requirements of relevance and urgency are not met; and denying any refund of the licence fee or compensation amounts to “outright confiscation”. The decision also criticises the BRL 200,000 daily fine. The AGU has announced an appeal.

What this means: this is the strongest precedent so far, but it is fragile. The reasoning rests almost entirely on general principles and rejects the measure’s urgency while the Supreme Court is examining precisely that question. In October, a similar injunction was suspended by the same court’s president within a day, and the Supreme Court rapporteur referred to the risk of “predatory litigation”. For companies considering their own action, a request to keep systems running to refund balances, without new bets, is a lower-risk route. The “confiscation” argument, in turn, strengthens the compensation front, which the Federal Court of Accounts (TCU) also referred to the courts this week.

No impact studies and under seal: the measure’s rationale under scrutiny

Responses to freedom of information requests show that the ban was issued without any prior assessment of its effects. The day before publication, the SPA replied that it had no study on the impacts of a ban and that such an analysis would require studies “not yet in existence”. The Ministry of Planning said no assessment of the issue had been made; the Federal Revenue Service, that it had produced no estimate beyond earlier notes; and the Ministry of Sport, that it had not been consulted on the effects on sports integrity. At the Supreme Court hearing, a former member of the team that drafted the sector’s regulations said the technical staff had not been heard.

At the same time, access to the documents was shut off. The Chief of Staff’s Office (Casa Civil) denied access to the measure’s file on the grounds of attorney-client privilege over its legal opinion, extended to all documents and with no review date. A classification notice released this week indicates that the Ministry of Justice classified the documents used to draft the measure as restricted for five years, in an act signed the day before publication, citing risks to public health and to the country’s financial stability. The only known official figure is the revenue loss estimate in the measure’s explanatory memorandum, which the TCU deemed sufficient for budgetary purposes.

What this means: this strengthens the arguments on lack of urgency, reasoning and proportionality, and carries political weight in Congress. As a rule, Brazil’s Access to Information Law guarantees access to the documents underlying a decision once it has been made. In litigation, it is worth asking the court to order their production; in Congress, legislators can request them formally. The government, however, will argue that the fiscal impact was estimated and validated by the TCU, and the classification must be challenged through the proper channels.

The Supreme Court waits for Congress, and the committee has yet to be set up

On Wednesday (Nov 4), the Supreme Court adjourned its ruling on municipal lotteries, and the signal is that it will be decided jointly with the challenges to the Betting Law and to the measure, with no date set, after Congress takes a position. The joint committee that must review the measure has still not been installed and has no rapporteur. The government’s leader in Congress wants to install it next week and hold a vote in 2026. From Nov 9 the measure takes precedence over other items on the agenda, and it would only lapse around March 2027, although calculations differ.

What this means: Congress is now the decisive arena. The choice of rapporteur will be the next milestone, and it is worth arriving at that point with concrete transition proposals.

0.5% Selective Tax on betting from 2027

A new provisional measure issued on Nov 4 sets the Selective Tax (a new excise tax under Brazil’s tax reform) at 0.5% on prognostic contests, a category that covers fixed-odds betting, from February 2027. The same week, the Ministry of Finance removed betting revenue from the 2027 budget proposal.

What this means: the government is keeping a tax framework ready in case the market returns, with this burden added to the current one. The deadline for amendments is Nov 10.

Enforcement targets the illegal market and payment channels

An operation by the Federal District Civil Police, triggered by alerts from the SPA, hit a network of websites without a federal licence in six federative units, with up to BRL 3.48 billion frozen. The network received payments via Pix (Brazil’s instant payment system) through a financial institution and used state lottery accreditations. The inter-agency enforcement committee met the same day.

What this means: banks, fintechs and payment providers should expect closer scrutiny, and state lotteries and their accredited operators are now on the radar.

Looking ahead to next week

• Nov 9: the measure starts to take precedence on the congressional agenda; the joint committee may be installed and its rapporteur chosen.
• Nov 10: deadline for amendments to the Selective Tax measure.
• AGU appeal against the federal court decision and a possible request to suspend it.
• Senate: a bill strengthening mental health and consumer protection in betting has been assigned a rapporteur in a committee with final say.

Our team is available to discuss how any of these issues may affect your business.

This material is for information purposes only and does not constitute legal advice. The analyses reflect the team’s understanding at the date of publication and may be revised as regulations and case law evolve. For specific guidance on particular situations, please consult a member of our team. © Souto, Correa Advogados – Gaming & Betting Practice.formativo e não constitui aconselhamento jurídico. As análises refletem o entendimento da equipe na data de publicação e podem ser revistas conforme evolução normativa ou jurisprudencial. Para orientação específica sobre situações concretas, consulte um advogado da equipe. © Souto, Correa Advogados – Prática de Jogos & Apostas.