Brazil betting industry challenges Lula's gaming ban in Supreme Court
Industry associations argue the president's executive order is unconstitutional and will drive bettors to illegal sites.
Brazil's betting industry has filed a constitutional challenge at the Supreme Federal Court against President Luiz Inácio Lula da Silva's prohibition of fixed-odds sports betting and online games.
The National Association of Games and Lotteries filed a direct action of unconstitutionality on September 28, challenging Provisional Measure No. 1,394, which was issued by Lula on September 25.
The industry is seeking an immediate suspension of the measure, which orders licensed operators to stop accepting new deposits and remove their websites and applications by October 6.
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"The decision is hasty and creates serious legal uncertainty," the Brazilian Institute for Responsible Gaming said in a statement.
The IBJR and ANJL argue the ban, enacted via a provisional measure, is unconstitutional because it prohibits an activity that the federal government itself regulated over the past two years.
In a joint submission to Justice Luiz Fux, the associations asked the court to suspend the measure until Congress completes its consideration or the STF rules on the challenges.
They contend the government failed to demonstrate the constitutional urgency required for a provisional measure and that the abrupt prohibition undermines legal certainty for operators holding five-year federal authorizations, for which they paid R$30 million each.
"Companies received government authorisation, met regulatory requirements and invested in operating under the rules set by Brazil," the IBJR statement said.
The associations have also asked the court to exclude operators holding valid federal authorizations from the measure or provide at least six months for an orderly wind-down.
Industry groups warn the ban will strengthen the illegal market, a concern supported by new monitoring data showing a sharp increase in detected unauthorized betting websites following the announcement.
Bet Legal, a monitoring platform, reported that 295 unauthorized betting domains were identified by the evening of September 25, a figure that climbed to 710 domains by September 27.
"The clandestine websites have expanded their offerings and continue to operate outside the law and oversight," said ANJL President Plínio Lemos Jorge.
"Now, they will take advantage of the prohibition of legal betting to attract bettors to the illegal market."
According to the associations, approximately 31 million people currently use licensed betting platforms, which offer consumer protection measures like age verification and self-exclusion tools.
Legal experts argue a provisional decree is not the appropriate instrument to revoke legislation passed by Congress, which first legalized and then regulated the online betting industry.
José Frederico Manssur, a partner at law firm Natal & Manssur Advogados, said a nationwide provisional decree could be unconstitutional, as the Supreme Court has recognized states also have authority over gambling matters.
The government has said nothing about returning the costly licensing fees operators paid, the industry notes.
Authorities have launched enforcement efforts, taking down 506 websites suspected of offering illegal betting services since the measure was enacted.
Beginning October 6, internet service providers will be required to block betting websites following government directives, although details of the blocking system are still being developed.
Unless the Supreme Court intervenes, the country's 188 licensed betting sites must cease operations this week.