Betting firms prepare legal challenge to government ban - Valor International

Digital betting companies spent the weekend preparing a legal challenge to the government's ban on their operations, with industry associations and lawyers coordinating a joint response to the provisional presidential decree issued Friday (Sept. 25). The sector is expected to go to court this week, with a direct action of unconstitutionality before the Supreme Court among the options under consideration.

Betting operators have yet to decide which legal instrument they will use. Another possibility is a collective writ of mandamus, a draft of which began circulating on Saturday, a person familiar with the discussions said. More than one industry association could join the case to give it greater weight, said a lawyer who advises companies in the sector.

What has already been agreed is that operators should avoid filing individual lawsuits before the collective action is submitted, the lawyer said. The aim is to prevent an adverse ruling in an isolated case from influencing the main challenge. Companies could still bring individual claims at a later stage.

Industry associations had been trying to coordinate a response even before the provisional decree was published, Valor learned. Once it became clear in the days leading up to the announcement that the government planned to change the rules, the groups began calling meetings with members and stepped up communication among operators and lawyers.

They also encouraged companies that had remained outside the associations to join so they could take part in the mobilization.

On Friday, after the measure was issued, around 200 people joined a virtual meeting to discuss the issue, including betting operators and companies involved in other parts of the industry, such as game development. Talks continued throughout the weekend.

Carlos Lima, chief executive of the Brazilian Institute of Responsible Gaming (IBJR), confirmed that the Sept. 25 meeting took place but declined to provide details.

“Yes, it happened, there was a conversation among the associations. The associations have always talked to each other,” Lima said.

He also declined to specify which legal actions the groups were considering, but confirmed that they intend to go to court.

“We will seek a judicial route,” he said, adding that any other industry facing the same situation would do the same.

Asked whether one of the options being considered was a direct action of unconstitutionality before the Supreme Court, Lima said no decision had been made.

“Everything is being evaluated. No decision has been made on any of the paths to be followed. Everything is really under review,” he said.

Lima added that there is no deadline for the associations to file their cases.

Asked whether the measure had caught the industry by surprise, he said a ban on betting operations had been among the scenarios companies were considering.

“But the surprise, what we did not imagine, was that they would ban it ‘from one moment to the next,’” Lima said. “If the government wanted to send a provisional decree to Congress, it could have given companies time to carry out a ‘phase-out.’”

The IBJR executive also addressed the government’s argument that the measure would help intensify efforts against illegal betting.

Lima noted that, in addition to paying licensing fees, operators had also paid regulatory supervision fees to the government totaling R$170 million from January 2025 through July 2026, based on calculations provided by the executive.

“And the big question is: if the government was genuinely concerned about fighting the illegal betting market, why didn’t it use those R$170 million to combat the underground betting market?” he said.

The National Association of Games and Lotteries (ANJL), also contacted by Valor, said that while it disagreed with the government’s measure, it respects the law, the Constitution and democratic institutions, and that any disputes should be addressed through legal channels and the courts in an institutional manner.

Shortly after the provisional decree was issued Friday, the association said in a statement that the decision would push more than 30 million bettors “into the hands of thousands of illegal websites” and that the government’s move was aimed “solely at a supposed electoral gain in the presidential race.”

“No illegal platform is concerned about cases of match-fixing. They only want to take bettors’ money. That concern, on the other hand, was and remains constant among licensed companies,” ANJL Chair Plínio Lemos Jorge said in the statement.

The Brazilian Association of International Gaming Operators and Providers (Abrajogo), also in a statement released Friday, said the betting ban undermines the “business environment” and “represents a break with the regulatory framework built by the Brazilian state itself.”

Lawyers interviewed by Valor unanimously said the issue is likely to end up in court.

José Frederico Cimino Manssur, a partner at law firm Natal & Manssur Advogados, said a direct action of unconstitutionality could be brought before the Supreme Court to challenge the provisional dec.

“There are three main points that can be questioned,” said Manssur, who specializes in contracts and in the regulation of sports betting and online gaming.

One argument, he said, is that the Supreme Court has already recognized that the federal government does not have exclusive authority over gambling matters, allowing states to legislate in the area as well.

In his view, a nationwide provisional decree would therefore be unconstitutional, with each state instead responsible for adopting its own legislation.

A second point is that Congress has already passed legislation authorizing gambling and betting, which was subsequently regulated. The main law establishing a broad framework for fixed-odds betting and online gaming in Brazil was Law No. 14,790 of 2023.

Manssur argues that a provisional decree would not be the appropriate legal instrument to revoke that legislation. Doing so, he said, would require Congress to approve a new law through the regular legislative process.

“And [the final point] is that the federal government will not return the licensing fees that were paid. That is confiscation,” he said.

João Biazi, a partner at João Biazi Advogados and a specialist in corporate law, agreed.

Each betting company had a license allowing it to operate legally before the provisional decree, he noted, after paying a R$30 million licensing fee valid through 2029.

Biazi said the debate over reimbursement is separate from the question of whether the provisional decree itself is lawful. Companies paid in advance for the right to operate, he said, so they could calculate the unused portion of the license period and seek reimbursement through the courts.

“From a technical standpoint, it is a bad and mistaken approach for the government to refuse even to consider reimbursement, including partial reimbursement, for the license,” he said.

Companies can seek compensation or challenge the constitutionality of the provisional decree even before the measure becomes permanent, said Vanderlei Garcia Júnior, a lawyer with a doctorate in civil law from the University of São Paulo (USP).

The provisional decree is already in force but must still be considered by Congress before becoming definitive, he noted. A 60-day period for congressional review began Friday and may be extended by another 60 days.

Garcia Júnior said the situation has also created legal uncertainty for Brazil’s gaming and betting industry.

“Congress may decide not to convert [the provisional decree] into law. And then all the authorizations [for the sector] would return,” he said.

Betting companies authorized to operate in Brazil could seek not only reimbursement for the unused portion of their licensing fees but also compensation for lost profits — the earnings they expected to generate over the coming years, said Fabiano Jantalia, a partner at Jantalia Advogados and president of the Brazilian Bar Association’s Federal District Gaming Law Committee.

This article was translated from Valor Econômico using an artificial intelligence tool under the supervision of the Valor International editorial team to ensure accuracy, clarity, and adherence to our editorial standards. Read our Editorial Principles.