Esportes Gaming Brazil is currently facing a federal ban imposed by the national regulator, but the company has found a way to continue operations through its ownership of ST Soft Desenvolvimento de Programa de Computadores Ltda, a platform licensed by the state regulator, Loterj.

Brazil’s regulatory environment

In 2023, Brazil’s federal regulator, the Public Security Agency (SPA), announced a list of approved operators authorised to legally operate in the country from 1st January 2024. Those who failed to secure approval were expected to halt operations, effectively being labelled unlicensed. Esportes Gaming Brazil found itself in a precarious position after it was notably absent from the SPA’s list of approved operators. This meant that, under federal law, the company would be unable to operate in Brazil until the official market launch in 2024.

Facing a federal ban, Esportes Gaming Brazil turned to Rio de Janeiro’s state-regulated gambling authority, Loterj, which operates under a different legal framework. Through its subsidiary, ST Soft Desenvolvimento, Esportes Gaming Brazil acquired a state licence, enabling it to continue operations, albeit under Loterj’s jurisdiction. As part of this arrangement, the domains of Esportes da Sorte and Onabet will now operate under ST Soft’s Loterj licence, allowing the company to serve customers in Rio de Janeiro.

Court rulings

The federal court recently ruled that Loterj does not have jurisdiction outside of Rio de Janeiro, meaning its licensees cannot legally operate in other Brazilian states. This ruling directly challenges Esportes Gaming Brazil’s ability to expand its operations beyond state borders, despite Loterj’s assertion that its licences should allow nationwide activities.

Despite these legal and ethical challenges, Loterj has maintained that Esportes Gaming Brazil meets all necessary legal and technical requirements for a state licence. The state regulator argues that its licensees are not subject to SPA’s federal rules, citing Law No 14,790, which predates the SPA’s regulations. This law, specifically Article 35-A, stipulates that licensees must follow the law rather than regulatory ordinances, providing a legal shield for operators under Loterj’s jurisdiction.

With the legal landscape still in flux, Esportes Gaming Brazil has continued to operate under Loterj’s licence, asserting that its activities comply with all state regulations. However, the company’s future remains uncertain as it faces ongoing legal scrutiny and the possibility of further federal action.

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