Brazil looks set to welcome another municipal lottery, though ‘welcome’ may not be the best word as the feeling around these operations is somewhat mixed.
Petrópolis, a municipality in Rio de Janeiro, has secured approval to create its own municipal lottery. Law No 9,048, enacted on 18 July, has created a 20 year concession with the option for renewal.
The municipality has now taken on the responsibility of regulating, controlling and overseeing global lottery operations. It also has the option to start a bidding contest for certain services.
The law also mandates where lottery funds will be distributed. Lottery revenue will be challenged to three departments – Health, which will get 40%; Public Works, which will get 30%; and cultural initiatives, which will also get 30%. The lottery will also have to pay a tax of 5% of gross revenue.
Municipal lotteries are unique to Brazil. Whereas most countries have either a national lottery, as is the case in much of Europe, or state ones as seen in the US and Germany, Brazil things get much more local.
As the name suggests, these are lotteries run by the local municipality, an area which could best be compared to say, counties in the UK, or departments and communes in France. There are currently more than 5,000 municipalities spread throughout the country, and many have their own lotteries.
However, with the introduction of a nationwide online betting market on 1 January 2025 and shaky moves to legalise casinos as well, the existence of municipal lotteries has created some regulatory issues.
The legal status of these lotteries is a grey area. They first began springing up after a Supreme Court ruling back in 2020 which stated that the federal and state government does not have a monopoly on lottery operations.
But they have also never been explicitly made legal, and in some cases this has caused clashes between state, federal and municipal lottery operations, as explained by Daniel Romanowski, CEO of the Paraná State Lotteries, to SBC Noticias – Brasil.
“It may be that, at some point, a state will waive its right and transfer it to the municipalities. But, today, our understanding is that they are illegal,” he said.
“In fact, we took action with two municipalities, as we did in the case with the state of Rio de Janeiro, when these municipalities were selling lotteries nationwide—even here in Paraná, because we understood that they were exceeding their jurisdiction.”
Another issue for some commentators and stakeholders, like Romanowski, is the sheer number of municipalities throughout Brazil. If local lotteries were to be legalised, this would cause even more issues, particularly regarding where funding would go.
In addition, there is also the issue of economics. While some municipalities, particularly those which are home to large and economically active cities, have solid finances, others are not in such a fortunate position. This raises the question as to whether some municipalities would be up to the task of running a lottery.
Romanowski continued: “What I personally oppose is this: we have 5,000 municipalities, and I’m sure cities like São Paulo, Curitiba, and Rio de Janeiro have the infrastructure to carry out this control, to contact laboratories, to verify what type of games are being made available to the population.
“But many other municipalities do not. And would we leave the entire population of these municipalities—and their surrounding areas—in a fragile environment where they could be harmed?
“This is the thought I would like to convey to legislators who will decide on this matter. I doubt whether a city hall that sometimes struggles even to hire staff to maintain essential services will be able to handle this lottery environment.”
The presence of municipal lotteries and the loophole around them is a uniquely Brazilian development. It is also one that legislators and policymakers are keen to address, and could prove to be one of the defining moments as the country’s betting and gaming industry continues to develop.