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.
Brazils regulatory environment
In 2023, Brazils 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 SPAs 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 Janeiros 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 Loterjs jurisdiction. As part of this arrangement, the domains of Esportes da Sorte and Onabet will now operate under ST Softs 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 Brazils ability to expand its operations beyond state borders, despite Loterjs 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 SPAs federal rules, citing Law No 14,790, which predates the SPAs 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 Loterjs jurisdiction.
With the legal landscape still in flux, Esportes Gaming Brazil has continued to operate under Loterjs licence, asserting that its activities comply with all state regulations. However, the companys future remains uncertain as it faces ongoing legal scrutiny and the possibility of further federal action.
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