241 Years Later: Legal Opinion Reaffirms What Colonial Brazil Already Knew About Municipal Lotteries

In a remarkable coincidence that history sometimes offers us, on the exact day that marks 241 years since the first municipal lottery draw in Brazil and 37 years since the new Brazilian Constitutional Order was promulgated on October 05, 1988, a robust legal opinion was filed by Dr. Paulo Horn. The document, requested by the National Association of Municipal and State Lotteries (ANALOME), not only unequivocally confirms the full legality of municipalities creating lotteries, but also exposes the profound irony of a debate that is taking place today, more than two centuries later.

History tells us that, on October 5th and 6th, 1784, the Municipal Chamber of Vila Rica, now Ouro Preto, held the first municipal lottery draw in colonial Brazil. The objective was pragmatic and direct: to seek alternative sources of funding to build the new Town Hall and Jail building. A solution of local interest, for a local problem, approved by a local authority.

Today, 241 years later, in the 21st century, in the year 2025, municipalities throughout Brazil are still forced to seek legal validation to exercise a prerogative that seems to have been clearer in the 18th century. It is in this context that Dr. Horn's opinion becomes a landmark.

The document, filed today, clearly explains the decision of the Supreme Federal Court (STF) which, in 2020, when judging ADPFs 492, 493 and ADI 4986, put an end to the idea of ​​a Union monopoly in the operation of lotteries. The opinion reaffirms that the Union's competence, provided for in article 22, XX of the Constitution, is to legislate exclusively on the general rules of raffles and consortia, including bingo and lotteries, and not to prevent States and Municipalities from operating this activity as a public service. This is the fundamental distinction between the competence to legislate (create the lottery modalities) and the material competence (operate the respective lotteries).

The irony is palpable. While the Governor of the Captaincy of Minas Gerais in 1784 only needed authorization from the City Council, today municipal managers require complex opinions and decisions from the highest court to do the same: "finance programs of local interest."

The opinion highlights that lottery operation is a public service and that preventing municipalities from accessing this source of revenue violates the federal pact and the principle of equality among federated entities. In the words of Minister Gilmar Mendes, quoted in the document, municipal laws that establish lotteries "merely convey material competence that has been granted to them by the Constitution." In other words, they do not create a new right, but only exercise one that has always existed.

Furthermore, Minister Gilmar Mendes adds: “…in my view, it constitutes a true abuse of the power to legislate when the Union uses Article 22, item XX, to exclude all other federated entities from the revenue that comes from them, or to restrict it in an unreasonable and anti-egalitarian way, preventing access to resources whose destination is, according to the constitutional text, directed to the maintenance of social security, under the terms of Article 195, III, of the Federal Constitution of 88…”

What has changed in 241 years? The need to finance essential public projects remains the same. The pursuit of fiscal autonomy for municipalities is, perhaps, even more pressing. What Dr. Horn's opinion, on this symbolic date, reminds us is that the solution found by Vila Rica in 1784 was not only creative, but perfectly legitimate within the political and administrative organization of the time.

Today, the legality of municipal lotteries is no longer a matter of opinion, but a constitutional right confirmed by the Supreme Federal Court. The challenge, which began with the need to erect public buildings in the city of Vila Rica, Minas Gerais, has evolved into a struggle for the affirmation of municipal autonomy throughout Brazil. The opinion filed on October 5th is not merely a legal document; it is a link connecting the pragmatic past to the autonomous future of our municipalities.

(*) Ana Paula Gatti, Lawyer, specialist in games and betting, member of the Gaming Law Commission of the OAB-RJ, fiscal advisor of Analome, operations director of Abrabincs, former general secretary of the Racial Equality Commission of the OAB SP, administrative director of IBD, undergraduate in Technology and Data Science at UFMS.