The Public Prosecutor's Office of Rio de Janeiro (MPRJ) is challenging the Video Lottery in Rio, and the case could generate a billion-dollar legal imbroglio.
The Public Prosecutor's Office of Rio de Janeiro (MPRJ) filed a representation of unconstitutionality against State Decree No. 49.804/25 , which authorizes the operation of Video Lottery Terminals (VLTs) in the state. However, the action faces a structured technical and legal challenge: documents from LOTERJ itself, a federal opinion from the Ministry of Finance, and the practice of five other Brazilian states indicate that Video Lottery Terminals operate within the current legal framework, and not as the fixed-odds betting that the MPRJ intends to combat.
At the heart of the dispute is a question of classification: are the terminals a new type of betting—which would make the decree unconstitutional—or simply a physical channel for a modality that already exists and is regulated by federal law? The answer to this question will define not only the legal fate of the operation, but also the financial exposure of the State of Rio de Janeiro to compensation claims that an expert consulted by BNLData estimates at up to R$ 1 billion.
The action and its foundations.
The Attorney General of Justice, Antonio José Campos Moreira, filed a representation of unconstitutionality against the decree issued on August 18, 2025. The action is being processed in the Special Body of the Court of Justice of Rio de Janeiro (TJRJ), under the rapporteurship of Judge Gizelda Leitão Teixeira, and has the governor of the state as a defendant, with the Attorney General's Office of the State (PGE) appearing as an interested party in a process that BNLData had access to.
The Public Prosecutor's Office of Rio de Janeiro (MPRJ) supports the action on three pillars. The first is the allegation of violation of the principle of legality: the decree allegedly created obligations and restrictions without support in specific state law, exceeding the regulatory power of the Executive branch. The Public Prosecutor's Office mistakenly cites that the operation would be part of Bill 442/1991 ( current Bill 2234/22 ), which legalizes casinos, bingo, and the jogo do bicho (a type of illegal lottery), still under consideration in the Senate, as evidence that the issue lacks mature legislative deliberation.
The second argument is the usurpation of the Union's competence. The MPRJ (Rio de Janeiro State Public Prosecutor's Office) argues that Federal Law 14.790/2023 reserves fixed-odds betting in online games exclusively to the virtual environment, prohibiting physical equipment for this purpose. According to the Public Prosecutor's Office, by authorizing Video Lottery Terminals in bars, restaurants, and markets, the state decree would, in practice, create a lottery modality not foreseen by the Union.
The third pillar is the deficient protection of fundamental rights. The widespread presence of physical terminals in high-traffic establishments would expose children, adolescents, the elderly, and people with compulsive gambling disorder to a high-risk product. The Public Prosecutor's Office points out concrete gaps: LOTERJ (Rio de Janeiro State Lottery) allegedly lacks access to the Unified Registry—necessary to exclude beneficiaries of Bolsa Família and BPC (social security benefits)—nor to Siscoaf, a money laundering prevention system. In fact, LOTERJ only authorizes operation in stores dedicated exclusively to the operation of Video Lottery Terminals.
The action does not include a request for an injunction. The decree remains fully in effect. The State Attorney General's Office has until July 29, 2026 to respond to the case file, and the governor has not yet provided information to the proceedings.
The technical distinction that changes everything.
The MPRJ's argument is based on a premise that LOTERJ contests with a Technical Note structured as a defense document before the Public Prosecutor's Office, the Court of Auditors, and the COAF: Video Lottery Terminals do not operate as fixed-odds betting—a modality of Law No. 14.790/2023 restricted to the virtual environment—but as an electronic instant lottery, the digital equivalent of the Exclusive Instant Lottery (Lotex) operated by Caixa Loterias, a subsidiary of Caixa Econômica Federal and popularly known as scratch-off tickets.
The distinction is not cosmetic. Lotex is provided for in Federal Law 13.756/2018 and Federal Law 13.155/2015 , and was regulated by Decree 9.327/2018 , signed by then-President Michel Temer. This decree expressly establishes that the modality "is implemented in physical and virtual media" and defines virtual betting as "that which is carried out by the bettor through an electronic channel." Unlike Law No. 14.790/2023, therefore, the regulatory framework of Lotex has allowed, since its creation, operation in both physical and virtual channels.
The technical difference between the two models lies in the role of the random number generator (RNG). In fixed-odds betting and slot machines, the RNG determines the outcome of the bet at the moment of play. In Video Lottery Terminals licensed by LOTERJ, the RNG does not generate the prize: it draws, from a finite series of tickets already approved by the authority, which ticket will be given to the player when they press the button on a Video Lottery Terminal – VLT. The prizes, the amount, and the return to player (RTP) are predetermined before any bet is placed. It is the electronic equivalent of drawing a printed ticket from a physical batch that has already been produced and stored.
From this perspective, Video Lottery Terminals (VLTs) do not, in themselves, constitute a lottery modality or a new type of game. The terminal merely represents the physical and technological means used for the sale of electronic lottery tickets and for the interactive presentation of the results to the bettor.
From this perspective, Video Lottery Terminals (VLTs) do not, in themselves, constitute a lottery modality or a new type of game. The terminal merely represents the physical and technological means used for the sale of electronic lottery tickets and for the interactive presentation of the results to the bettor.
The visual experience provided to the user is exclusively playful and recreational, serving only as a mechanism for the instant revelation of the content of the purchased ticket. The result of the bet is not produced by the equipment nor defined at the moment of the player's interaction. The prizes are already pre-established in the lottery series, according to the Game Plan and the Prize Distribution Table approved by the competent lottery authority, fully observing the applicable legislation and the previously certified return-to-bettor (RTP) percentages.
This operational architecture ensures that the entire cycle of the modality remains fully auditable and subject to state oversight. The regulatory authority is able to monitor the issuance of tickets, their distribution, commercialization, prize allocation, operational statistical indicators, revenue destined for the state, and the correct execution of the Game Plan, maintaining complete control over lottery activity.
Similarly, the financial flow remains fully traceable. Considering that financial transactions are carried out through identifiable electronic means, notably PIX, all participants are previously identified through KYC (Know Your Customer) procedures, allowing for the traceability of the origin and destination of funds, the maintenance of complete audit trails, and compliance with the requirements for the Prevention of Money Laundering and the Financing of Terrorism (AML/CFT), reinforcing the layers of control already provided for in state regulations.
Thus, the Video Lottery Terminal performs a function equivalent to that of a point-of-sale or self-service terminal: it is the instrument through which the bettor acquires a previously authorized lottery product, without the equipment altering the legal nature of the modality being exploited. The modality remains the Instant Lottery as stipulated in federal legislation; the Video Lottery Terminal is merely the technological channel for its execution.
Experts point out that Article 4 of the contested decree itself reinforces this distinction: it expressly prohibits "local onboard RNG terminals," that is, non-centralized result generators, typical of clandestine equipment. The rule protects precisely the model that LOTERJ defends, and not the one that the Public Prosecutor's Office fears.
What does the federal government say?
The issue also reached the federal level. The Secretariat of Prizes and Bets of the Ministry of Finance (SPA-MF) issued Technical Note SEI 4119/2025/MF, a document that was attached to the MPRJ's own action. Its conclusion is diametrically opposed to the MP's thesis: Video Lottery Terminals do not constitute a new type of lottery, but rather "technical means of execution" of already existing lottery products.
According to the federal government, terminals can only operate if linked to a type of game previously established by federal law, as is the case with LOTEX. Operational regulation is the responsibility of the states and the Federal District, provided that the Union's regulatory framework is respected. The document lists cumulative conditions for the operation to be considered lawful: independent certification of the systems, integration into a Central Monitoring System (CMS) with real-time oversight, full traceability of transactions, customer identity (KYC) policies, anti-money laundering (AML/CFT) mechanisms, and tools to combat gambling addiction.
The Brazilian Federal Savings Bank (Caixa Econômica Federal), through its subsidiary Caixa Loterias, already operates two games in the digital version of Lotex — Trevo do Milhão and Sabor de Sorte —, authorized by SPA-MF, which demonstrates that the Federal Government recognizes the modality in operation.
What the decree requires and how it operates in practice.
Decree 49.804/25 establishes an extensive set of requirements for terminals. Multifactor authentication with facial biometrics and proof of life is mandatory. Player registration (KYC) must be integrated with public and private databases to block minors and prevent money laundering and compulsive gambling. The systems need certification by a recognized international entity, following GLI standards and ISO norms. All financial transactions are restricted to Pix, linked to the bettor's CPF (Brazilian taxpayer ID).
The certification chain described in the technical report attached to the process consists of three layers: equipment, game, and central management system, all carried out by BMM Testlabs, an international laboratory accredited by SPA-MF. The evaluations followed Gaming Laboratories International (GLI) standards, including GLI-14 for pre-generated results systems and scratch cards, and GLI-20 for self-service terminals, with a "compliant" result in all aspects.
To obtain a license from LOTERJ, companies must meet 1.026 requirements, in addition to undergoing an on-site Proof of Concept (PoC) for software and hardware verification and conducting multiple simulations. Only after these control steps are operators authorized to collect the fixed grant fee of R$ 5 million from the government. Currently, 31 companies hold licenses granted by the agency.
A BNLData report visited one of the dedicated stores operating LOTERJ's Video Lottery Terminals in Niterói and found that the protocols were followed by the operator. However, some of the steps were described as complex from the perspective of the bettor's experience, due to the multiple layers of controls—elements that are relevant to the regulator, but which impose friction on the end user.
Other states and the financial risk for Rio
The operation of Video Lottery Terminals is not exclusive to Rio de Janeiro. Paraná (Lottopar), Paraíba (Lotep), Tocantins (Lotins), Sergipe (Lotese), and Maranhão (Lotema) already operate this modality in their territories, under authorization from their respective state lotteries. The existence of this set of operations in other states reinforces the argument that Video Lottery Terminals fit into the model of executing a pre-existing modality, not as the creation of a new lottery category.
For Rio de Janeiro, the judicial outcome has a direct fiscal impact. If the Rio de Janeiro Court of Justice declares the decree unconstitutional, the 31 licensed companies could file lawsuits against the State seeking reimbursement for amounts paid for fixed grants, investments made, lost profits, and other damages to the operators. An expert consulted by BNLData on condition of anonymity estimated that the compensations could reach R$ 1 billion. In addition to the passive exposure, the decision would represent a revenue loss: the state would forgo the revenue from an operation that is already underway.
LOTERJ's own legal counsel, in a statement submitted during the administrative phase preceding the legal action, concluded that the decree is "in accordance with the text of the Constitution."
The impasse will continue in the Special Body of the TJRJ (Rio de Janeiro State Court). With the PGE (State Attorney General's Office) about to present the State's defense and the governor still without having provided information to the court, the dispute over a technical distinction — electronic scratch card or fixed-odds bet — will determine not only the legality of an ongoing operation, but also the extent of the risk that the State of Rio de Janeiro runs by having authorized, at least according to the argument of LOTERJ (Rio de Janeiro State Lottery) and the Ministry of Finance, what federal law already permitted.
