Brazil's Supreme Court is judging the prohibition of gambling and analyzing the decriminalization of land-based casinos.
The Brazilian Supreme Court begins this Wednesday (August 5th) the trial of Extraordinary Appeal No. 966.177/RS, which questions the constitutionality of the prohibition of physical gambling in Brazil. The case has recognized general repercussion under Theme No. 924 and is reported by Minister Luiz Fux.
At the heart of the debate is Article 50 of Decree-Law No. 3.688/1941, the Law of Criminal Offenses, which criminalizes the operation of casinos, bingo halls, and physical gambling establishments in the country. Defenders submitted briefs to the Supreme Court plenary arguing that the provision, enacted 85 years ago, was not adopted by the 1988 Federal Constitution and should be declared atypical.
The central argument of the defense
The briefs argue that maintaining the criminal prohibition on physical establishments while the Brazilian state regulates, taxes, and authorizes fixed-odds betting in a digital environment constitutes an unsustainable regulatory contradiction.
The document points out that the Ministry of Finance has built an entire oversight structure for so-called "Bets , " online betting platforms regulated by Law No. 14.790/2023. The defense argues that the means of accessing the game, whether physical or digital, cannot be the defining element of criminal offense. A casino operating in a municipality in Rio Grande do Sul would be a crime; the same betting mechanism, operated on a smartphone screen with federal tax approval, would be legal.
Lawyers Maria Carolina Peres Soares Gschwenter and Laerte Luis Gschwenter argue that the 1941 Decree-Law stemmed from an axiological matrix centered on state protection of "morality and good customs," a concept that the 1988 Constitution supposedly overcame by enshrining individual autonomy, pluralism, and free enterprise as structuring values of the economic order.
Underground activity as an economic and social argument.
Beyond the constitutional argument, the briefs develop a systemic efficiency argument: the prohibition did not eliminate gambling in Brazil, but rather shifted its operation to the informal sector, transferring control of the industry to organized crime and armed militias.
The defense argues that this scenario produces two simultaneous effects. The first is the loss of tax revenue that could be allocated to health and education. The second is the informal employment of thousands of workers, including attendants, technicians, security guards, and cleaning staff, who operate without the labor guarantees stipulated in Article 7 of the Federal Constitution.
The document further argues that cracking down on commercial activity consumes resources from public security forces that could be directed towards combating violent crimes.
Comparative law and the American tribal model
To support the economic argument, the briefs cite the American model as a benchmark for macroeconomic impact. Following the 1987 U.S. Supreme Court decision in California v. Cabazon Band of Mission Indians, the U.S. Congress passed the Indian Gaming Regulatory Act (IGRA) in 1988, allowing indigenous communities to operate land-based gaming establishments.
According to data presented by the defense, the so-called Tribal Gaming currently operates more than 520 casinos in the United States, generates over US$105 billion annually, and sustains approximately 670 direct jobs. The revenues are legally reinvested in basic infrastructure for the communities themselves.
The article states that Brazil finds itself in geographic and regulatory isolation within the G20 and the Americas by maintaining the ban, preventing the country from attracting investments in the hotel and entertainment sectors.
The request to the plenary session
Based on these grounds, the defense requests that the full Supreme Court reject the Extraordinary Appeal and establish a general precedent recognizing that Article 50 of Decree-Law No. 3.688/1941 was not received by the 1988 Constitution. Approval of this precedent would imply declaring the conduct of operating and establishing physical gambling establishments throughout the national territory as atypical.
The lawyers also expressed interest in oral argument and informed that, due to the inclusion of the case on the agenda, as provided for in the internal regulations of the STF (Supreme Federal Court).
What the plenary will decide this Wednesday goes beyond the fate of casinos, bingo halls, and the jogo do bicho (illegal lottery); the ruling could determine whether the Brazilian state can maintain two legal regimes for the same economic activity, one criminalized and the other taxed, depending solely on the mechanism by which the gambler accesses the game.
