The creation of the Municipal Lottery is already a reality

English Edition I 25.06.21

Por: Magno José

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The decision Brazilian Supreme Court indicates the possibility municipalities providing lottery service. Otherwise, it will be up to the Attorney General’s Office to question municipal legislation with the Supreme Court

To approval Guarulhos Lottery by Municipal Council and the bill presented by councilor Claudio Janta ended up generating a debate on Brazilian lottery market about the legality provision this service by the municipalities. As there are divergent understandings about the subject, it is appropriate to discuss the variables on creation public service of lotteries by the municipalities.
In judgment Brazilian Supreme Court of ADPF’s 492 and 493 and ADI 4.986, Minister Alexandre de Moraes decided in his vote the municipalities have same powers due to the fact there is no express prohibition in the Federal Constitution.
“I understand that, as there is no express prohibition on states and municipalities, the Union could not – under the terms of art. 19, III, of the Constitution, which enshrines one the important federative prohibitions –, by exercising its private legislative competence, creating distinctions or preferences between the Union and the states, between the Union, states and municipalities or between different states”, Moraes decides in his vote.
Article 19, clause III of the Federal Constitution defines “The Union, the States, the Federal District and the Municipalities are prohibited from: (…) creating distinctions between Brazilians or preferences among themselves.”
Through the article ‘As Loterias Estaduais e a recente decisão do Supremo Tribunal Federal nas ADPFs 492 e 493’ published on website Brasil Fernandes Advogados, and signed by lawyers Roberto Carvalho Brasil Fernandes, Alexandre Amaral Filho and Rafael Biasi express a different understanding from the minister Alexandre de Moraes. “There is necessary to diverge from the imprecision of vote Minister Alexandre de Moraes. The vote, despite affirming its adherence to the rapporteur’s vote, clashes with the latter’s foundations implying the municipalities would have same powers attributed to the states – powers that, however, are not provided for in the Federal Constitution”, comments Brasil Fernandes.
This Tuesday (21), through a new article entitled “Are Municipal Lotteries Possible?”, the lawyers reaffirm the understanding that only Union and states of the federation can explore lottery service in the country.
But the lawyer and former vice president of the Rio de Janeiro State Lottery – LOTERJ, Paulo Horn expressed a divergent understanding on article ‘The importance of the STF decision on state lotteries’ published by BNLData on October 1, 2020, by stating municipalities have autonomy to operate the lottery service.

“It fell to Ministers our Constitutional Court, the confirmation all our arguments, the result of which is the political, administrative and financial autonomy of the States, Federal District and Municipalities, as well as the possibility of using one more solution in search fiscal balance”, commented Paulo Horn.
The reporting minister Gilmar Mendes highlighted in the decision the importance resources from lotteries for financing social security, which in Brazil is described as a set of public policies aimed at the well-being of citizens, consisting of three main services: health, social assistance and social security.
“The implementation or resumption of exploitation these services by subnational federated entities will therefore constitute an important source of resources for overcoming contemporary financial contingencies, in addition to constituting, ultimately, an important reinforcement of social security resources (Art. 195, III, of the Federal Constitution/88)”, defends Mendes.
Remembering organizad Brazilian State is under the poder form of a federation, where political power is distributed among the parts make up the Federal State, with the federative entities being composed the Union, Member States, Municipalities and the Federal District.
The issue of social security financing is defined in clause III of article 195 of Federal Constitution, which will be financed by society as a whole, directly and indirectly, under the law, through resources from the budgets of the Union, States, Federal District and Municipalities, and various social contributions, including on the revenue from prognostic contests, focusing on any lottery, raffle, game, as long as it is a lawful activity.
Minister Gilmar Mendes reiterates in his vote the possibility exploration of the lottery service by municipalities when declaring non-receipt of art. 1 of Decree-Law 204/1967 by 1988 Constitution when it states that “to me it seems correct to infer that state (or municipal) legislation that institutes lotteries in their territories only convey material competence granted to them by the Constitution”.

Constitutional mutation of STF
In October 2018, the plenary Brazilian Supreme Court ruled Law 1566/2005, of the Municipality of Caxias, in Maranhão, unconstitutional, which instituted a lottery at the local level with objective of collecting funds to finance social assistance in the city. The decision was unanimous and followed the vote of Minister Marco Aurélio, rapporteur Allegation of Non-Compliance with Fundamental Precept (ADPF) 337, originating from the Attorney General’s Office.
In judgment – prior to ADPF’s 492 and 493, ADI 4.986 and ADI 3050, reported by Marco Aurélio Mello himself – the minister had decided the competence to legislate on the system of drawings and consortia is exclusive to the Union.
But in Judgment ADI 3050, published in February this year, the Attorney General’s Office questioned a law (10.959/97-RS) and four decrees (40,593/01, 40,635/01, 40,765/01 and 37,297/ 97) of Rio Grande do Sul on state lottery service, the Minister Marco Aurélio Mello quote the vote Minister Gilmar Mendes, who readjusted the Court’s jurisprudence in judgment of ADPF’s 492 and 493 and ADI 4,986 in September 2020.
“It is legal to conclude, therefore, the Union’s competence to legislate exclusively on systems of consortium and drawings, including lotteries, does not preclude the material competence for exploration of these activities by state or municipal entities”, he decided.
On BNL, professor and lawyer Regis de Oliveira, objectively summarizes the issue about subject.
“STF understood the Union has exclusivity to legislate on lotteries and betting, that lottery is a public service and it is up to each Federative unit to define its services and how to provide them. If so, quite pedestrian – municipalities can institute the lottery and determine purpose of resources. That’s what it seems to me”, summarized Regis de Oliveira.
The fact is the approval creation of Lottery Municipality of Guarulhos, in addition to the possibility of creating this public service by the Municipal Council Porto Alegre, is a reality. In case of different understanding, it will be up to the Attorney General’s Office to question the legislation first municipal lottery in the country with the Federal Supreme Court after the Constitutional change about subject.

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