Supreme Court decision on sports betting favors states against the Union in a fight worth billions

The Supreme Federal Court (STF) formed a majority and declared two provisions of Law 14.790/2023, known as the Sports Betting Law, unconstitutional. This regulation was approved in the first year of the Lula administration with the aim of fattening the federal coffers and thus financing the projects promised during the then presidential candidate's campaign for the Workers' Party (PT).

Through Direct Action of Unconstitutionality (ADI) 7,640, however, the governors of São Paulo, Rio de Janeiro, Minas Gerais, Paraná, Mato Grosso do Sul, Acre and the Federal District questioned in the Supreme Court points of the law that directly impacted state concessions and, consequently, their revenues.

In the ADI, the governors questioned two provisions of federal law: that a single economic group or company could have only one concession in only one state ; and that which limited advertising for the state lottery, stating that it should be directed exclusively to people located in the states themselves.

In practice, this disadvantaged state concessions, making them less attractive than federal concessions. Behind the legal dispute lies the fight for billions in revenue from these concessions. According to data from the Secretariat of Prizes and Bets (SPA), linked to the Ministry of Finance, in the first half of 2025, the federal government collected R$2.2 billion in concessions and R$3.8 billion in taxes.

To obtain a federal grant with authorization to operate throughout the country, sports betting companies must pay R$30 million to the Union , in addition to 15% income tax on profits for the fiscal year; 12% on gross revenue; and 13% to 16% in miscellaneous taxes - which will be unified upon the enactment of the tax reform.

Supreme Court decision on sports betting opens space for new players

Talita Garcez, a lawyer with over a decade of experience in the sector and a partner at Garcez Advogados e Associados , says the Supreme Court's decision expands the private sector's opportunities. "It allows for greater competitiveness and efficiency in the operation of lottery services," she says.

According to lawyer Bernardo Freire, a partner at Bet Law , the Supreme Court's decision will open up space primarily for new players in this market. "I know companies that were waiting for the decision to purchase one or two state concessions. They intend to start the business, test it, and decide where to go based on the results they obtain," he says.

Freire states that Rio de Janeiro, São Paulo and Paraná are the most attractive states for sports betting companies, given that they primarily seek out more populated and higher-income regions.

Fux's vote in favor of the states was unanimously supported

The rapporteur of the case, Minister Luiz Fux, voted in favor of the ADI and declared the unconstitutionality of both the section that limited the company to only one concession in a single state, and the expression “advertising”, both in Federal Law No. 14,790/2023. Fux was unanimously accompanied by the other ministers in the plenary, who only made reservations for the reasoning.

For the rapporteur, the questioned articles of the law reduced the ability of states to attract companies interested in participating in bids, in addition to especially harming smaller entities, which would be limited to hiring providers that were “tendentially less qualified.”

The minister also emphasized that the limitation is not supported by Article 175 of the Constitution, which regulates concessions and permits for public services, and would ultimately weaken state revenues for the benefit of the federal government . Regarding advertising, he considered it impractical to prevent states from adopting marketing strategies outside their geographic boundaries, noting that offering services to consumers in other territories is already prohibited.

"It doesn't seem reasonable, for example, that a particular state's lottery service can't sponsor an athlete or a professional soccer team that competes in another state or even outside the country," said Fux.