The Attorney General’s Office of Brazil (AGU) continues its efforts to block the Rio de Janeiro State Lottery (Loterj) from offering nationwide licenses to operators. As the country prepares to regulate online betting, Loterj’s authority to license operators has been put into question, triggering a complicated regulatory standoff.

AGU Wants to Prevent Loterj from Influencing the Rest of Brazil

Loterj, for context, has been issuing licenses to operators, some of which have expanded their operations beyond the confines of Rio de Janeiro. This has created a serious conflict of interest amid the country’s inexorable shift toward regulated online betting.

Previously, an injunction by the Supreme Federal Court allowed Loterj brands to operate outside Rio despite Normative Ordinance No. 1,475. However, the AGU insisted that this decision was in conflict with national laws and tried to appeal it.

Soon after, the Federal Regional Court of the First Region (TRF1) in Rio de Janeiro agreed to prevent Loterj licensees from operating outside of Rio de Janeiro – a measure that was appealed by Loterj.

In the latest development in this ongoing conflict, the AGU filed a lawsuit in an effort to reassert its authority. The office hopes that the court will grant a preliminary injunction that would prevent Loterj-licensed operators from targeting the rest of Brazil.

The legal motion was filed on October 11 and came shortly after Loterj issued licenses to several companies, including the controversial Esportes da Sorte.

Various Bodies Questioned Loterj’s AML Efforts

AGU remained firm in its conviction that Loterj’s current position undermines the legal sector. This was echoed by the Prizes and Betting Secretariat, which noted that if Loterj-licensed operators were to continue operating outside the state, the overall regulatory system, cybersecurity and responsible gaming efforts would deteriorate.

The Financial Activities Control Council, on the other hand, supported the complaint by suggesting that Loterj’s current rules are already harming the AML measures in Brazil.

The AGU, meanwhile, also slammed Loterj for its suboptimal AML and CTF measures and non-existent geolocation capabilities. Without the latter, Loterj is technically unable to block players from outer jurisdictions from placing wagers.

Loterj, however, noted that it implies certain restrictions and accused the government of approving operators based in tax havens for launch in the country.