Brazil's top court links online betting to gambling ban, creating regulatory risk for operators

Brazil's highest court has thrown the regulatory future of online betting into doubt by linking it directly to the country's long-standing ban on land-based gambling.

In a hearing on 6 August, the Supreme Federal Court reviewed the constitutionality of Article 50 of the Criminal Misdemeanours Act of 1941, which classifies operating games of chance as a criminal offence. Reporting Justice Luiz Fux confirmed that the provision remains valid under the 1988 Constitution.

Justice Flávio Dino agreed with that conclusion but requested a broader review. He argued that the court cannot uphold a ban on land-based games of chance while ignoring online fixed-odds betting, which he said operates under the same logic.

"I do not see how to separate them, because a bet is a game of chance. That is the point," Dino said during his vote.

As a result, proceedings have been suspended for up to 90 days. The final ruling may not come before 2027, according to some reports.

Fux defended the land-based ban on public order and health grounds. He described the gambling industry as a structure of persuasion designed to keep bettors chasing losses.

"There is an entire structure of persuasion designed to ensure that, even after losing, the bettor compulsively continues trying to reverse the outcome," Fux said.

Dino endorsed those concerns, citing addiction, family harm, and links to money laundering and organised crime.

The case has direct implications for Brazil's licensed betting market. Fixed-odds sports betting is currently legal under Law No. 13,756/2018, creating a regulatory distinction from traditional games of chance. Dino's argument challenges that distinction at the constitutional level.

A separate Direct Action of Unconstitutionality against the betting framework is also pending before the court. The STF has agreed to examine developments in that case during the 90-day review period, increasing the likelihood that both cases will be considered together.

For now, the legal status quo remains. Land-based gambling is prohibited under Article 50, while licensed online betting operators continue to operate under specific legislation. But the court's direction signals growing risk for the regulated sector.

Separately, Brazil's Senate is considering Bill 2,234/2022, which would legalise integrated casino resorts, bingo, and the traditional jogo do bicho game. Even if the STF upholds the land-based ban, lawmakers retain the authority to change federal law.

For Maltese iGaming companies with exposure to Brazil, the ruling adds a layer of political and regulatory uncertainty that could reshape one of the industry's most anticipated growth markets.