Brazil’s Supreme Court reviews constitutionality of land-based gambling ban

Brazil’s Supreme Federal Court (STF) began hearing a case on Wednesday that could determine whether physical gambling may remain criminalized. The court will analyze whether the long-standing criminal prohibition on physical gambling venues, such as casinos and bingo halls, is still compatible with Brazil’s 1988 Constitution.

The case focuses on Article 50 of Brazil’s 1941 Criminal Offenses Law, which makes it illegal to operate physical gambling establishments. The appeal argues that the rule is outdated, especially after Brazil legalized and regulates online fixed-odds betting through Law No. 14.790/2023.

The defense argues the current system is contradictory. Lawyers representing the case say Brazil now has two different legal standards for essentially the same activity.

They argue that online betting operators can obtain federal licenses, pay taxes and legally offer gambling services, while land-based casinos and bingo halls remain criminal offenses simply because they operate in physical locations.

According to the defense, the distinction no longer makes sense. They also argue that the 1941 law was created under a legal framework based on concepts of public morality that were replaced by the principles established in Brazil’s current Constitution, including free enterprise and individual liberty.

The legal filing also argues that banning land-based gambling has not eliminated the activity, but instead pushed it into the illegal market.

This has allowed organized crime and illegal operators to benefit while the government loses tax revenue and workers remain outside formal labor protections, the defense argues. They also argue that law enforcement resources could be better used to combat violent crime instead of policing underground gambling operations.

To support its argument, the defense points to the United States, where tribal gaming has grown into a major economic sector following the passage of the Indian Gaming Regulatory Act (IGRA) in 1988.

The filing states that tribal casinos now generate more than US$105 billion annually, operate more than 520 properties and support hundreds of thousands of jobs. The lawyers argue that Brazil is becoming an exception among major economies by continuing to prohibit land-based gambling while many other countries regulate the sector.

The appeal has been granted “general repercussion” status, meaning the Supreme Court’s decision will serve as a precedent for similar cases across Brazil.

The defense is asking the court to rule that Article 50 of the Criminal Offenses Law was not incorporated into the 1988 Constitution, effectively ending the criminal classification of operating land-based gambling venues.

The case is being reported by Justice Luiz Fux, who will cast the first vote. Beyond the future of casinos and bingo halls, the ruling could determine whether Brazil can continue applying different legal treatment to online and land-based gambling.