Lotteries and horse racing betting as an exception (Brazil)

Lotteries and horse racing betting as an exception

1) Context: Prohibition - but not "zero point"

In 1946, by federal decree, casinos and commercial "chance games" were banned throughout the country. However, two forms of excitement have survived as legal exceptions:

1. state lotteries historically used to fund public needs;

2. betting on horse racing through licensed organizers (jockey clubs) in a betting format.

This architecture defined the "skeleton" of the Brazilian market for decades: a massive legal lottery, a sports sweepstakes and parallel attempts by the "gray" sector to occupy the space left by closed casinos.

2) Lotteries: How "official luck" works

2. 1. Why the lottery

The lottery was perceived by the state as a controlled way of mobilizing funds for social programs: health care, sports, culture, education. Unlike casinos, the lottery model is easier for supervision: transparent rules, public circulations, a fixed share of distribution.

2. 2. Federal level

In the center are federal lotteries (well-known products like Mega-Sena, Quina, Lotofácil, etc.). Classical distribution scheme:

Prize fund for winners;
Contributions to social funds and programs (percentage fixed by norms);
Operating expenses of the organizer and sales agents.
Sales are conducted through offline agencies and more and more through digital channels (applications/sites), which has increased the availability and requirement for KYC/AML.

2. 3. Regional level

After the legal clarifications of the 2020s, states were able to develop their own/consortium lottery products in compliance with the federal framework for consumer protection and financial reporting. This increased the competition of formats (instant tickets, "social" draws) and created an incentive to unify RG and compliance standards.

2. 4. Responsible play and compliance

The modern lottery in Brazil is:

age barrier and online identity checks;
shopping limits/self-exclusion in digital channels;
circulation transparency (publication of results, control of certified devices/procedures);
KYC/AML with online sellers and payment partners.

3) Racecourses and sweepstakes: "gentleman's" sport as an exception

3. 1. Historical legitimation

Betting on horse racing dates back to the 19th century and has long been considered a "civilized" form of betting. After 1946, the racetrack sweepstakes retained legality as part of a recognized sport with a developed horse breeding industry.

3. 2. How the sweepstakes work

Players place bets in common pools (win/place/exacta, etc.).

The coefficient is formed by a pool: payments depend on the ratio of the amounts set for the outcomes, minus the organizing commission and mandatory deductions.

Bets are accepted by jockey clubs and their authorized partners at racetracks and at permitted points/online.

The industry is regulated by sports and financial standards: veterinary standards, anti-doping control, certification of betting software, turnover reporting.

3. 3. Economic role

Racing supports horse breeding, coaching teams, employment season, local tourism around big prizes. Part of the turnover is directed to prize funds and industry programs.

3. 4. Responsible play

Despite the sporting nature, the same RG principles apply: age control, risk communication, complaint channels, prohibition of organized bets outside the permitted points, monitoring transactions.

4) Why exactly these two exceptions survived the ban

1. Social utility of lotteries: predictable flow of funds to public projects.

2. Sports value of horse racing: cultural tradition, systemic contribution to the agro- and sports sector.

3. Manageability: centralized supervision, reporting, transparent draw/pool procedures.

4. Low "night externality": the absence of a connection with the "revue economy" of the 1930s casino (alcohol, shows, "night" risks).

5) Digitalization: new amenities - new responsibilities

Online lottery sales and remote betting on horse racing have expanded coverage, especially after pandemic restrictions.

This required tighter verification of age and personality, introducing default limits, storing transaction logs, connecting an ombudsman/ADR for disputes.

Payments: cards, e-wallets, bank transfers; where allowed, integration with fintech services. For all methods - KYC/AML, clear return rules and payment terms.

6) Social balance and "shadow"

Legal exceptions have not canceled calls: underground lottery schemes and fast betting points periodically try to parasitize on demand. The answer is public circulations, complaint channels, education, joint supervision and financial monitoring operations. In sports, there is zero tolerance for match fixes and pressure on referees/riders.

7) Distribution economics and transparency

Typical distribution logic in lotteries and sweepstakes:

prizes to the winners;
contributions to public funds/programs (normatively fixed shares);
operating expenses of the organizers;
supervisory fees and taxes.
The key to trust is public reporting: audit of procedures, open methods for generating prize money, payment terms, statistics of complaints and their resolution.

8) Risk comparison: lottery vs horse racing

Criterion	Lottery	Tote at the races
Winning formation	Fixed circulation rules	Pools, odds depend on bids
Frequency/tempo	Scheduled circulation	Race card on a specific day
Skill vs case	Almost pure case	Some players use "form," but the risk remains high
RG tools	Limits, self-exclusion, info memos	Same mechanics + stadium rules of conduct
Social effects	Program funding	Support for the horse racing/tourism industry

9) Outlook to 2030 (benchmarks)

1. Uniform digital standards for federal and state lotteries: KYC/AML, limits, ombudsman, reporting.

2. Tote modernization: software updates, anti-doping protocols, media rights, viewer comfort.

3. Education and RG showcase online and on racetracks (QR for self-exclusion, hotlines).

4. Antifraud/cybersecurity: 2FA, anomaly monitoring, testing of raffle systems.

5. Transparent communications: reports on the distribution of funds, KPIs on the timing of payments and complaints.

10) Memo to player

Buy only in official channels (offline agencies/official sites/applications).

Check the rules of circulation and the timing of the presentation of the winnings.

At the hippodrome, bet at the permitted betting points; keep the check/receipt.

Use limits and know the signs of a problem game (dogon, hidden spending, conflicts). If necessary - self-exclusion and appeal to help.

Saved after 1946, lotteries and horse racing bets are not a "loophole," but deliberate exceptions linked to public benefit and sports tradition. Their sustainability is ensured by oversight, distribution transparency, digital compliance and Responsible Gaming. In such a model, Brazil combines cultural memory and modern consumer protection, keeping excitement in controlled, socially justified forms.