The city that hosts next year’s Olympic Games has become the first in Brazil to ban the use of smartphone-based ride-hailing applications like Uber.

Rio de Janeiro mayor Eduardo Paes on Tuesday signed legislation recently passed by Rio’s city council banning Uber and similar technologies from operating in the city.

“Uber is forbidden,” Paes said after signing the bill. “We are open to discuss the matter, but it is forbidden.”

Uber drivers who ignore the ban can be slapped with fines of nearly $500.

“It is a sad day for Rio,” Uber said in a statement. “To please taxi owners in the city, Mayor Paes sanctioned a completely unconstitutional bill to ban technology from the city, leaving cariocas (Rio residents) with less options to move around.” The company said it is studying possible legal actions.

In Brazil’s biggest city, Sao Paulo’s city council also passed legislation banning Uber this month, but Mayor Fernando Haddad has yet to sign or veto the bill.

Haddad told the Globo network he wanted to find “a middle path” to address the issue.

“We aren’t thinking only about Uber. We are thinking of ways to include this new technology in our city’s regulations,” he said.

Cab drivers complain Uber is unfair competition, and have mounted a string of protests against the service.

“They are a multinational that pays no taxes. How can we compete with that?” said Rio cab driver Elizeu Soares, 54. “We have to go through inspections; they don’t. We have to pay for special documentation; they don’t. The only advantage we have is to pay a bit less when we buy new cars, but even that doesn’t make up for all the costs. They can’t just come to Brazil and throw us out of business.”

Traffic expert Eduardo Biavati said that “although Uber isn’t that big here yet, it can surely become big soon”.

He said Haddad’s proposed approach can be more effective.

“Mayor Paes sided with the cabbies, but that kind of legislation will soon become useless. Technology is faster than politics and this shouldn’t be about Uber becoming taxis. It should be about taxis becoming Uber, with less regulations for all,” he said.

Brasilia and Belo Horizonte are the only other two cities in Brazil where Uber is present. To prevent its spread, city councils in at least 13 other state capitals have laws pending approval to ban the service.