Quarterly collection of lotteries falls US$ 320 million in 3 years in Brazil

The Lottery Market Monitoring Bulletin is a quarterly publication of the Secretariat of Economic Monitoring of the Ministry of Finance, with the objective of showing, quarterly, numbers and statistics of lottery products regulated at the federal level. It is intended, therefore, to spread this theme to the academic community and society in general.

"It is important to publicize the lottery market, especially with the ongoing process of privatization of the Exclusive Instant Lottery -LOTEX- , and with the proximity of the implementation of the Fixed Quota Bet in Brazil, whose Bill should soon be sent to National Congress. With the advent of these two modalities, "substantial increases in the social transfers of lotteries are envisaged," said the Secretary for Economic Monitoring, Mansueto Facundo de Almeida Filho.

"We believe that the bulletin is an important instrument to increase transparency in the exploitation of federal lotteries in the country, increasing the visibility of this important sector with Brazilian society. This is an unprecedented initiative to have a regular monitoring of the performance of the lottery products in the country, which is in line with the current way of regulating lotteries in the Ministry of Finance, "explained Mansueto Almeida.

Overview of the Brazilian Lottery Market

 

Of the collections and real rate of growth

 

Table 1, in nominal terms, shows that federal lottery revenues fell from US$ 927 million in the first quarter of 2014 to US$ 891 million in the first quarter of 2017, down 3.9% in this period. In real terms, the ratio between collection and gross domestic product (GDP) also shows a sharp fall in revenues in this period, as it reached 0.18% of GDP in the first quarter of this year, 0.03 percentage point (Pp) below the percentage reached in the first quarter of 2014, 0.21% of GDP.

Despite the fall observed between 2014 and 2017, comparing the first quarter of this year with the first quarters of 2015 and 2016, it can be seen that there was a slight variation in the real collection of federal lotteries, which ranged from 0.19% to 0.18% of GDP.

On the other hand, in the period from 2014 to 2017, the quarterly real collection (deflated by the IPCA) of the federal lotteries shows a sharp drop. For example, when considering only the first quarters in this period, there is a decline from US$ 1.12 billion in 2014 to US$ 865 million (down 22.3%) in 2017, according to the graph below.

With this decrease in the collection, there was, consequently, a fall in the allocation of lottery resources to social programs (social transfers), as well as in the collection of Income Tax with the award granted. Social transfers have fallen approximately 10% between the first quarter of 2015 (US$ 385 million) and the first quarter of 2017 (US$ 350 million). In turn, income tax collection from federal lottery winnings fell by 19%, from US$ 118 million in 2015 to US$ 96 million in 2017.

 

Lottery of Numbers and Lotteries based on Sports Predictions

 

Initially, it is worth mentioning that in Brazil, currently, there are only two federal lottery types: lottery draw and sports predictions. This second type concentrates less than 1% of the revenues, consequently more than 99% of the federal collection comes from lottery of numbers draw.

It should be noted that in the first quarter of 2017, the share of Mega-Sena, the flagship of the federal lotteries, fell to 33.6% of the total participation, considering that it was at the level of 44.7 % in 2014. This phenomenon seems to be linked to two reasons: first, the price adjustment of the Mega-Sena occurred early in 2015; Second, to the relative increase of other products such us Lotomania, Quina and Timemania, which consequently made the main lottery product of the country lose participation.

Finally, it is worth mentioning the low participation of lottery sports predictions, which represents less than 1% of the Brazilian federal lottery market. This figure contrasts with the exploration of the modality around the world (around 7% of total revenues with Lottery, according to the World Lottery Association) and also with the fact that football, the basis for this type of lottery, has a strong popular appeal in Brazil.