The companies that won the Lotex auction, the Italian International Game Technology (IGT) and the American Scientific Games International (SGI), informed that they will no longer operate the instant lottery. The multinationals wanted Caixa to sign an agreement to assign the lottery chain, which is a private network with a public concession administered by Caixa, so that they could sell the games.
In the jointly signed statement, the companies said that the distribution contract with Caixa to cede lottery ticket sales was essential to the success of the deal. “The 13 thousand Caixa lottery shops are fundamental for the successful launch of the instant ticket business in Brazil and without this distribution network, companies were not prepared to move forward,” they informed.
Another reason for abandoning the business was the decision of the Supreme Federal Court, on May 30 - the Court ruled that the exploitation of lotteries is not exclusive to the Union, allowing the states and the Federal District to manage the activity. The result may open competition for the consortium, which wanted to explore, exclusively, the instant lottery.
“As a result, and despite being fully prepared to comply with all the financial and non-financial conditions precedent of the concession contract, prudent capital management determines that we withdraw from the process and reevaluate the business case of implementing a model of operations of lottery in Brazil,” informed the businessmen representing the companies.
Lotex's concession notice provided that the consortium could enter into a partnership agreement, including with Caixa. The use of lottery retailers was only a hypothesis and Caixa was under no obligation to close this agreement.
In the assessment of the president of the National Federation of Personnel Associations of Caixa Econômica Federal (Fenae), Sérgio Takemoto, if Caixa signed the agreement to assign retailers to sell the games, it would decree the end of the lotteries. “Caixa should be in the business and not help the competitor to sell tickets on the network it operates. It would be to speed up the death of the lotteries themselves,” he analyzes.
“The agreement was advantageous only for companies - instead of spending money to form a network to market the games, it would use Caixa's 'counter' to profit. And Caixa would provide a space where the bank itself could raise funds to be transferred, in part, to government social programs. It would be insanity,” he explains.
For Takemoto, good news is that the companies' withdrawal paves the way for the concession to return to Caixa. "It's a possibility. Caixa has operated lotteries since the 1960s and collects a large percentage for social programs. That's what we want. The funds raised by Caixa's lotteries are an important source for the country's social development. When Lotex operated, around 40% of the proceeds went to social programs in the areas of social security, sports, culture, public security, education, and health. With the concession to the Estrela Consortium, only 16.7% would be transferred to the Union,” he said.
Last year alone, Caixa Lotteries raised R$ 16.7 billion. Of this amount, approximately R$ 6.2 billion was transferred to the programs. This amount corresponds to a transfer of 37.2% of the total collected.
Concession was a mistake
For Caixa's board member (CA/Caixa), Rita Serrano, the Lotex concession was an error since its elaboration. In 2016, the Temer government decided to privately grant the instant lottery operation. The Ministry of Finance, at the time, prevented Caixa from participating in the process. The public bank could only partner with a multinational company.
“If the private company needs the lottery chain and uses it as an excuse to break the contract, why doesn't Caixa itself do the operation? It has expertise, capacity, and the lottery network to operate. What we cannot accept is that this foreign consortium does blackmail for wanting to use a ready structure without making investments. It accepted the concession rules,” analyzes Serrano.
Serrano recalls that the Lotex issue was not even debated by the Board of Directors in 2016, as the Government prohibited Caixa from participating in the auction. If the Estrela Consortium really gives up on the deal, the counselor says she will defend the return of the instant lottery concession for Caixa to manage.
Lotex, which was operated by Caixa, was sold in October 2019. After successive attempts by the government to unsuccessfully deliver the service to the private sector, the companies International Game Technology (IGT) and Scientific Games International (SGI) concluded the auction with a bid of R$96.969 million for the initial installment. Only R$1,000 above the minimum amount stipulated by the Ministry of Economy and the National Bank for Social Economic Development (BNDES). Another seven payments of R$103 million would be made annually, totaling R$ 817.9 million. The concession would be valid for a period of 15 years.
Source: GMB / FENAE
