VIE 29 DE MARZO DE 2024 - 09:26hs.
GMB ONE-ON-ONE Sergio Alvarenga, firm's CEO

"Intralot Brasil is optimistic to invest in new states, bring more options to the bettor"

In an interview for the GMB One-On-One Cycle, Sergio Alvarenga, Chairman of the Board of Intralot Brasil, brought his good expectations regarding the result of the vote on the Union monopoly to explore lotteries. The executive believes that the Supreme Court Federal (STF) will correct the historical error and allow state lotteries: 'I am optimistic that this discussion will end, in favor of the states.' If this happens, Alvarenga has already said that the company will seek new states to operate and create more lottery modalities.

Check out the main parts of the interview below

GMB – What does the ten-year contract with Loteria Mineira means for the company, since it is the first contract of a private firm with a state lottery?
Sergio Alvarenga - It represents a lot, as it was the entry of Intralot Brasil in operations in Latin America. We started an operation in Brazil that, over these ten years, still remains as the only multinational established, positioned and operating in the country, since Lotex should soon start. We have a great challenge to operate in Minas Gerais and for us it was a great opportunity not only to start the operation but also to gain experience and get to know the Brazilian consumer better. In the online gaming industry it means a lot to our company.

And what were the great achievements of Loteria Mineira with the work developed by Intralot?
The model of our contract is ‘revenue share’. That is, the Lottery, like Intralot, has its revenue on sales. Over this period, we have already transferred more than R$100 million (US$18.5m), which is invested in social actions. That is the goal of the Lottery. Today, we represent 96% of Loteria Mineira's revenue. This is a huge satisfaction for us, as we managed to generate revenue for the State, and we see the application of these revenues up close. We monitor the support that the Lottery gives to the Military Police, in the form of equipment and uniforms, as well as actions aimed at daycare centers and needy people. We have a solidarity soup program and many social programs. Loteria Mineira recently managed to transfer R$ 33 million (US$6.15m) generated by revenues from our contract for the creation of field hospitals and equipment to combat COVID-19. The great differential of our state operation, not only for what the Lottery receives, is to see things happening up close and the application in the social side.

Interesting as it is a unique operation in Brazil…
It is a unique operation and we do not know exactly why. We know that other states have this prerogative and we have been mobilizing some of them to resume their lotteries. We have come a long way in some projects, but the states are in such a chaotic situation that sometimes they dedicate themselves more to putting out the fire than to seeking a light at the end of the tunnel for a new recipe. In addition, we recognize the legal uncertainty that states are going through. As we have had a contract for ten years without suffering any kind of legal difficulty and the Loteria Mineira has been operating continuously for 100 years, we understand that other states should also have their lotteries operating, as it is a significant revenue. I think that all these reasons lead to insecurity and lack of priorities, but this will end, and the states will realize how important it is to use the right of an autarchy. Imagine -in Brazil it is difficult to make this comparison because we do not have sports betting at the state level - that the state of New York has a US$ 9 billion operation, almost double what Caixa does in Brazil.

Are the head office and Intralot Brasil satisfied with the joint action with the Loteria Mineira?
We are. The little bit of frustration we have is how much we are limited to operating according to Caixa's operations. See that we launched less than a year ago the online operation in the digital market, through internet connections and app. This could only happen after Caixa also entered the digital market. It is frustrating that it was only in May 2020 that our online operation began, which we have had in other 60 countries in the world for many years. Our contract was signed ten years ago, and we are only now able to start online operations. We could have used much more technology and made other successful lottery modalities that happen in the world, but we have this obstacle in Brazil. But we are satisfied with the operation, which has brought to our company an apprenticeship that many others will need to break through and pass through, both logistically and culturally and with little maturity.

You just spoke at the STF. We will have in plenary this week the vote on whether or not state lotteries exist in Brazil. How do you see this discussion and your expectations?
I think the discussion itself is extremely outdated. The monopoly model in Brazil goes against any global model. And not only in the lottery area. Competition is healthy. In Brazil it is even worse, as we see that the Union has competitors that it should fight and does not do it, such as illegal gambling, capitalization bonds that have become lottery games and the international sites that operate in Brazil actively and take money from Brazilians abroad.
The Union should have other concerns and not harm the states that manage to make their revenues from the lotteries and with the objectives I mentioned. Therefore, I am sure that the State Attorney General and the State Attorney's College will be able to better defend the issue. We know that the breach was due to an interpretation of the 1988 Constitution. The right of state lotteries to operate is unquestionable. It is not just a discussion of state lotteries, but much more than that. It is the federal government to interfere in the isonomy of the state. The current government has an open position. We see not only the President, but also the Minister of the Economy, talking about decentralizing and empowering the states. In a speech, the president himself said that the states should operate the state lotteries. So, I hope that the STF has this interpretation. The discussion is out of date and I hope that ministers will also be able to see it that way. It is a unique moment, very important, and definitive. I am optimistic that this discussion will end, in favor of the states.

Do you think this discussion end this week?
Exactly. In my interpretation it ends tomorrow (Wednesday). This discussion is completely unnecessary and has no basis whatsoever. We have different interpretations and legal opinions in the same sense of our understanding.

In other words, next week, Intralot will perhaps seek new state partners to expand its operation in Brazil?
For sure. We will intensify that. We have already done a lot and will intensify this activity. And I want to take advantage and say that the STF's positioning will be fundamental not only for new operations and new revenues for the state governments, but also for the resumption of other lotteries and to correct what happens in Brazil. It is unacceptable that some states, such as Minas Gerais, Rio de Janeiro and Rio Grande do Sul, can operate their lotteries, while Bahia, Distrito Federal and other states cannot. It is impossible to imagine that. Why does Minas Gerais have a greater prerogative than Bahia? It seems to me that 14 states can resume or operate lotteries and another 13 cannot. It is absurd that other governors do not have the same right. In addition to pacifying this discussion, it can be a great opportunity for the STF to correct this historical error.

In Intralot's plans will new lottery modalities come to join Keno Minas, a success in the state of Minas Gerais, and then in other states?
We have a library with almost 400 games. Some work well in some countries and not in others. We were limited to concentrating our operations on Keno, which is a lottery modality with few differences from Mega-Sena. The operation itself is the same, with steering wheel filling, delivery to the point of view, where the bet is registered, and the draw is awaited. The only difference is the technology. It is an important fact and I know that Caixa wants to change that. This is the payout. We distribute at least 60% in prize money, and last Saturday we reached more than 80% on more than 1 million bets in celebration of the day we launched Keno. Payout, then, is a great differentiator and will be decisive for success in the lottery market. I quote New York again. There, the State Lottery is responsible for the entire educational network. This is not magic. The New York Lottery changed completely when it came to a management where it was understood that the lottery market is for entertainment. So, we are very optimistic to invest in new states and also bring new modalities and more attraction to the bettor, in addition to investing in more own stores, a trend in our market.

Source: Exclusive GMB