Brazil is proving equally incapable of privatizing its instant lottery operations as it proved incapable of legalizing other forms of gambling.
Monday brought the deadline for bids for the 15-year exclusive concession to run Lotex, the instant lottery scratch card business currently managed by the Caixa Economica Federal bank. But the deadline came and went without a single company filing a bid, leaving the government scrambling for the appropriate response.
Brazil’s Ministry of Finance had hoped to raise BRL542m (US$144m) from a July 4 auction for the Lotex concession. The money was supposed to help fund the National Public Security Fund. The auction was originally scheduled for June 14 but was pushed back in order to give companies more time to prepare their bids.
Companies that had previously expressed interest in the Lotex concession, including international lottery giants IGT, Intralot and Scientific Games, ultimately opted not to file any bids.
Games Magazine Brazil reported that these companies had concerns over late amendments to the terms of the concession, which won’t be voted on until September, leaving the companies fearing a moving of the goalposts after bids were received.
Would-be bidders were also reportedly spooked by the fact that Caixa was forbidden from submitting a Lotex bid, leaving open the possibility that Brazilian MPs might permit Caixa to offer other forms of lotteries at some future date.
Brazil had planned to require a Lotex concessionaire to offer a 65% payout to consumers, while the state would receive a 16.7% share of Lotex revenue for social causes in addition to a 2.6% tax on the concessionaire’s profits.
For years now, Brazil has been attempting to modernize its gaming market, the prospect of which had international operators both online and land-based salivating. But despite numerous attempts, efforts in both of Brazil’s legislative chambers have routinely failed to progress due to political instability, stakeholder squabbling and the prattling of social conservatives who claim gaming liberalization will lead to societal implosion.