The Investment Partnership Program (PPI) of Brazil has decided to award a contract to a consortium for State-Owned Instant Lottery Business. The PPI awarded the contract to the consortium comprised of 50-50 partnership of IG-SG or International Gaming Technology and Scientific Games after the tenders were held. The contract for Loteria Exclusiva Instantânea (Lotex) was given to these suppliers for 15 years to operate it. The consortium paid BRL96.9m which is equal to $23.8m USD. There will be seven more installments after the initial value though of BRL103m and thus the contract amounts to BRL 817.9m. The consortium would also pay 17% of the annual revenue to the Brazilian Government for the 15 years.
IGT International chief executive Walter Bugno and Pat McHugh, chief executive of Scientific Games’ Lottery division issued a joint statement shortly after the contract was awarded. They said that this is an important step for the privatization of the lottery instant games in the Eighth Largest Economy of the world. They also expressed the excitement of having the opportunity to define the instant lottery games in Brazil.
The Joint Statement also mentioned that this would benefit both the Government and the Public. The leaders of the Consortium are also hopeful that global leaders and vast experience of the IGT and SG would bring necessary change to make Lotex even more successful.
Brazilian government’s secretary for evaluation, planning energy and lottery Alexandre Manoel looked equally enticed and termed it as ‘emblematic’ of many more changes to the lottery sector. He also told that this would end the monopoly of the national lottery industry and is just the beginning of the paradigm shift of the country.
The revised tender process said the contract should be signed no later than April 16, 2020. Hence, Consórcio Estrela Instantânea, the Consortium of IGT and SG, is to sign the final papers on or before April 16 next year. There is, however, an appeal process available for the bidders who didn’t win till December 2. However, keeping in mind that no real competitive bidders were present in the tender, the contract might be signed earlier than expected.
Caixa Econômica Federal (CAIXA), the National Bank of Brazil has operated the National Lottery since 2017. Since the idea of privatization was introduced, there were plenty of setbacks and it looks finally Brazil is settling for the privatization of Lotex.
The initial model was to generate BRL 1bn through the tender process. There were no real bidders available with that model. The operating terms also kept changing and amended numerous times, the last was in May, this year. This didn’t help the case either.
PPI then amended the eligibility criteria to draw more bidders and close the deal.