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Brazil – CAIXA to be major player in Brazil’s gaming shake up
By Phil - 14 September 2016
Brazil’s largest state owned bank and lottery operator, the Caixa Econômica Federal (CAIXA) is looking to enter the casino and bingo market according to Reuters.
Local media outlets are also reporting that in 2017 CAIXA plans to operate a unit which will look into ways to expand into the casino, and bingo market and would also allow for a legalised version of the popular Jogo do Bicho or Animal Game. At the same time, according to Folha De S. Paulo, the government is also looking at ways to create what would initially be a state-owned online sports betting company. Foreign operators would be invited to take part in the venture in which CAIXA would remain a minority investor once the company was privatised.
In order to raise additional cash for state coffers CAIXA’s instant lottery arm Lotex would be privatised as well. According to government sources, the privatisation of instant tickets would generate revenue of between R$2.2bn and R$4bn a year while annual revenue for the government would stand at around R$1bn. Combined, the sale of both privatised instants and the right to offer online sports betting, could raise $8.4bn for the government.
Under present plans now being studied in the Ministry of Finance a private company would be permitted to develop the instant business after an initial public offering (IPO) or after a licence tender process was carried out. While CAIXA would still retain the monopoly over lottery gaming the complete operation of instants including pre-production, production, logistics, telemarketing, sales and after-sales support would move to a single company or consortium of private companies, which can be made up of both national and international companies. It is believed that the bank would find a private partner which would own 51 percent of the newly created company.
Meanwhile according to Reuters, CAIXA is looking for an experienced partner which would be the majority shareholder in the new land-based business. A source described as being high up in the company was quoted as saying that CAIXA plans to create a unit which would manage casinos, bingos and a legalised version of the Animal Game.
The news that CAIXA could be planning to enter the market is a strong indicator that the gaming law could pass soon. Brazil’s new gaming act was approved by a committee in the Lower House earlier this month. The bill proposes the legalisation of casinos, bingo halls, slot parlours, online gambling and the Animal Game. The text defines the types of gaming that can be played in Brazil, the criteria for how licences are to be granted and the rules for the distribution of prizes as well as how gaming is to be taxed in the future.
If approved CAIXA could prove to be a major operator in the market. Caixa Econômica Federal, known locally as CAIXA, is the biggest public bank in Latin America and is extremely well known locally. The CAIXA lottery sales network is also extremely well developed and extensive and encompasses the entire territory. In Brazil there are a total of 45,333 CAIXA lottery shop terminals which register an average of 13.7m transactions per day. These include lottery and non-lottery related transactions. There are now 35,000 service outlets nationwide including 13,251 lottery shops. Brazilians can also pick up benefit cheques at lottery offices and carry out basic banking services giving lottery outlets greater appeal.
