Operator News
Brazil – Lotex removed from privatisation programme
By James - 29 February 2024
The federal government has announced that it has withdrawn the Instant Lottery (Lotex), from the National Privatization Program (PND).
The measure was formalized through a decree published today which was published in the Official Gazette of the Union. The decree was co-signed by the acting President of the Republic, Geraldo Alckmin, and the Minister of the Civil House, Rui Costa.
New rules give Caixa Econômica Federal the right to issue instants for a period of 24 months including online instants after President Lula signed a decree that regulated Lotex in August 2023. CAIXA was given permission to sell instant tickets for a specified period of time or until the tender was complete under the presidential decree. The government expects to raise around R$ 3 billion per year once instants are up and running. Lotex was placed under The Ministry of Finance which was charged with regulation and supervision. The Ministry of Finance authorized Caixa the right to offer Lotex on 28 December.
In January special adviser to the Ministry of Finance José Francisco Manssur confirmed that Lotex tickets would be on sale once again in March. Speaking to local news media outlet Globo, Manssur said that the government was going ahead with its plans to let Caixa sell instant tickets for a specified period. Caixa’s operation would continue until the bidding for interested companies was opened and finalized by the government.
However instants will instead, according to the decree issued today, continue to be operated by Caixa. It is unclear for now if that means that Caixa will run instants permanently or if Lotex will be eventually tendered out as had originally been envisaged.
The National Privatization Program is a government initiative aimed at transferring ownership or management of state-owned enterprises to private entities. The program was implemented to promote efficiency, competitiveness, and economic development by reducing the state’s direct involvement in economic activities. The goals of the PND include improving the performance and efficiency of privatized enterprises, attracting private investment, reducing the burden on public finances, and fostering competition in previously monopolized sectors.
Instants were first rolled out in Brazil in 1990 and operated until 2016, when they were was suspended by decree during the government of then President Michel Temer due to falling revenues.
There have been a number of attempts made in the past to privatise instants. The Brazilian Development Bank (BNDES) a federal public company associated with the Ministry of Development, Industry, and Trade and the main financing agent for development in Brazil first oversaw the failed privatisation of CAIXA’s instant lottery arm. Public tenders for selecting the operator lasted years and were abandoned several times due to a lack of interest.
In 2019 a consortium Consórcio Estrela Instantânea formed by SGI and IGT won the bid for Lotex. It was expected to be fully operational by the end of 2020 but was delayed because of COVID-19. The consortium ultimately withdrew from its contract in October 2020 announcing that the decision had been taken as a result of a failure to establish a distribution agreement with CAIXA Federal: a deal that both companies believed was integral to the success of the business model. In addition in a joint statement the company cited the Brazilian Supreme Court decision to allow states to offer their own lotteries as one of the reasons behind their move.
