Rio de Janeiro has started the tender process for the state’s lottery and sports betting contract. The winner will be announced on July 2. [Image: Shutterstock.com]
Process will go quickly
The race to soak up the dollars waiting to be wagered in Rio de Janeiro has begun, as the State Lottery of Rio de Janeiro (LOTERJ) has launched the bidding process for the state’s lottery and fixed-odds sports betting contract. The contract would last for five years and is valued at BRL$260.5m (US$48.5m).
potentially bringing in BRL$400m (US$74.5m) for the selected operator in the first year alone
LOTERJ believes the contract would be quite lucrative, potentially bringing in BRL$400m (US$74.5m) for the selected operator in the first year alone and as much as BRL$1.06bn (US$197.5m) by the fifth year.
Both retail and online operators are eligible to bid on the contract. Those not based in Brazil may still apply, but must partner with a company that is. Suitors will submit their bids in two separate parts: the Qualification Documentation and Technical Qualification and the Economic Proposal.
LOTERJ will announce the winner on July 2, 2021. The chosen operator must pay a fee of BRL$30m (US$5.6m) within five days, lest the contract go to the runner-up.
Heaps of responsibility
The company that ends up being selected is not just going to be a software provider. Operators must have the ability to operate at least 3,000 point-of-sale retail lottery outlets and operate online. The company must also have membership in the World Lottery Association (WLA).
That could give an advantage to Brazil’s national lottery operator, Caixa Econômica Federal, which also just happens to be a state-owned bank. The bank has over 13,000 points-of-sale across the country. While it is not in the sports betting business, it could always team up with a company that is.
The winning bidder will need to build the entire platform on which lottery games and sports betting will run, as well as develop payment, electronic commerce, and control applications.
LOTERJ is also requiring the future operator to return at least 40% of the money played on the lottery to its customers. The governing organization does not believe this will be a problem, anticipating that the return will be around 55%.
Slowly but surely
The path to this point has been a long time in the making. In 2007, Brazil’s Supreme Court ruled that all gambling was illegal unless it was explicitly legal. Thus, online gambling was verboten. That didn’t stop people from playing, though, as there was no legal recourse to punish individuals who gambled online or overseas operators who accepted Brazilian wagers.
There was some effort to look into legalizing different types of gambling in 2015 with the formation of the “Special Commission on a Regulatory Framework for Gambling in Brazil,” but nothing ever came of it.
In December 2018, President Michel Temer signed a bill which legalized sports betting, both retail and online. Last June, Minister of Economy Paulo Guedes gave it his stamp of approval. Then, in August, current President Jair Bolsonaro signed Decree No. 10,467, making it all official.
Initiatives that are part of PPI are “treated as a national priority.”
Sports betting is included in Brazil’s Investment Partnerships Program (PPI), a system in which the government works to attract businesses from overseas. Initiatives that are part of PPI are “treated as a national priority.”
Sports betting became a priority last year because the COVID-19 pandemic hit the country hard, causing a 4.1% drop in GDP. The industry was seen as a way to try to generate finances. The problem was that Brazil’s government was among the worst in the world at managing the pandemic, to the point that President Bolsonaro was a COVID denier (he also caught COVID and recovered).
Brazil ranks behind only the United States and India in the number of reported COVID-19 cases with nearly 16 million and is second in deaths at 446,527. The loss of life and impact on the government’s time and resources has slowed the rollout of sports betting.