Brazil iGaming Market Takes a Step Back with IGT Scientific Games' Lottery Withdrawal
Published October 24, 2020 by Lee R
Government intervention is the only hope for resuscitating what was once a promising deal in Brazil.
The Brazil iGaming market has for now lost key entrants in the lottery division.
Scientific Withdrawal
Backing off from its bid to be the first national instant lottery concession in Brazil, Scientific Games announced they will be withdrawing that bid as the first national instant lottery concession in Brazil.
Renouncing LOTEX Concession
Scientific relinquishes the October 2019 LOTEX Concession last year, which also nullifies the distribution agreement the companies sought to sign with CAIXA Econômica, the largest retail lottery network operator in Brazil.
CAIXA's Breakdown
The current agreement fell apart when after settling on terms, “CAIXA failed to authorize its execution by the concession deadline,” which further resulted in the loss of the government extension to complete the deal.
IGT and Scientific Speak
A joint statement issued by IGT EVP New Business and Strategic Initiatives Walter Bugno and Scientific Games President of Global Strategic Accounts Michael Conforti states:
“The 13,000 lottery retailers within the CAIXA network are fundamental to a successful launch of the instant ticket business in Brazil and without such distribution network, the companies were not prepared to move forward.”
In other words, the deal fell through without the vital network.
Legislative Impact
Besides the infrastructural hit, the Supreme Court of Brazil recently ruled on September 30, 2020, that the lottery monopoly run by the federal government was unconstitutional, which paves the way for each of Brazil's 26 states and one federal district to open their own state lotteries.
Scientific Motivated Until the End
The court ruling and the lack of finalised agreement with CAIXA was the pitfall, according to Scientific, with all business P's and Q's otherwise covered:
“Despite being fully prepared to fulfill all of the financial and non-financial conditions precedent of the concession agreement, prudent capital management dictates that we withdraw from the process and re-evaluate the business case of implementing a lottery operations model in Brazil.”
Outlook
The door was left open for the companies to re-continue project development if the government provided the extension from CAIXA nonetheless. Global companies Scientific and IGT games should not be seen as discouraged from iGaming in Brazil through the lottery project, as much as stalling out due to the breakdown in the local partnership role.
