International Game Technology and Scientific Games have released a joint statement withdrawing from its bid to become the first national instant lottery concession in Brazil (LOTEX Concession).
The two parties, which were awarded the concession in October 2019, state that they are to “re-evaluate the business case of implementing a lottery operations model in Brazil”. However, the door was left ajar to potentially re-engage in the process at a future date.
Detailing the struggles since securing the concession, Walter Bugno, IGT EVP of new business and strategic initiatives and Michael Conforti, Scientific Games’ president of global strategic accounts, explained: “Prior to and since receiving the award of the LOTEX Concession, the parties repeatedly informed the government of Brazil that it was critical, to ensure the success of the national instant ticket business in Brazil, to have a signed distribution agreement with CAIXA Econômica, operator of the largest lottery retailer network in Brazil. Following more than seven months of diligent discussions with CAIXA, the parties successfully completed contract negotiations.
“However, despite reaching an agreement on the final version of the contract more than two months ago, CAIXA failed to authorize its execution by the concession deadline, and our request for an extension of the process was not granted.
“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.”
Furthermore, last month the Supreme Court of Brazil ruled that the federal government’s lottery monopoly was unconstitutional, paving the way for states to develop state lotteries for each of Brazil’s 26 states and one federal district.
As a result, IGT and SG say that “prudent capital management” dictates the aforementioned withdrawal from the process, despite being fully prepared to fulfil all of the financial and non-financial conditions preceding the concession agreement
“Should the government of Brazil consider an extension of the process for CAIXA to authorize and execute a contract because of the high contribution potential of this venture to a number of government programs, we will explore the possibility of re-engaging in the process,” Bugno and Conforti added.