In this way, the exploration of the lottery market, considered highly profitable, for states and municipalities was authorized.
All this, after the decision of the Federal Supreme Court (STF) in 2020, which declared that the Union does not have a monopoly on business exploration.
Legal context and controversies
In 2023, the National Congress approved the Sports Betting Law (Law 14,790/2023), causing discontent in state governments such as São Paulo, Minas Gerais, Acre, Paraná, Mato Grosso do Sul, Rio de Janeiro and the Federal District.
This law prevents the same economic group from obtaining concessions in more than one state, thus benefiting the Union, since the granting and payment of a federal subsidy allows the company to operate throughout the country.
The dispute between the states and the Union involves billions of dollars in proceeds from concession sales and tax collection of the sector. The approval of Law 14,790/2023 was a priority of the Minister of Finance, Fernando Haddad, and the Lula government to increase tax collection.
Contrary to what is indicated in part of the legislation, six states filed a Direct Action of Unconstitutionality (ADI) before the STF. Edgard Bezonatti Neto, general director of the Companhia Paulista de Parcerias, says:
"We are waiting for the decision with a lot of optimism about what is coming, since the STF has been very thoughtful in that regard, the decisions have been technical and positive."
Taxes and location
The São Paulo project is based on the STF's 2020 decision. Therefore, the tax on the betting operation will be applied depending on the place where the user makes the purchase.
"The interpretation that the state of São Paulo is making of this, which is reasonably pacified, is that the player needs to be in São Paulo to be able to bet on our lottery," explained Edgard Bezonatti Neto.
To do this, the lottery website must identify the user's geolocation through the IP or mobile device services. If the player is outside the state of São Paulo, he will not be able to place bets. Bezonatti Neto believes that the ADI test will be carried out before the auction.
"We have very positive prospects, regardless of ADI's decision, because we have put some mechanisms in the contract that would allow us to accommodate a later decision," he said.
Betting market and investor interest
A report by XP Investimentos in January showed that companies in the sector would invoice R$ 13 billion in Brazil in 2023. Therefore, this represents an increase of 71% compared to 2020.
The estimate of the total value of the bets last year was between R$ 100 billion and R$ 120 billion, which represents approximately 1% of Brazilian GDP.
Ricardo Bianco Rosada, partner of brmkt.co, a strategic and marketing consultant, stressed that in 2024 the market numbers will grow.
"This year we believe that all the bets that exist in Brazil will generate R$ 250 billion, with 37% of that value coming from the state of São Paulo," he says.
To compete with federal licenses, Rosada highlights the need to offer an attractive product. "If the concession and taxation are very high, it is not attractive for companies," he adds.
Edson Lenzi, executive director of PayBrokers, specialized in iGaming and lotteries, comments that the fact that São Paulo is the richest state in the country is reflected in betting. "It is a market that, in terms of transaction volume and revenue values, is very equivalent to the market of England or France," he said.
Details of the São Paulo project
The concession project of the government of Tarcísio de Freitas foresees a variable concession of 35% of the gross operating income of the concessionaire. Thus, it is projected at R$ 3.4 billion in 15 years, destined for investments in the health sector.
The five types of services that can be explored include:
Lottery of specific predictions (predictions for different games)
Sports prediction lottery (prediction of goals in matches)
Numerical prediction lottery (for example, Mega-Sena, Quina)
Instant lottery (for example, Scratchcard and Lotex)
Passive Lottery (for example, Federal Lottery and Christmas Lottery)
31 exclusive points of sale will be installed in all regions of the state of São Paulo, in addition to 11,000 non-exclusive points of sale. Companies must present plans for the prevention of money laundering and responsible gambling, in addition to obtaining certifications such as WLA, GLI and ISO.
Finally, the Public Services Regulation Agency of the State of São Paulo (Arsesp) will be responsible for supervising the contract, with the support of an independent verifier. In addition, important international actors, such as IGT and Scientific Games, have shown interest in the São Paulo concession.
Dingnews.com 25/07/2024