IGT and Scientific Games push for instant lottery business in Brazil hits a snag as local partner misses deadline. The businesses are open to reengage with the process although new legal challenges would require further reevaluation of any moves in Brazil.

Brazil’s Instant Lottery Push Stops as Local Partner Misses Deadline

Brazil has been see-sawing between legalizing gambling and gently inserting hurdles on the road to progress. On Tuesday, a much-anticipated bid for Brazil’s instant lottery scratch card business between International Game Technology and Scientific Games fell through because the retailer that won the tender for distribution and local assistance had failed to provide a contract by the stated deadline.

The privatization of Loteria Exclusiva Instantânea or Lotex was a necessary step for both companies to establish their footprint in the market and launch a lottery business. IGT and SG were awarded a joint-concession in October 2019 and had to finalize an agreement with CAIXA Econômica.

In the seven months between October and now, the companies got in touch with CAIXA, which is the largest lottery retailer network in Brazil, and successfully negotiated a contract two months ago.

However, CAIXA, for unspecified reasons, failed to authorize its execution by the concession deadline. SG and IGT sought an extension to the concession deadline but the request fell through, and without a distribution network, the companies couldn’t move the project to the next stage.

Changes in the Legal Fabric of Brazilian Lotteries

Commenting on these developments, IGT EVP for New Business and Strategic Initiatives Walter Bugno and SG President of Global Strategic Accounts Michael Conforti added that as of September 30, 2020 the Supreme Court of Brazil considers the government’s lottery monopoly unconstitutional.

According to the Supreme Court, lotteries were a public service and therefore not a subject to interference from the federal government.

Therefore, Brazil’s 26 states will be effectively looking to establish and develop their own state structures for lottery solutions. Mrrs Conforti and Bugno have argued that the ruling means that SG and IGT will have to reevaluate “the business case of implementing a lottery operations model in Brazil.”

IGT and SG, though, may be open to reengaging with the current process should the government decide to extend the deadline period and revisit the arrangement. In the meantime, Brazilian President Jair Bolsonaro approved the privatization of sports betting in the country.