US giants pull out of Brazil lottery deal

IGT and Scientific Games have withdrawn from a partnership that would have seen them engage in setting up an instant lottery concession in Brazil.

They jointly bid for the first national lottery concession, LOTEX, as far back as a year ago but had to satisfy certain conditions by September 21. The two companies had stressed to the Brazilian government the necessity to first ensure a distribution agreement with Caixa Economica, the operator of the largest lottery retailer network.

After long negotiations with Caixa the talks ended with success, but Caixa failed to authorise its execution by the concession deadline and a request for an extension was not granted. The 13,000 lottery retailers within the Caixa network were essential to the launch of the instant ticket business, said the two US companies in a statement.

“Without that distribution network, we were not prepared to move forward,” said Michael Conforti, president of global strategic accounts at SG.

“In addition, on September 30 of this year 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 we withdrew from the process to re-evaluate the business case of implementing a lottery operations model in Brazil.”

Conforti added: “Should the government of Brazil consider an extension of the process for Caixa to authorise and execute a contract, because of the high contribution potential of this venture to a number of government programmes, we will explore the possibility of re-engaging in the process.”