Caixa initiates plan to implement sports betting in lottery network.

Representatives from Caixa Econômica Federal and Playtech met with representatives from the board of the Brazilian Federation of Lottery Companies – FEBRALOT, leaders of state unions and around 70 lottery entrepreneurs this Tuesday (12), at the Metropolitan, in São Paulo, to present the business plan for the operation of the fixed-odds betting lottery modality of Caixa Loterias. The meeting marks the beginning of a series of workshops scheduled to discuss the implementation of this new product in the portfolio of Brazilian lottery houses.

The initiative comes after the Secretariat of Prizes and Bets of the Ministry of Finance (SPA-MF) authorized, on July 30, Caixa Loterias SA to operate the BetCaixa, MegaBet, and Xbet Caixa brands. The license covers sports betting and online games, in both physical and virtual modalities, and is valid until December 31, 2029.

During the event, a gradual implementation plan was announced, beginning with a Proof of Concept (PoC) in 70 lottery outlets. This initial phase aims to jointly test and develop customer journeys and the operational model before expanding to the entire network of over 13 lottery outlets nationwide.

One of the central themes debated was the remuneration model for the lottery network, considered essential to guarantee the engagement of business owners and the sustainability of the business. Caixa confirmed that lottery operators will participate in the results obtained through the online channel, where the largest volume of bets occurs.

The new product will operate on a "banked" business model, in which revenue depends directly on the outcome of sporting events. The strategy aims to achieve an overall margin between 10% and 12%, lower than traditional lotteries.

The payout for the bettor will be 88%, in contrast to the approximately 40% offered in conventional lotteries. To maintain competitiveness in the market, the minimum bet amount may start from 20 cents.

Playtech will provide a "Turnkey" and "Omnichannel" solution , integrating physical and digital environments into a single betting platform. A model similar to an affiliate program is being developed to reward lottery retailers for acquiring new customers, although the customer engagement period, called "latency," has not yet been fully defined.

Playtech was chosen as the platform provider after a rigorous competitive process conducted by Caixa Loterias SA. The company obtained 50,125 points in the sum of the criteria considered, surpassing Sportradar, which achieved 43,625 points. The selection process included five rounds of negotiation, with a persistent tie at 24,2%, requiring the application of the tie-breaking criterion based on the highest score in the "Experience/Recognition" category.

The implementation of fixed-odds betting in lottery outlets faces challenges due to unified regulatory requirements for online and physical environments. Caixa is in negotiations with the Ministry of Finance seeking specific adaptations to enable operations at physical locations.

One of the main obstacles is related to the KYC (Know Your Customer) process. Regulations require complete registration with the collection of personal data, presentation of identification documents, and mandatory facial recognition for each bettor. There is also a list of people prohibited from placing bets that needs to be verified at the time of registration.

Regarding withdrawals and deposits, current SPA regulations only allow transactions via PIX, TED, debit cards, and prepaid cards. The prohibition on the use of cash represents a barrier to operations at lottery outlets, where cash transactions are predominant.

Caixa is negotiating with the regulatory body the possibility of allowing cash payments with a set limit, possibly of R$ 500. Another important point is that withdrawals and deposits must occur exclusively between accounts with the same holder, linked to the same CPF (Brazilian taxpayer ID).

To overcome the difficulties related to customer registration, two distinct models will be tested during the implementation phase. The first involves registration assisted by an attendant at the sales terminal, while the second offers the option of self-registration via QR Code on the customer's own mobile phone.

In both cases, the process includes CPF validation, confirmation of personal data, phone validation via token, and facial biometrics. For bets, different formats are being developed, including bets assisted by an attendant and pre-formatted bets with commercial names such as "The Deal of the Day" and "Quick Bet".

Customers will be able to use QR codes to create more complex bets on their mobile phones and make payments at the lottery counter. The in-person service will be restricted to pre-game bets, unlike the online environment which will offer live betting.

A controlled test will be conducted in 70 lottery outlets for approximately 40 days. The goal is to begin this pilot phase simultaneously with the launch of the online operation, scheduled for 2025. Design Thinking sessions involving lottery operators, technical teams, and customers are planned to detail the user journey.

During the presentations, the case of the French operator FDJ was cited as a reference for the Brazilian project. In the French experience, the physical operation represents between 45% and 50% of the company's total revenue, demonstrating the potential of the physical channel when well implemented.

One proposal that emerged during the discussions was the possibility of lottery retailers expanding their reach by installing terminals in other commercial establishments, such as bars and bakeries, linked to their main unit. This expansion would be managed using geolocation technology to ensure a strategic distribution of points of sale.

Lottery operators emphasized that without adequate investment in in-store technology, the participation of the physical channel will be minimal. The implementation of self-service terminals (kiosks) was requested from the initial launch as a way to attract new customers and modernize the experience in lottery outlets.

Project management reported that, although the kiosks are not planned for the initial phase, the tests will utilize other equipment to enable the self-service experience. It was emphasized that the physical operation will not include online games like "Fortune Tiger" and will adhere to responsible gaming guidelines.

Several risks were identified by lottery operators during the meeting. One of the main points of concern is that the remuneration model for the lottery network has not yet been fully defined. There is a lack of clarity regarding percentages, structure, participation in the online channel, and the duration of the customer's relationship with the lottery operator.

The ban on accepting cash and the requirement for facial recognition pose challenges to the viability of physical operations. Managing queues in high-traffic lottery outlets has been identified as an operational risk. The additional time required to place fixed-odds bets may impact the sale of other traditional lottery products.

The affiliate model using QR codes presents a risk of being exploited to generate competition within the lottery network itself. This technology, if not properly regulated, can create distortions in the market.

Among the next steps is the detailing of the operating model and the proof of concept (PoC), which will be developed in conjunction with the Playtech team. The testing phase with a selected group of lottery retailers will be fundamental to validating the different customer journeys.

It was also established that there is a need to discuss how lottery retailers will be integrated and participate in the online business model. This point is considered crucial to ensure the engagement of the physical network in the new betting product.

The implementation of the new system faces obstacles related to the technological infrastructure in lottery outlets. Operators have established the installation of modern equipment as a condition for their participation, aiming to renew the experience for bettors.

The move to the testing phase remains pending due to a lack of essential operational definitions. To date, no detailed timeline has been established for this stage, nor have the criteria for selecting participating lottery outlets for the experimental period been determined.