Government to redesign scratch-off lottery auction model

After seven failed attempts, the government decided to relax the rules for granting the Exclusive Instant Lottery (Lotex). While previously the rules favored the largest companies in the sector, technicians now plan to relaunch the tender in August and attract the attention of at least 30 companies.
Also known as "scratch-off tickets," instant lotteries are a type of lottery where the player finds out if they've won a prize the moment they scratch the card. Lotex can be operated by Caixa Econômica Federal or a concessionaire.
The decision to grant the concession was made during the Temer administration. After successive presentations of the asset to international investors (so-called "road shows") in cities like London and Las Vegas, the government made its first attempt at an auction in July of last year. But it had to postpone it due to low interest.
The government continued to postpone the election. New dates were set, and in total, the date was changed five times. The technicians justified this by citing companies' concerns about the legislation, the electoral process, and later, the change of government.
However, despite these factors, the government is still facing difficulties. Scheduled for February of this year, the auction had to be canceled at the last minute. Only two companies were interested in bidding: IGT Global Services Limited and Scientific Games Corporation.
The two companies eventually joined forces to evaluate a joint offer. Meanwhile, they demanded answers from the government regarding what would happen if they withdrew from the asset after the auction. Faced with low interest, the government decided it was best to redo the bidding process to attract more companies.
“We are making the bidding process more flexible to attract the 30 [largest companies], precisely to generate competition and guarantee market openness,” says Alexandre Manoel, Secretary of Public Policy Evaluation, Planning, Energy and Lotteries at the Ministry of Economy.
Now, the government intends to reduce the required experience in operating an instant lottery service. In the original tender, the company had to demonstrate that it had already managed an instant lottery service with revenue equal to or greater than R$ 1,2 billion.
Furthermore, the government plans to reduce the guarantee amount to something up to one-third of what was required in the last tender. Previously, a minimum amount of R$ 27,3 million was required, which could be provided in cash, public debt securities, surety bonds, or bank guarantees, and had a minimum term of one year. In other words, the new amount could drop to around R$ 9 million.
Following studies conducted during the Temer administration by the then Ministry of Finance and the BNDES (National Bank for Economic and Social Development), the economic team decided to grant the concession in exchange for a payment to be made by the winning company.