State lotteries are moving towards "phase 2.0" starting in 2027.

Brazilian state lotteries are preparing for a new phase. Starting in 2027, the sector is expected to experience what is already being called "phase 2.0," a second wave of projects, more mature, more modern, and designed based on lessons learned since the Supreme Federal Court, in 2021, recognized the states' competence to operate lottery services.

Today, any and all discussions about state lotteries carry a recurring condition: "after the elections." States that were awaiting a possible second term, or simply the maturation of the matter, are beginning to gain momentum and intensify discussions about their projects. Several points that previously generated uncertainty have already been consolidated and have evolved significantly since the Supreme Court's decision.

The progress of these discussions, especially the improvement in their technical level, has been noted by agents throughout the sector. Negotiations remain active with various states, both those already part of the state lottery association and others emerging as potential members. The plurality seen in the market today is also celebrated: different models, different regulatory designs, and different regional vocations coexist and are tested in practice. This diversity of experiences, coupled with the heightened debate, will be crucial for the emergence of increasingly better models in future cycles.

The narrative needs to change.

One of the factors driving the shift is the abundance of criticism the sector has observed regarding the model adopted by the federal government, in which public discussion begins with the game itself, and everything associated with it, only addressing the benefits of tax collection afterwards.

This order needs to be reversed for the activity to gain better social acceptance. That's how it was in the United States more than half a century ago, and it remains so today. That's how it was in Europe. And it needs to be the same in Brazil: it's up to society to accept and define the limits of the game, and which modalities are appropriate to the reality.

It is precisely at this point that state lotteries assume their main role: regionalization. Brazil is a continental country, and each region will have different permissions, different levels of acceptance, and different "tropicalizations" of the games that arrive in the country. There will be different types of games, with different rules, in different regions.

State lotteries need to understand this role and deliver the best type of game for their population, not simply replicate imported models without adaptation.

Another movement considered fundamental for the next phase is the union between states. For lottery operations to be viable in smaller states with smaller populations, the way forward is to follow the example of established international lottery products, such as Mega Millions and Powerball in the United States, and EuroMillions in Europe, all built on cooperation between jurisdictions.

Small populations, on their own, cannot sustain a quality lottery product. The solution to this problem is the formation of consortia and shared games between states.

Much can be learned from the models already implemented by Paraíba, Rio de Janeiro, São Paulo, Paraná, Tocantins, and Maranhão. Whether in these states or in those that have not yet structured their lotteries, the model needs to be improved, and this is already happening.

The new projects will be more modern, already updated, with the problems identified in previous experiences duly resolved. There are even designs in an advanced stage of development, built upon everything the sector has learned in recent years, that correct a good part of these distortions and point to a significantly better way of operating. The market should get to know them soon.

2027 is coming. And with it will come the 2.0 era of state lotteries.

 

(*) Daniel Romanowski is the CEO of the Paraná State Lottery – Lottopar.