Opinion: Caixa could become a 'partner' in Lotex operations.

The new proposal from Caixa Econômica Federal for the commercialization of Lotex in its network of lottery units could transform the bank into a 'partner' or 'shareholder' of the consortium that submits a proposal for the auction of the Exclusive Instant Lottery – LOTEX, which will be held on April 26th.

The new minimum parameters established by Caixa stipulate participation in sales through its lottery network, with an average percentage of 1,44% of sales over the 15-year contract with the new operator. In addition, there is also the remuneration for the lottery network, which must be at least 6%, calculated on the face value of the ticket/bet.

If we consider the average percentage of 1,44% for network usage and add it to the 6% for the point of sale (lottery outlet), the sale of Lotex at the 'Caixa counter' will account for 7,44% of the 18,30% allocated to the operator's costs. However, this value is significantly lower than the 11% (5% CEF + 6% POS) of Caixa's initial proposal.

In addition to the share of sales at the 14 lottery outlets, Caixa's proposal obliges the operator to grant a share at other Lotex points of sale of an average percentage of 0,21% of sales throughout the entire contract period, excluding sales on internet pages and smartphone apps.

According to the business plan by the consulting firm Ernest Young, Caixa could raise around R$ 140 million with this indirect participation in the Lotex operation.

Proposal modifies tender parameters.

Caixa's proposal to participate proportionally in the sales of the Instant Lottery ends up constituting an indirect participation of the bank in the Lotex auction, a practice prohibited in the Concession notice. Indirectly, the future operator will end up having to pay twice for the service, to the government and to Caixa.

Cashier's Counter

The new premises presented by Caixa for the use of the lottery network improve the attractiveness of Lotex's operation, since the problem with the auction was the cost of the 'Caixa Counter'. As the tender requires an investment in setting up a network of 65 points of sale in five years, it is unthinkable for the future operator to give up 14 POS, which represents about 21% of the operation. The question now is whether Caixa's proposal for participation in the remaining points of sale will affect and/or compromise the operation's revenue.

Proposal creates legal uncertainty.

But what should be worrying those interested is item 1.6 of Caixa's proposal, as it reiterates that the bank has the exclusive prerogative to establish or not any definitive commercial agreement and that "in this sense, the values ​​presented above cannot, under any circumstances, have binding effect." Furthermore, Caixa does not define the services for which it is charging for the use of its branches. In other words, who guarantees that Caixa will honor the percentages presented in the proposal?

With 17 days to go until the Lotex auction, we don't know if Caixa's proposal could compromise the bidding process and prevent the government from receiving approximately R$ 1 billion in concession fees and investments, and collecting around R$ 18 billion in taxes over the 15-year contract according to Ernest Young's business model, with R$ 15 billion earmarked for Public Security.

But the sector will only know the answers to these questions on April 22nd, the day the proposals and other necessary documents for participation in the auction of the Exclusive Instant Lottery – LOTEX are due, which will be held on April 26th.

Unless Economy Minister Paulo Guedes convinces the president of Caixa Econômica Federal, Pedro Guimarães, to provide legal and commercial guarantees to the future operator of Lotex.