Brazil's SECAP defends lottery price hikes

1 November 2019

Proposals by Brazil’s national bank, Caixa Econômica Federal (CAIXA), to apply a series of price rises across its lottery products have been approved by the Secretariat of Evaluation, Planning, Energy and Lottery (SECAP).

Prices for a total of eight products will increase by an average of 28.2% next year, according to SECAP, which regulates the lottery sector in Brazil and is a division of the country’s Ministry of Economy.

The new product prices will start at BRL1.50 for the Loteca and Lotogol products and go up to BRL4.50 for the Mega-Sena product.

The secretariat defended the price rises by saying that they were the first to be applied since May 2015. They were “motivated by the prospect of sustainable economic growth in the coming years and by the opening and expansion of the national lottery market ahead of next year”, it said.

SECAP added that the price adjustments would provide CAIXA with “better conditions to cope with the competitive lottery market environment”.

It comes weeks after the country’s Investment Partnership Programme (PPI) finally privatised the instant lottery business previously operated by CAIXA. A consortium comprising International Game Technology and Scientific Games won the tender to operate the state-owned instant win gaming business Loteria Exclusiva Instantânea (Lotex).

Under the 15-year contract, the two suppliers, via a joint venture, will pay an initial BRL96.9m (£18.4m/€21.4m/$23.8m) to secure the contract, followed by seven instalments of BRL103.0m. Seventeen per cent of annual revenues will also be paid to the Brazilian government over the duration of the contract, which is set to be finalised no later than 16 April 2020.

The Brazilian lottery market reported a 52.6% year-on-year increase in revenue for the second quarter of 2019, with Mega-Sena more than doubling its contribution over the period. However, weaker performances were reported for other products, such as Lotofácil, which posted a 3% decline in revenue to BRL$1.0m.

The changes have come against the backdrop of a wider overhaul of Brazil’s largely unregulated gambling market.

In September, SECAP published a draft of a decree governing fixed-odds sports betting for comment, the final opportunity for the betting industry to suggest changes.