Last week, the State Secretariat for Special Projects of the Federal District Government published its final report on the public consultation for the implementation of the DF Lottery, which had 91 inquiries or comments about the public hearing and the study presented to base the local government decisions for creating its lottery.
Among the main points presented by those interested in the bidding for the operation of lottery modalities in the Federal District, issues such as payout, market size, concession model, international certification, sports betting, number of points of sale, etc. stand out.
In the report, SEPE pointed out the difficulty in obtaining, with precision, the percentage of the gambling population, which is why a methodology similar to studies carried out abroad was used, and why it was considered a gambler the one who played at least once in the last three months.
Thus, it concluded that "based on the profile of bettors in Brazil, the study presented used the same data (age and income) from the Federal District to correlate with the country's data, reaching 6.56% of the gambling population, with based on the correlation of sample designs from the Household Budget Survey – POF”.
In the clarifications, SEPE indicates that the study foresees 1996 Point of Sale's (POS) until the end of the second year of operation of the lottery and that some of the calculations also considered the diversity of types of points of sale and number of games, indicating that the calculations were developed according to the average ticket of the bet.
Both during the public hearing and by email, interested parties expressed discontent and doubts about the need for international certifications, such as ISO and WLA. SEPE clarified that these are normal requirements for a good service concession process, ensuring satisfactory technical results and good practices in the operation of the DF Lottery to the Government.
“Requiring certifications that are widely used in the lottery market is the most efficient way to bring systemic security and reliability to the lottery public service. It should be remembered that there are some solid foundations for such requirements, but the main one is the preservation of the Public Power in relation to fraud and money laundering,” justified the SEPE.
According to the agency, “the required certifications gain greater relevance when it comes to the operation of online lotteries and such operational standards are based on fundamental technology levels for an integral operation. It is also worth mentioning that the Federal Court of Accounts - TCU, when evaluating the concession process of LOTEX, made a point of pointing out such a need, because without such guarantees, there would be exposure to the risk of the operator being captured to launder the proceeds of illicit activities (such as clandestine gambling, arms and drug trade, and so on). From the point of view of competition, such requirements do not affect the real agents capable of satisfying the necessary requirements for the establishment of a fair, reliable and efficient lottery.”
SEPE ruled out the possibility of offering a period for potential bidders to obtain technical certificates and certifications after having been declared the winners of the bid, “due to the risk of frustration of the bidding itself and damage to the Administration. The certification is granted by third parties to companies that are in a certain conformity – it is not an act that depends on the efforts of the Administration.”
The agency justified further by stating that “in a scenario in which bidders have difficulties to prove such compliance, the Administration will be extremely harmed by having to paralyze (or even start) its public lottery service. Therefore, in the specific case, as in several jurisdictions, selecting among those really suitable ensures the most advantageous proposal to the Administration.”
Regarding the payout, several questions pointed to the low attractiveness of lottery modalities, namely 40% for the prediction lottery, 50% for the instant lottery and 60% for sports betting.
Some of those interested pointed out the need for revision, as Lottex itself had been defined at 65% during the privatization process and 90% for fixed-quote bets.
SEPE stated that “instant lottery and fixed-quote payouts are among those practiced in the market. There are payouts practiced above the one placed in the proposal, however, the proposed values remain competitive and fit the market parameters.”
The Agency even stated, in the final report, that “the considered district and federal taxes are high and take a significant part of the revenue, limiting the payout as much as possible. Another point that needs to be raised is that the financial modeling proposes a conservative targeting of the population when compared to other markets, not requiring it to be the most competitive payout in the country.”
During the public hearing, it was cited the example of Colombia, which is operating sports betting with a minimum payout of 83%, and in the document published by SEPE, it clarifies that "the amount practiced, if adopted in Brazil together with the current taxes, there would be no availability for coverage or operating costs, nor for the payment of grants.”
In order to analyze the entire document and understand SEPE's positions regarding the issues raised, interested parties can download the full report here.
Source: GMB
