But for Gustavo Viscardi, a specialist in studies for the Expression of Interest Project (PMI) at GCL Consultoria Econômica, the revenue potential is even greater, reaching R$ 23.5 billion (US$ 4.5 bln) per year in the next two decades.
Among the modalities provided for in Loteria Paulista are numerical prediction games, specific predictions, sports predictions, in addition to passive lottery (in which the bettor buys the ticket already numbered), instant (scratch cards) and fixed-odds bets. The creation of state lotteries was made possible after the Federal Supreme Court decided, in September 2020, that this activity could not be a federal monopoly.
The model presented by the State Department of Budget and Management of the State of Sao Paulo foresees an investment of R$ 727.8 million (US$ 138m) to reach revenues of R$ 14.1 billion (US$ 2.7 bln) in 20 years. Viscardi, on the other hand, sees much greater growth potential from a bolder investment plan, of around R$4 billion (US$ 760m). “We are talking about a new company, almost the size of a telecommunications firm, with the creation of 97 thousand direct and indirect jobs in the State of Sao Paulo alone,” he estimates.
The economist points out that the federal lottery – with Caixa's monopoly – represents only 0.3% of the Brazilian Gross Domestic Product (GDP), while the sector represents an average of 1% of GDP in the European market, reaching 1.54% of GDP in Portugal.
“We estimate revenues from R$20 billion (US$ 3.8bln) to R$23.5 (US$ 4.5bln) billion with a lottery that reaches 0.80% of Sao Paulo's GDP, with a penetration four times greater than the federal lottery. That's counting new resources and tickets 'replayed' with the resources of the prizes,” calculates Viscardi.
For this, the company winning the concession contract will need to make heavy investments in infrastructure and marketing, in addition to increasing the capillarity of the betting points. “Caixa invests between R$100 million (US$ 19m) and R$120 million (US$ 22.8m) in marketing per year. We project investments of around R$ 240 million (US$ 45.5m) for Loteria Paulista, close to the annual marketing budget of Casas Bahia,” he compares.
According to him, Caixa today has around 20 thousand points of sale throughout Brazil, while Loteria Paulista only in the State of Sao Paulo would have between 40 thousand and 44 thousand points. Precisely the presence of one point of sale for every thousand inhabitants would be the trump card to compete not only with the federal lottery, but with more than 120 thousand illegal betting points - in the jogo do bicho, for example - that the economist estimates there are in the state.
“As much as there are investments in digital betting, it is essential to reach the bettor directly with physical points. The most popular lottery in Brazil is still the one that is outside the law, without collecting taxes, funding other illegal practices,” he says. “Still, we also want 2% to 2.5% of the population of São Paulo registered, betting online in the state lottery, compared to 0.01% of the national population that today bets on the Caixa website,” he projects.
Proposals
Eleven groups presented modeling proposals to the Sao Paulo government, which chose to follow the path of hiring just one company to run the entire state lottery operation. Although some interested parties disagree with the exclusivity model, Viscardi believes in significant competition in the auction scheduled for the end of March. He reports, however, investors' concerns with the possible entry of large Sao Paulo cities into this market, with the launch of their own lotteries in the coming years.
“There is a lot of room to increase the culture of Brazilians in betting and using lotteries more. When there is this movement with several new companies, it is like throwing a yeast for the cake to grow as a whole. Each slice will be bigger than the original cake, but this yeast also has a limit,” considers the economist.
For him, the auction should not be affected by the electoral dispute or by legal questions, given the amount of arguments in favor of the concession. “People from all sectors will understand the potential for generating jobs and collecting taxes that will be fully allocated to social policies. The political scenario can always try to intervene, but in this case it is very difficult, because there is no counterargument that stops standing,” he concludes.
Source: Estadão
