To help with the "upgrade" of the reconstruction process in Brazil, based on democratic values, the government of President Luiz Inácio Lula da Silva published this Tuesday (July 25th), in the Official Gazette, the Provisional Measure that regulates the return of the Exclusive Instant Lottery (Lotex), popularly known as “raspadinha” (scratch card).
The purpose of the measure is to reverse acts of flexibility adopted by the previous government. The government action aims to boost the financing of several social programs maintained with the resources obtained by betting.
The PM for the resumption of Lotex was drawn up by the economic team of the Ministry of Finance. The return of the operation is part of the federal Executive's fiscal effort to increase tax collection, with an estimate that this will reach an extra amount of between R$ 3 billion (US$ 630m) and R$ 5 billion (US$ 1.05bn) per year, approximately.
The text of the PM indicates that the government also intends to include the taxation of online sports betting, with the potential to increase the funds raised to R$ 12 billion (US$ 2.52bn). Thus, the aim is to assume a commitment to the trajectory of improvement in public accounts.
With the return of this lottery, Caixa Econômica Federal is again responsible for the operation, as it used to be before the “famous” experience of privatization in recent years and since 1970, when the public bank assumed responsibility for managing and executing the federal lotteries in Brazil, under the supervision of the Ministry of Finance.
Since then, Caixa has had a monopoly on lotteries in the country, a segment that has been the target of some unsuccessful privatization attempts, such as the auctions between 2016 and 2019. As a result, Lotex has not been explored since 2015, and the country has failed to collect important resources for the social and economic development of its various regions.
The operation with lotteries, according to the National Federation of Caixa Personnel Associations (Fenae), has always represented a historic gain for Brazil and its population, because the money collected was reinvested by the public financial institution in the areas of social security, sport, culture, public safety, education and health, thus encouraging public investment in the country.
“The segment's return could result in the benefit of more than half of the funds allocated to public policies, in addition to strengthening Caixa's financial balance sheet,” argues Sergio Takemoto, president of Fenae.
For Takemoto, lotteries are one of the most profitable businesses in the public bank, with ever-increasing profits per year. “If it really comes to fruition, Lotex's return will bring gains not only in the short term, inflating the annual result. In the long term, important recurring revenues are generated, with a focus on the Caixa public, social and increasingly strengthened,” he details.
This positive performance, incidentally, was attested by recent internal studies by Caixa, which revealed to the Lula government that the scratch card was the second highest grossing lottery in the world. Despite this, the segment was discontinued and this ended up affecting the Union's revenue.
The president of Fenae claims that there is not the slightest doubt that the social role of Caixa, a strategic partner of the State in the execution of public policies, needs to be reinforced in view of the country's democratic reconstruction process.
And he adds: “It is essential that the bank remains public. The logic of a private company is completely opposite to a public company like Caixa, which takes care of projects that are fundamental for national development, such as Minha Casa Minha Vida, Bolsa Família and social programs.”
He recalls that the suspension of successive auctions to privatize the lotteries occurred as a result of the mobilization of workers and representative entities. One of these suspended auctions took place four days after Fenae filed a public civil action to block the process.
Social gain
To get an idea of the importance of Caixa managing lotteries, with the record of the injection of resources into social programs, the numbers show that, between 1991 and 2015, Lotex was exploited by Caixa Econômica Federal, raising R$ 191.54 million (US$ 40.3m) in 2014.
From 2011 to 2016, lotteries raised R$ 60 billion (US$ 12.6bn), of which R$ 27 billion (45%) –US$ 5.7bn- came from social transfers. In 2017, R$13.88 billion (US$ 2.9bn) were raised and R$6.44 billion (US$ 1.35bn) transferred. In 2020, R$ 8 billion (US$ 1.7bn) were allocated, which corresponds to 47% of the R$ 17.1 billion (US$ 3.6bn) collected. Something around 40% of lottery profits were invested in social initiatives.
Until then, funds from the Caixa Lotteries were allocated to the Student Financing Program (Fies), the National Culture Fund (FNC), the National Penitentiary Fund (Funpen), the National Health Fund (FNS), the Brazilian Olympic Committee, the Brazilian Paralympic Committee, football clubs and the Brazilian Confederation of Clubs, among other social initiatives.
Measure adopted by the previous government, the Lotex sales auctions are a separate chapter. The Federal Executive at the time, after several frustrated attempts, changed the rules several times, lowered the price and managed to transfer Lotex to the Estrela Instantânea consortium, formed by groups from Italy and the United States, the sole proponent of the purchase, which paid much less than the originally established value and in eight installments.
The outcome, with the sale of Lotex, was not what buyers expected. The consortium that led the business at the time announced in 2020 that it would withdraw from the concession process. One of the reasons that led Estrela Instantânea to abandon the endeavor was a decision by the Federal Supreme Court (STF) to allow the States and the Federal District to share with the Union the management of lottery operations. The consortium wanted to explore, exclusively, the instant lottery.
In a recent period, when public property was the object of “sharp destruction”, a way found to stop the sale of lotteries was the mobilization of workers and representative entities in partnership with parliamentarians, since the privatization of the segment and other areas da Caixa could further jeopardize the profitability of the public bank. This understanding is based on the fact that Caixa has the system, expertise, distribution network and the credibility of the population to operate lotteries.
For Fenae, the return on using Caixa for business operations is positive, as it may represent that part of the earnings from lotteries is once again directed towards social programs.
Source: Fenae
