GMB - Loterj was one of the pioneers in launching sports betting at the state level. Why did you decide to take this action?
Hazenclever Lopes Cançado - Loterj has always been at the forefront of games and lotteries in Brazil. For decades - and even before the issues raised by the Federal Supreme Court in the ADPF's due to the difficulties faced with Caixa Econômica and the federal government - Loterj marks its role as the largest and most important lottery in the country.
And we must follow this tradition and not lose our pioneering spirit even now in the accreditation and regulation of sports betting, IOT and real-time. It is a government policy with great interest from Governor Claudio Castro to take advantage of the boom in games and lotteries in Brazil to bring new revenue to Loterj and the state government to be applied in social programs reaching the population of Rio de Janeiro.
Eight companies were accredited to operate sports betting from the loterj platform. What attracted them?
We had eight companies that sought accreditation in all online modalities provided for in federal legislation. The excellent number and size of companies that sought accreditation with Loterj is proof of the success of our Public Notice and our proposal, as well as the model presented. We are the first state lottery to accredit "bets" and online real-time with complete security, for the State, for Loterj and mainly for the player. I always say that in the world lottery market, Brazil is the “crown” and Loterj, the jewel of this “crown”. Rio de Janeiro brings added value to the companies that operate here, not only because of the significance of the State, but also because of what Loterj represents in the gaming market.
We brought a public notice of wide competition, surrounded by all legal care and precautions, both for gamblers and for the state government and the autarchy. We leave operational freedom to the private sector, to bookmakers. The vocation of a state lottery – and Loterj, specifically – is not to be a bookmaker. In my point of view, we are responsible for regulating, granting, auditing and supervising games.
It is important to highlight that we created two grants, fixed and variable, which are highly competitive. The federal government's discussion regarding the national regulation of sports betting, with a fixed grant of BRL 30 million plus the specific activity tax of 18% on the GGR, in addition to other taxes, raises the burden above 25% on the GGR. Loterj launched a project so that operators can sell bets across the country, with a fixed grant of BRL 5 million and a monthly variable of just 5% on the GGR, that is, far below the Union. What the state lotteries are practicing in the face of the Union's proposal makes them very attractive for market players.
The 5% tax on the GGR and the fixed grant of BRL 5 million was a strategic decision. How was this fundamental in attracting companies to operate under Loterj’s banner?
Yes. We need to manage public authorities with a strategy that needs to be managed with modernity and as the regulatory bodies impose on us. Bringing an attractive proposal allows to attract the big players to offer security and bring competitive odds and a high payout to remunerate the bettor well. He is our client and the raison d'être of bookmakers and state lotteries. Without the gambler, we don't survive. Therefore, we cannot bring a high taxation in order to make the operation unfeasible. It has to be attractive to all parties. Accounts have to close and, at the end of the month, the bookmaker has to pay its bills and the bettor needs to have an excellent payout and not what has been offered by federal games. It is also important that state lotteries have a fair and necessary remuneration to revert to social actions.
And speaking of operations, eight companies were presented, but how many are already operating?
We already have two bookmakers waiting and another six in qualification analysis. We hope that in the next few days all those under technical and documentation analysis will be enabled to go through the PoC - Proof of Concept phase, so that we can put them into operation and offer, not only to people from Rio de Janeiro but in throughout Brazil, the largest possible number of legalized, regulated and headquartered bookmakers in Brazil, collecting taxes in the country and generating jobs. We cannot continue with our eyes closed and cover our ears and have an uncountable number of “bets” operating without generating resources for Brazilian society. It is a sector that moves billions of reales without having any return for society and the government. It is time to reverse this, as we are already doing with the two companies operating with us in Loterj and the other six in the qualification phase.
It is important to highlight that the companies are operating throughout Brazil, but with the platform installed in Rio de Janeiro. Is it all organized?
We provoked this debate. It is a thesis that turned into a proposal and into a Public Notice, which was published and is in force, bringing to paper a justified and robust interpretation. There is no reason why we have a territorial limit in online for bookmakers that we do not have for other sectors. It is a monopoly culture that benefits a few and harms free competition by wanting lottery houses and state lotteries to function as if we were in the era of correspondence posted by mail and not by email, or by traditional transport, without having options like Uber and 99 (vehicle for hire company operating in Brazil) without having restrictions on permits from a prefecture.
How has the initial result of this operation been, with two companies already offering their sports betting throughout Brazil?
In the best possible way, with virtually all states betting through Loterj with our accredited partners. There are still some complementary measures that we will take to give more security to bookmakers and bettors. It has been an absolute success.
In other words, a fantastic result not only for Loterj, but for the entire society of Rio de Janeiro!
That’s right. We have a legal obligation, which we do with love, to invest at least 70% of Loterj's profits in social media. At the beginning of 2023 alone, we invested BRL 2.1 million (US$ 430k) in training 120 surf professionals, who have the “face” of Rio de Janeiro. We serve underprivileged young people and women, the disabled and women victims of domestic violence. We have just signed a contract to transfer more than R$2.7 million (US$ 554k) to RioSolidario for a place that houses women. We are also serving daycare centers and needy communities, such as Rocinha, Vila do João, Pavão, Pavãozinho and Cantagalo.
What to expect in the short and medium term in view of this new phase of Loterj?
We expect the regulated and legalized consolidation of the gaming and betting market in Brazil. Rio de Janeiro is playing a fundamental role in this regulation. We came out ahead of the Union and Loterj granted the country's first sports and real-time betting license. While the Union has been discussing the regulation of Law 13,756 since 2018 and now with Provisional Measure 1,182 about to expire without an installed commission. Rio de Janeiro sets an example of effectiveness and commitment to society and actually collaborating with the regulation and stabilization of this market, with safe bets, responsible gaming and the fight against money laundering and terrorist financing. Loterj is showing that all this is possible.
Brazil has been debating the issue for four years and billions of reales go abroad with the off-shore operation, for companies headquartered in Malta, Curaçao or Gibraltar, without CNPJ and address in Brazil, without generating jobs and taxes in the country. Loterj is not venturing out. We are confident that we know what we are doing. It is pioneering spirit with courage.
In other words, at least the eight companies accredited by Loterj are based in Rio de Janeiro and at Loterj!
The registered office must be in Brazil. And if it is a consortium, the leading company must be based in the country. The operation is in Rio de Janeiro and the player informs, through the platform, that his game is being held in Rio de Janeiro, for all legal, fiscal and tax purposes. The legal base of the game is Rio de Janeiro, so the bettor can place his bets anywhere in Brazil, and the base of the platform is Loterj, in Rio de Janeiro, which is the one that is allowing the service, exclusively of Rio Janeiro and competence of Loterj, as already decided by the STF.
Do you believe there will be a dispute with the federal government or will everything fall into place over time?
No way. There is no dispute between state and federal lotteries. There is no atmosphere of dispute, as the market is competitive and there is room for everyone. We have one of the largest populations on the planet and one of the two or three largest gaming and gambling cultures in the world. There is a market for all state and Federal District lotteries without competing with Caixa or the Union. It will not be a competition, but an option to be made by the player, legally and with all the auditing and supervision, against clandestine sites. The dispute will be between the legal market and the clandestine one. This is not Loterj's intention or option. Our vocation is to respect the federal lottery market and it is agreed that it is not exclusive to the Union.
In other words, it is a bet for the benefit of society!
Exactly. What the Union has, together with the National Congress, is the exclusivity of legislating on lotteries and the States cannot create game modalities, which is the competence of the Union. There is no dispute and because nothing prevents a company from accrediting in Rio de Janeiro, Paraná, Maranhão and the Federal District and that is also accredited in the Union. There is no such legal prohibition and it will be a decision of the company and its project as to enter in more than one State and also in the Union. But one thing is clear: the betting house can operate in all the States of Brazil through the Loterj license.
Source: Exclusive GMB
