GMB - What is your assessment of this moment in which sports betting is regulated, and what will happen in the future in the lottery sector?
Amilton Noble - We had six years of a legal but unregulated market and now we are starting a regulated experience. We have been fighting for this for years and many players have been involved in this fight for this moment to arrive. We are very happy that it has arrived. Obviously, it is the beginning of a process. Regulation is an ongoing process and there is still a lot to be fixed and improved. But we are very happy and believe that there is still a lot of room for joint action by all federated entities towards regulation.
What I have been saying is that we cannot fight amongst ourselves. Our common enemy is unregulated gambling. So, the regulatory bodies have to find a way to have everyone rowing in the same direction.
Yes, there is a common enemy, which is the gray market. How do you combat this?
You cannot combat a market with these characteristics with a silver bullet. There are a number of factors that will effectively make exploring an unregulated market, the illegal market, less attractive. One of the main ones, which we expect to see a concrete move from government agencies, is the issue of payment methods, the PIS. If you stifle unregulated operators with restrictions on payment methods, you end up reducing interest in illegal activity.
What path do you think state lotteries will follow from now on, given the federal regulations? And how will they behave in light of this new reality?
I understand that the state lottery is an operation that complements the regulatory process. Regardless of what it is, even municipal lotteries may eventually come into effect in the future. I don't understand how state lotteries and federal regulations can be competitors. In my view, they are complementary. Many serious and solid operators do not have the capacity to pay R$30 million in concession fees, for example. They could be operating in the state with smaller concession fees, and that's what I call taking a test drive.
In other words, taking advantage of a smaller operation in one state to gain strength, and then taking on a second state, taking on a third state, and eventually, in the future, having the financial capacity to pay the concession fee, for example, which is one of the elements, this company would already be able to have a national operation. So, I always see it in a complementary way.
And so, assuming that you are expanding the range of companies that can be served by the regulated environment, there is no reason for it to be unregulated. When you have different conditions, even for smaller markets – and when we talk about smaller markets, you take Rio de Janeiro with 17 million inhabitants, Minas Gerais with 21 million inhabitants, Paraná with 11 million inhabitants – it is more than most countries in the world. So, you have huge markets to be explored in the states. I don't want to get into the issue of territoriality because that is something we will still hear about for a while. But even without going into that, Paraná, for example, which defines its market as only in the state, has 11, 12 million inhabitants. In other words, there is room for everyone to explore and start their officially regulated operations.
What do you see in the near future for the lottery sector now that there is federal regulation and the clash with state operations that may be going beyond geolocation?
In recent years, we have discussed the issue of fixed-odds bets, and traditional lottery operations themselves have been relegated to the background. Obviously, these are two completely different markets, but they also have a lot of room for growth in Brazil.
I think that the deciding factor will be the debut of the São Paulo market in 2025. The São Paulo lottery, which ended up being concluded at the end of last year, will be regulated this year and will certainly bring new developments. That's what I say: São Paulo is the locomotive of Brazil. If São Paulo does a good job, I think others will follow suit.
How do you see the São Paulo market in our sector?
The São Paulo market is a challenge in itself. A state with 45 million inhabitants in 645 municipalities brings with it very big challenges. But the people who participated in the process are experienced in the market, have already operated in other countries and will know how to successfully carry out this operation in São Paulo.
I understand that it will make a difference in the market because I believe it will bring new developments and good practices from other countries. So, I always look at it with a very positive outlook. I have been struggling for many years to see – I haven't managed to see it yet, but one day I will see it – the 27 states with their lottery operations.
As someone who is very knowledgeable about the lottery market, let me give you a quick analysis of Loterias Caixa's products. For years, the company has maintained revenues in the range of 20 billion or so. What does it need to change to truly be part of the global lottery market, which is growing much more than Caixa's stagnation?
In reality, Caixa's issue is not exclusively due to its operations. I think that the lottery model in Brazil, which was a monopoly for many years and was handed over to an institution that is not its core business, is the first fundamental that needs to be discussed.
The second very important fundamental that needs to be discussed is that the lottery is a very dynamic market that needs to be agile. And, unfortunately, the operating structure of lotteries in Brazil, to launch a new product, for example, depends on approval by the National Congress. Which is absurd. A lottery operator needs to have autonomy to change payouts, to launch new products, to face the competition.
So, I think there are several factors that lead to this result, which I also understand as a result that is much lower than it should be. Brazil, with 210 million inhabitants, could not have an operation worth around 4 billion dollars. I like to use as a reference – and obviously a reference that cannot be used for direct comparison because the markets are different – ??but only the El Gordo Lottery, which is an end-of-year lottery in Spain, paid out the same prize as the 10 lottery modalities in Brazil for an entire year.
So, this shows that our model is wrong. I think what is needed is flexibility so that Caixa's technicians have the agility to face the competition, which, obviously, today we have a completely different market than it was in the past. Today, we have advances in online games, today we have advances in sports betting. So, if Caixa maintains this model, we will see this very timid movement of growth in Caixa Lotteries.
What a shame, isn't it?
A shame. Brazil deserves much more. Brazil needs much more. And Brazil can do much more. We have an average ticket price of around 15 dollars per capita in Brazil, which is absolutely ridiculous considering the market, its strength and what we are seeing here. We are in the first edition of ICE in Spain, with four pavilions absolutely full and Brazil being the reference for many of these suppliers. Everyone wants to be in Brazil. So, certainly, we can do more. Let's change concepts, let's change thoughts regarding lotteries in Brazil.
Source: Exclusive GMB
