São Paulo Lottery Auction Attracts Proposals and Promises to Boost the State’s Economy

Proposals were submitted on Monday, October 28, and the final bidding will take place in November at the B3 headquarters in São Paulo. Competing groups include the Winning Bet Consortium, led by SAV Participações, and the SP Lotteries Consortium, led by IGT Global Services, which already operates lotteries in Minas Gerais.

The concession model has been organized for a 15-year contract, and, according to the bidding terms, the group offering the highest initial concession payment will win, with a minimum set at R$ 260.7 million. In addition to the initial fee, the concession project projects a total revenue of R$ 3.4 billion over the period, with anticipated annual returns benefiting the healthcare sector.

The idea of state lottery concessions has been under consideration since former Governor João Doria’s administration in 2021, but was interrupted by issues raised by the State Court of Auditors (TCE-SP), which pointed to weaknesses in the original concession model. Among the main criticisms were the superficiality of the economic feasibility study and insufficient technical qualification criteria.

Under current Governor Tarcísio de Freitas, the project was revitalized, with all technical aspects reviewed to avoid legal challenges. In June this year, Freitas signed a decree formalizing the auction, highlighting the project’s importance for economic development and public health. According to federal legislation, funds raised through betting activities will be 100% allocated to health programs, supporting social welfare and strengthening service infrastructure.

The "Loteria Paulista," as the initiative is called, will feature three main types of betting:

Specific Prediction Lotteries: Includes numerical and sports lotteries where bettors try to predict event outcomes.

Instant Lotteries (scratch-offs): A form of betting with immediate results.

Passive Lottery: Based on numbered tickets, where prizes are drawn according to the number of the purchased ticket.

Any other lottery type not specified by federal legislation or explicitly authorized by the State of São Paulo cannot be exploited. This model aims to ensure that the lottery system operates within legal boundaries and provides a high level of security and transparency for bettors.

The two proposing groups bring extensive experience in lottery operations and public sector partnerships. SAV Participações, which leads the Winning Bet Consortium, includes among its partners Alexandre Manoel Angelo da Silva, former Secretary of Evaluation, Planning, Energy, and Lottery at the Ministry of Economy, and Fernando Eduardo Cabral Paes de Sousa Afonso, former CEO of Jogos Santa Casa, one of Portugal’s largest lottery operators. Meanwhile, the SP Lotteries Consortium is led by IGT Global Services, a company with vast experience in the betting sector, operating in other Brazilian states and various parts of the world.

The experience of these consortia can be an advantage in executing services and developing an efficient and profitable operation for the state. Additionally, the expertise of those involved is seen as a guarantee of professionalism and rigor in implementing the new system.

São Paulo’s lottery market has significant growth potential, with annual transactions estimated at R$ 9.3 billion, according to 2022 data. The government estimates that 20% of this amount could be captured by the new concessionaire, especially after an estimated maturation period of around six years.

The winning company will also need to navigate a competitive market, vying for space against online betting platforms, which often operate without regulation in Brazil. The President of CPP (Companhia Paulista de Parcerias), Edgard Benozatti Neto, remains optimistic about the future of this market, highlighting the sector's growth potential and the possibility of São Paulo reaching levels seen in countries with developed betting markets, such as France and the United Kingdom.

Furthermore, to ensure that the operation is financially viable, the contract includes a variable concession fee based on the financial performance of the concessionaire. According to Benozatti, the state will be involved in key issues, such as combating gambling addiction, but will grant sufficient autonomy for the company to develop strategies and innovations to improve the sector.

The São Paulo government’s lottery auction is an important step for the state’s economy and the strengthening of the healthcare sector. In addition to generating jobs and attracting investments, the initiative will direct public resources to essential services, aligning public interest with private efficiency.

Despite the challenges in the betting sector, the new concessionaire will have access to an expanding market and the opportunity to implement an innovative concession model. If successful, the Loteria Paulista could serve as a model for other regions in Brazil seeking to regulate and expand their lottery activities, always focusing on economic and social development.