Zona de Azar Brazil – IGT , Scientific Games Joint Venture in Brazilian Instant Lottery Collapses
Brazil.- 07th October de 2020 www.zonadeazar.com A joint deal between International Game Technology and Scientific Games to oversee Brazil’s instant lottery scratch card business fell apart Tuesday when a Brazilian operator failed to authorize a contract by the deadline.
In a joint statement, IGT and Scientific Games said the Las Vegas-based companies and CAIXA Econômica, operator of the largest lottery retailer network in Brazil, “successfully completed contract negotiations after seven months.
“However, despite reaching an agreement on the final version of the contract more than two months ago, CAIXA failed to authorize its execution by the concession deadline, and our request for an extension of the process was not granted,” according to a joint statement Tuesday from IGT executive vice president Walter Bugno and Scientific Games President Global Strategic Accounts Michael Conforti.
The deal was originally announced a year ago and the two companies, which both operate large lottery divisions along with casino products, were expected to split $200 million annually through the contract.
IGT and Scientific Games had been required to complete the contract by Sept. 21 but were given an extension.
“Prior to and since receiving the award of the LOTEX Concession, the parties repeatedly informed the Government of Brazil that it was critical, to ensure the success of the national instant ticket business in Brazil, to have a signed distribution agreement with CAIXA Econômica,” IGT and Scientific Games said.
The lack of a contract left 13,000 Brazilian lottery retailers within the CAIXA network without a distribution network.
“The companies were not prepared to move forward,” said IGT and Scientific Games.
A year ago, gaming analysts had a positive reaction to the Brazilian lottery deal, which was viewed as one of the last major lottery licenses available for IGT and Scientific Games.
The Brazilian license was expected to run for 15 years and would be fully paid for in seven annual installments. IGT and Scientific Game would have paid 17% of total lottery revenue to the Brazilian government.
Meanwhile, Brazil’s Supreme Court ruled last week the federal government’s lottery monopoly was unconstitutional, paving the way for states to develop state lotteries for each of Brazil’s 26 states and one federal district.
“As a result, and despite being fully prepared to fulfill all of the financial and non-financial conditions precedent of the concession agreement, prudent capital management dictates that we withdraw from the process and re-evaluate the business case of implementing a lottery operations model in Brazil,” said IGT and Scientific Games in the statement.
The companies said they would explore a “possibility of re-engaging in the process,” if the Brazil government would consider an extension of the process for CAIXA to authorize and execute a contract.
The companies said there was a “high contribution potential of this venture to a number of government programs.”
IGT, long considered one of the gaming industry’s largest slot machine manufacturers, was acquired by lottery giant GTech Holdings in 2015 through a $6.5 billion merger. The companies kept the IGT name.
Lottery giant Scientific Games entered the casino equipment business through the acquisitions of WMS Industries, Bally Technologies, and SHFL Entertainment – which had been bought a year earlier by Bally.
Shares of IGT, traded on the New York Stock Exchange, closed at $11.51 Tuesday, down 25 cents, or 2.13%. Scientific Games, traded on the Nasdaq, closed $34.82, down $.63 or 4.47%.
Editó: @MaiaDigital www.zonadeazar.com
