CASINO NEWS
Legal experts compare the Lotex bidding models
T
his short article, comparing the instant lottery LOTEX’s bidding model to a concession model by the Brazilian government, has been authored
by lawyers Fernão Justen de Oliveira and Ricardo de Paula Feijó*. It relates to the imminent tender process, which makes necessary a debate on the possibilities of exploiting the lottery service in Brazil.
1. Concession and liberation Federal Law 13.155/2015, which created the
instant lottery in Brazil, provides that LOTEX is authorized by the Brazilian Department of Treasury and is operated by Caixa Econômica Federal (Federal public bank), directly or indirectly through a concession agreement. Therefore, the concession agreement is the scenario provided by the law to transfer LOTEX to the private sector. Furthermore, it is possible to change the law in
order to transfer Brazil’s instant lottery to the private sector entirely, enabling a free market operation without the need of a concession agreement. In this case, the State would only regulate how the LOTEX is operated.
2. Concession
The traditional method to transfer any public activity to the private sector in Brazil is through a concession agreement. This method was widely used in the 90s to allow infrastructure development in various sectors, such as ports, public transportation and railways.
The concession is granted by a contract (concession agreement) signed between the State (Granting Authority) and the private party (Concessionaire). This contract transfers to the private sector the right of exploitation of the public activity for a period of time according to the legislation. A bidding process or public
Fernão Justen de Oliveira
tender precedes this contract. In the concession of a public service, the State
remains the owner of the activity, transferring only the exploitation rights to the private sector. At the end of the term, the concessionaire has no right to continue exploiting the activity and it is necessary for a new bidding process to grant a new contract to whoever wins the new bid.
Federal Law 13.155/2015 provides that LOTEX can be awarded as a concession (article 28, 1), making it the legal option to transfer the activity to private sector.
3. Concession combined with privatization of Caixa Instantânea S/A
The State can grant the concession in the form that best suits its interests. In this sense, Brazilian federal law contemplates many solutions. One of these is the possibility to combine concession with privatization of a State Company. For this reason, Caixa Econômica Federal can sell
part of its subsidiary Caixa Instantânea S/A, which has the authorization to operate the instant lottery in Brazil. However, the sale of Caixa Instantânea does not mean that the instant lottery will be sold to the private sector. The private company that buys the State Company does not buy the rights to exploit the instant lottery, but the right of exploitation of the lottery according to the concession agreement.
4. Conclusion
Federal Law 13.155/2015 provides for the concession of LOTEX to the private sector. It is possible that this concession can be combined with the privatization of State Company Caixa Instantânea S/A.
*Fernão Justen de Oliveira, LL.M in Business Law and PhD in Public Law. Partner of Justen, Pereira, Oliveira & Talamini. Ricardo de Paula Feijó, Degree in law at UFPR. Administrative law specialist and Attorney at Justen, Pereira, Oliveira & Talamini
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