Brazil Passes on IRs

On March 20, Brazil’s Chamber of Deputies failed to reach a consensus on the inclusion of integrated-resort language in a tourism bill. As a result, the gaming passage was dropped from the bill. It’s unlikely to put an end to the annual debate about gaming. The bill’s sponsor, Rep. Paulo Azi (l.), blamed the link with tourism for the defeat.

Brazil Passes on IRs

Different version of the bill could be revived

After months of buildup in which global gaming operators expected broader legalization of casinos in Brazil, lawmakers have passed a tourism bill that excludes integrated resorts.

The bill’s main sponsor, Rep. Paulo Azi, said there was “no agreement” among legislators on the casino portion of the proposal, language that would have permitted integrated resorts in two Brazilian states. The measure was added to the tourism package in February, despite pleas by deputies who wanted more than two IRs.

On March 20, the revised tourism reform bill sans casinos passed by a vote of 290-57.

Games Magazine Brasil reported that “a large number of parliamentarians” rejected the casino part of the bill. Some criticized its inclusion in the tourism legislation—Joao Carlos, Chamber of Deputies member for one, said the proposal would only benefit foreign gaming operators and would generate few jobs.

The market has been of great interest of U.S. operators, including the Las Vegas Sands Corp. Last May, Sands Chairman and CEO Sheldon Adelson huddled with President Michel Temer and other high-ranking Brazilian government officials in what was seen as a prelude to a business relationship around gaming. Rio De Janeiro Mayor Marcelo Crivella then told the O Globo newspaper Adelson was prepared to invest up to $8 billion in a Brazilian integrated resort.

“If you look at comparable numbers for gaming in that region, it’s clearly a market you need to pay attention to,” said Rob Goldstein, Sands president and COO at the time. “Adelson decided to have a look for himself and he was impressed with what he saw.”

And representatives of another Vegas-based operator, Caesars Entertainment, met earlier this month with Mansueto de Almeida, secretary of Fiscal Energy and Lottery Monitoring at Brazil’s Ministry of Finance, with the same kind of investment in mind.

For operators and investors, Brazil is a natural target. It’s the largest country in South America, with a population of more than 208 million. Revenue forecasts for land-based market have ranged as high as $20 billion per year, which could mean as much as $6 billion in taxes for the government.

Experts have called Brazil “global gambling’s sleeping giant,” with an estimated market value of more than R$18 billion (US$5.4 billion).

Pro-gaming lawmakers say this isn’t the end of the push for casino gaming in Brazil. They now hope to resuscitate a previous proposal that features a much wider gaming liberalization package, including casinos in multiple states, online gambling, sports betting, bingo and new lotteries.

Legalization of the industry is important, said Manoel Linhares, president of the Brazilian Association of Hotel Industry. Without it “there has been prevented the generation of revenues in the Brazilian economy and the difficult moment the country is in. That’s why the hotel industry supports the project, as it will generate taxes, jobs and attract more tourists.”

Linhares said gaming is a great way to develop regional economies and pointed to Las Vegas as an example. “Las Vegas has developed a lot and today is an icon with the best hotels, generating positive results for the country,” he said.

Manuel Gama, president of the Forum of Hotel Operators of Brazil espouses a more prudent approach to growth. “It cannot be something without limits that anyone can build,” he said. “We must make the few enterprises good enough to generate income in Brazil.”

Alexandre Sampaio, president of the Brazilian Federation of Lodging and Food, takes a different view. “The market regulates itself,” he told Games Magazine. “For Rio de Janeiro, the city with a strong tourist vocation, it would be great to approve.”