Rio Governor Stumps for Gaming

Governor Wilson Witzel (l.) of Rio de Janeiro is asking the Brazil government to finally legalize gaming to generate much-needed new revenues. Witzel says Rio will hit a financial wall in just a few months without some help.

Rio Governor Stumps for Gaming

Investors already interested

The governor of Rio de Janeiro, Brazil, Wilson Witzel, isn’t mincing words about the financial fail that could await the state without a new source of revenues. According to Games Magazine Brasil, Witzel is asking the Brazilian government to finally move on legal gaming to ease the country’s financial crisis.

“If we keep up the pace, without making any contingency measures without negotiation, we will arrive to July without money,” Witzel said at the inauguration ceremony of the new state attorney general, Marcelo Lopes. “We have a deficit of more than R$8 billion (US $2.15 billion), remnants to pay of more than R$11 billion (US $2.95 billion), and we need to act. We need to charge for the eviction, we need to collect the active debt. We need to commit ourselves.”

Brazil has long been of interest of global gaming operators including the Las Vegas Sands Corp. In May 2017, Sands Chairman and CEO Sheldon Adelson met with then-President Michel Temer and other high-ranking 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.”

Representatives of another Vegas-based operator, Caesars Entertainment, met last spring 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. Casino News Daily has called Brazil “global gambling’s sleeping giant,” with an estimated market value of more than R$18 billion (US$5.4 billion).

Under new president Jair Bolsonaro, pro-gaming lawmakers may try to resuscitate a gaming liberalization package that proposes casinos in multiple states as well as online gaming, sports betting, bingo and new lotteries.

Legalization of the industry is important, said Manoel Linhares, president of the Brazilian Association of Hotel Industry in March. 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.”

Guedes has said he’s committed to eliminating Brazil’s current $37 billion deficit “to zero” this year through spending cuts and other measures; that level of debt may make legal gaming an easier sell in the South American country.

“We are committed to passing legislation that allows for the installation of casinos in the state of Rio de Janeiro,” Witzel affirmed. “We also have here spaces to host casinos and there are opportunities for that. Just fine-tune the control mechanisms and there will be no problems at all. Certainly, the state will greatly win and will benefit from it.”