Investors take notice
Jair Bolsonaro, the far-right retired military officer recently elected president of Brazil, has been called conservative in his values, liberal in his economic viewpoint, and no fan of legal gaming, which has been considered for years as a way to boost tourism and the economy.
According to Games Magazine Brasil, left to his own devices Bolsonaro “would maintain the current prohibition of casinos, online bets, bingos, jogo do bicho, etc. However, being a non-traditional politician, is a man who knows how to listen and does not close in his thoughts but evaluates what is best for the country.”
“What’s best” could at last include legal casinos. Brazil has been of great interest of U.S. 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 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.”
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).
Pro-gaming lawmakers may try to resuscitate a gaming liberalization package that proposes 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 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.”
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.
In the wake of Bolsonaro’s election, the BBC reported that Brazil “seems like one of the best bets for investors at the moment. While global markets have been experiencing sharp drops since September, Brazil’s stock market and currency have both soared 13 percent in the same period.”
His chosen economist, Paulo Guedes, has “promised a host of pro-market reforms: formal independence of the central bank, privatizations, reduction in tax exemptions to industries, tax simplification and pension reform.”
No word on previously unsuccessful campaigns to bring legal casinos to the country, but Guedes has said he is committed to bringing down Brazil’s budget from its current $37 billion deficit “to zero” in 2019 through spending cuts and other measures. Time will tell if a new integrated resort industry will be part of that mix, but SBC Americas reports that “pressure” to turn around Brazil’s economy may open the way for gaming.
Davis Hodge, partner and co-founder of Concordia Public Affairs Strategies, said, “Sports betting is being evaluated independently via the finance ministry and this will be the purview of Paulo Guedes. Brazil needs revenue and this is a guaranteed source, with next to no investment required on behalf of the state.” He added, “Ciro Nogueira, the author of the senate gaming bill, may be the president of the senate so we will see how this all shakes out.”
