iGaming Daily

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Empty promises and empty pockets, a tale that has struck Brazil in shock. Today in iGamingDaily we will discuss what happened in the state of São Paulo and a lottery bid that went wrong. I'm Fernando Nott, your host for today and I am joined to discuss this very interesting topic, this very interesting case with none other than Ana Maria Menezes, business journalist for SBC Noticias Brasil. Ana, how are you today?

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Hi Fed, I think Morgan excited. think I'm very interested in discussing this topic with you. It's a very important case for us and it could have some big repercussions. Yeah, definitely. But now let's jump right into the discussion. And first, let's thank Optimo, the number one CRM marketing solution for the iGaming market and sponsor of iGaming Daily. Big shout out to Optimo. And like I was saying,

00:57
This case has everyone and their mother on the edge of their seats as we hashtag wait and see how things develop. But let's take it from the top. Ana, why don't you explain our listeners what happened with Consortium Aposta Vencedora in Sao Paulo? OK, so in November of 2024, the Aposta Vencedora Consortium won the auction to operate the lottery services of the state of Sao Paulo and they placed a bid of 600 million reais.

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which would be around $100 million. And they were officially disqualified from the concession process after they failed to meet the extended deadline for the grant payment. And just to give you as an overview of this extension, the consortium was initially given 60 days and they were extendable by another 60 to make the payment. They didn't. And after that period, the government still granted an additional 10 business days.

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and even so the amount was not paid. And then the state had to call in the bid guarantee, which was a deposit of approximately 3.3 million reais that was made by the group because this amount was supposed to cover the auction costs. They had a bunch of time to pay it. They didn't. And then the disqualification decision was published in the state's official Gazette on Thursday, May 8th.

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And it's important to work with dates for this one because we do have a lot of dates. It was an investigational process. So please bear in mind that dates are useful. But also during the auction, it was questioned about the history of that money. And this is very important part. And who were the investors? To which Antonio won, and we're going to talk a bit about this. Antonio said that they would keep their names in secret. Antonio, one of the partners of the construction.

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They would keep their names of the investors in secret, but he would check if they were inclined to say who they were. And all those news were released to the public. And after that, SBC Notices Brasil got an exclusive interview with someone from the company who stated that, and quotes here, they were playing Shark Tank and they never had the money that they had made the offer and joined the bidding process.

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thinking that they would find investors without even doing market research." So this is a very serious statement, but made by someone in a high rank at the company to whom we talked to. And one of the biggest points here is that employees allegedly would be working under the assumption that the fee was going to get paid. So until the moment of this podcast, it didn't happen. They were disqualified. So yeah, that's the big overall fit. OK, so

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We'll go over the whole case, but keep in mind that if you are subscribed to SBC Noticias Brasil's newsletter, you will have read about this already. So make sure you subscribe to SBC Noticias Brasil's newsletter. And Ana, you were saying they were pushing the deadline over and over again. And actually Rafael Benigni, Secretary of Investment Partnerships for the States of Sao Paulo said, and I quote, we granted every possible deadline, including an additional one, which is our standard.

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but since they didn't pay, we are executing the bond and moving on to the second place bidder. Well, that's a bit of a spoiler ahead of what we are speaking in a while about what's next for this auction, actually. But some names involved in this case actually might be familiar to many people because there's...

04:37
a former official from a Portuguese government institution and also a former Brazilian government official as well. Yes. So I believe among the key figures that we should talk about of the consortium, we have to separate the consortium into two companies. Sabe Participações, the partner is Alexandre Emmanuel Ângelo da Silva. A lot of names here. We're just going to call him Alexandre.

05:07
He was the former secretary of planning, energy and lotteries at the Ministry of Economy. He held the post from 2019 to 2020 during the minister Paulo Guedes term under the former presidency of the ex-president Jair Bolsonaro. The other name is the Portuguese Fernando Eduardo Cabras Baix de Souza Afonso, another big name. We're just going to call him Fernando Afonso.

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He's the former president of the gaming department at Santa Casa of Lisbon. So the lottery of the Santa Casa of Lisbon from 2002 to 2005. And he became the CEO and president of the consortium himself. And he also worked with the same lottery department in 2011.

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to 2016. Oh, also, sorry, Fed. And as the investigation progressed, we learned that on May 16 of this year, 2025, Fernando Afonso told the ex-director, the person who we interviewed, who we're going to name Carol for this, that he was already on his way to Portugal promising that, quote,

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everything will be paid, meaning the salaries today, unquote, which as the time of these podcasts, it didn't happen. It didn't happen. Well, that's actually a very interesting part of the story. You can read, of course, on SBC News in Brazil, which is the testimony of this director, this Carl, whose name shall remain hidden. We were going to call him Carl for security reasons.

07:03
And well, she explained how they would allegedly pretend to be working on the whole thing. Like everything had already been paid for. Everything was already set for a post-avenced to actually operate, which was far from it, right? Yes. So in February this year, Carol was approached by Fernando Afonso and Alessio Emmanuel by both of them. We had access to those conversations.

07:32
And at the time she claimed that she was assured that the fee had been paid and that the operations were about to begin. And later, when she talked to us, according to her, the consortium had approached various directors to build cloud with commas between them and with quotes. And they would build cloud for the company and then lend credibility to the project, which she later suspected that was all just a front.

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And the first signs of inconsistency when she started working at the company emerged when the employees, although already working, were not giving formal contracts under Brazil's labor law, we call Selete. And Carol said that they would send absurd contracts for them to question and not sign. And apparently, they weren't allowed to engage suppliers or request budgets.

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That's when she found out that they hadn't even signed with the government yet. And she said, she told us and in quotes, that they had to spend the entire day reading the regulations and the public notice. Why? Because nothing we did could move forward since they weren't going to pay the fee, unquote. So a vendor as well being approached by the company who chose to remain anonymous said that whenever we asked Fernando or Alexandre anything, they would respond with the public.

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notice." And a quote again. Again, this is all the testimony of people involved in the Apostles of Vencedora who are working for them, director, vendors. So this role remains to be of course investigated by the authorities. we will see what happens. Hashtag wait and see about this very interesting case, which will continue to develop and was first to break on SBC News in Brazil. But we have given you guys

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our listeners a lot to think about, a lot to process. So let's take a very quick break here and we'll be right back with what's next for this auction in Sopop.

09:39
And we are back with iGamingDaily and this very interesting case with Apostle Vencedora with the lottery auction in the state of São Paulo in Brazil. And we now have to talk about the most important side of this story. You kind of have addressed it already here and there in the previous, in the first half of the episode. But what about the people that were hired to work for this consortium? Because you all of a sudden...

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are looking for a job, you see this offer, hey, this consortium is going to operate the lottery in Sao Paulo. You apply, you get the job, you're very excited. But all of sudden, it all goes down the drain. So what about these people? OK, so we only have the overview for it. And so let's just go bit by bit through that. Days before the consortium's disqualification, Carol, our source,

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confronted Fernando about her contract and the status of the bid. Because again, you're going to the job, you're waiting to do something and then you can do what you're supposed to do. And his alleged response was, if God wills it, you get paid. If not, you won't. So that was the answer to employees, allegedly, that was given in a meeting. And then actually the employees only learned

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of the official failure to pay the fee on May 7th with the publication confirmation on May 8th. So we're talking about a day to spare. You have to find out that you're without a job a day before the publication. And Carol added that even on the day that the official Gazette confirmed the disqualification, the HR representative was still sending her contract information to something that was not going to happen. And

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After the collapse, actually questions about the payment intensified and internally blame began to sort of circulate. The CEO reportedly pointed fingers at the compliance director and the accounting office run by Antonio Cesar Felix de Souza. Not the same Antonio that we talked before. The compliance director, however, denied responsibility and he claimed that he was pressuring the partners to pay the staff.

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but he did not respond to requests for comment at all. Actually, not Fernando Alexandre or this compliance director answered to any of our requests to talk to them. And again, this was, I don't want to put you in a tight spot with this, but how long was this going for approximately? Like how long were people working for? It's like two months or something, right? Yeah, depends on

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depends on the jobs that they had at the company. an example, Carol was approached in February as an example. She got her invite letter, invitation letter on March 5th, and this was all read and just like analyzed by our SBC News Brazil team. She had the invitation letter on March 5th to start working on April 1st.

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So we have here a big timeline, a big time of negotiations, of salaries, of all of that with other employees. However, we do not have the information precisely about the timeline when they were hired. We do have of Carol. So we see that it's a long time and she was hired as a director, so directly engaged with management and hiring people and all of that. And she never had the opportunity.

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according to her to do any of that because every contact would be cut from the beginning. And she also reported actually that meetings with companies and suppliers were cut off and that a weekly schedule presented by a consultant was in her words, quote unquote here, fake. And she also claimed that the HR manager and whose name was withheld for this, not only the podcast, but also for the article.

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liked the experience in the field and she once confessed that allegedly she wants confess that she was being structured to find loopholes in the regulations and that this would be the way they would operate. This is all according to Carol when she talked to us which is again a very serious statement about how the company would be working. Yeah it's very serious I mean companies do

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loop for loopholes to operate here and there to do some type of business or to find the best conditions for either hiring or working or something. But this is a government contract we're talking about. it's highly irregular. It's highly regular that they are actually looking for loopholes, actively looking for loopholes in this type of contract. yes, go ahead. I asked Carol,

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about when I asked Carol about these loopholes, I asked if those were loopholes to how to operate in the country and she told me specifically that the loopholes were to start working without paying the fee. So this is not just looking for a breach. If this is confirmed and it's going to be on the investigation,

15:21
If this is confirmed, it's something that could have other repercussions. So far, those are segments and they still need to go, again, as we said, under the process of the GDCRE process. So we're just going to have to hashtag wait and see if this is approved or not. So should this be proved through any of these misconduct, this alleged way of operating? Should it be proved?

15:49
What could happen to the people responsible for it? OK, so the disqualification of the consortium could trigger some legal consequences across different fields, initiative, civil, and also potentially criminal domains. So according to some legal experts that were consulted by SBC Inegices Brasil, this case could fall under Brazil's anti-corruption law, which allows for copyright

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liability. And again, we're going through some very hard terms for a Brazilian to say in English, but we're going to push it through. this Brazil, Brazil's anti-corruption law allows for corporate liability in cases where companies engage in public tenders without genuine intent to fulfill contractual obligations. And this law actually doesn't require proof of intent, only the occurrence of the offense. So

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we have this one option. And although the 3.3 million reais performance bond was executed, this alone does not rule out the possibility of further investigations into bad faith or fraudulent conduct. If authorities confirm that the consortium presented a bid without the real capacity to deliver the contract, it may be considered a violation of laws prohibiting fraud and unfair practices in public procurement. And we have the side of the criminal law.

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On the criminal side, this situation could also raise some serious concerns, especially with Brazil's public procurement law, which criminalizes fraudulent execution of government contracts, and the PENALCO defines fraud as deliberately misleading others for unlawful gain. So in addition to that, the case could also be treated as administrative misconduct.

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especially if intent to deceive or act in bad faith is established. And depending on how the fact unfolds, both the public prosecutor's office and oversight bodies could initiate some legal proceedings against those responsible, so the consortium, but also the split companies, Savi Participações and the other company, Axis 4B, was also part of the consortium.

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So we'll have to wait and see for how this judiciary side of the story develops. An incredible investigation by SBC Notices Brazil by Ana Maria Menezes. And make sure you subscribe to SBC Notices Brazil newsletter because you will be the first to read all the developments that come after this investigation and everything else that comes after. So make sure you are subscribed. But now to end this episode, Ana.

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Last but not least, what happens with the business? Because Apostle of the Vesedora is out. So who's going to take over? OK. So the SEP Luterius Consortium was the second place in the bidding process and led by the multinational IDT Global Services has been officially invited to take over the contract. And IDT already runs the Minas Gerais State Lottery. And they had submitted a bid of six, oh, sorry, of

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526.5 million reais for the state lotteries of São Paulo. And the state is anticipating raising 3.4 billion reais over the duration of the contract and it would be used for the healthcare sector as well, part of that money. And the concessionaire will have autonomy to decide on the products and sales channels using both prognostic and eastern lottery gains.

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Well, so that's a familiar name for the gaming industry and especially the lottery business that will step in in Sao Paulo in case IGT of course decides to actually take over. But yes, we'll be following real close how this whole investigation develops, how this story develops. And actually next Monday there's going to be news, right Ana? Yes. So next Monday we're publishing the second part of the story.

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And we're also bringing a compliance expert to tell us a bit more about how the consortium was able to place a bid of 600 million reais without proving that they actually had the money in the first place, allegedly. We're gonna talk to her about it and we're also gonna look into a bit more of what Carol told us. So about details of where they were working, if it's all according to law about capital and mean capital as in.

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money the company's had and all of that. make sure to check. It's going to be a nice second part for this investigation. this is going to be next Monday. So you have time. You have plenty of time to subscribe to SBC News Brasil's newsletter. So great job, Ana Maria Menezes and the SBC News Brasil team for covering this story. But that is all for this episode. Thank you very much, Ana.

21:01
Thank you very much, James Ross for producing this episode and a big shout out to Anaya MacDonald who's recovering at home. To our listeners out there, we'll see you in the next one. Goodbye.