Brazilian Congressional Committee Approves Lottery Funding Proposal for Disaster Relief Fund
The Finance and Taxation Committee of the Chamber of Deputies has approved Bill 5368/20, which authorizes the Special Fund for Public Calamities (Funcap) to receive the net revenue generated from a lottery draw every year within the category of numerical prediction lotteries, including Mega-Sena and Quina.
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If fully approved, the provision will remain effective for five years. The bill was proposed as an improved version of Bill 580/19, which was introduced in the Federal Senate.
Initially, the document proposed that 1% of all revenues from the lottery would be allocated to Funcap. However, in the new version, legislators chose the alternative model aimed at avoiding the reduction of prize amounts for the benefit of participants in popular national lotteries such as Mega-Sena and Quina.
According to the committee, the amendment aims to find a compromise between social funding and the sustainability of the Brazilian lottery system.
Reasons for Avoiding the Prize Reduction
The amendment is the result of the work of Congressman Paulo Guedes (PT-MG). As he said, reducing the prize amounts might decrease the attractiveness of federal lottery products.
“It is important to note that our model follows the model used for organizing lottery draws with the purpose of financing social purposes. The reduction of prizes could lead to a decline in participation in the lottery“, explained Congressman Guedes.
According to Guedes, in addition to increasing the attractiveness of the lottery game, the proposed model corrects financial inappropriateness found in the first version of the document. Under the approved model, the transfer to Funcap will be calculated on the basis of revenue earned from conducting one lottery per year.
The net revenue is determined as the revenue from ticket sales, less operational costs, payment of prizes to winners, and taxes due.
In this way, it will be possible to expand the scope of activities of disaster response agencies in the context of providing the funds required by expanding disaster preparation capabilities, without causing problems for other aspects of the lottery ecosystem.
About the Fund for Financing Disasters
The Special Fund for Public Calamities (Funcap) is intended to finance civil defense projects and measures in connection with emergencies and disasters occurring as a result of public disasters.
It is also designed to finance the necessary actions to address the consequences of public disasters, including the organization of assistance, rescue operations, reconstruction of infrastructure, etc. Brazilian officials began discussing the need for expanded financing of disaster response services amid a series of weather disasters in various states.
Under current legislation, a part of the money earned from the lottery goes to finance the activities of certain non-governmental organizations via lottery contests conducted annually.
Annually, institutions that receive revenue from a lottery contest include the National Federation of Associations of Parents and Friends of Exceptional People (Fenapaes), Brazilian Red Cross Society, and the National Federation of Pestalozzi Associations (Fenapestalozzi).
According to deputies’ opinion, the expansion of financing of disaster response activities through a similar mechanism would provide predictable resources for improving the existing disaster response infrastructure.
Further Actions of Lawmakers
The Bill is expected to go to the next step in the legislative process, the Constitution and Justice, and Citizenship Committee for examination under a conclusive procedure. After being approved there, the bill must be reviewed by the Chamber of Deputies and the Federal Senate to become a law.
In general, the discussion reveals the importance of gambling revenue as a source of financing social needs for the state authorities in Brazil. In many cases, revenues from the lottery and other gambling games played in Brazil often end up funding educational, health care, sports, and other social programs in the country.
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Source: BNL Data
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