How Rio’s illegal lottery came about

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How does one describe to a foreigner an institution as Brazilian as the jogo do bicho (animal game), a former zoo raffle that has existed for 125 years, is against the law and has become one of the biggest illegal lotteries in the world?

The question arose during an unpretentious chat, but it motivated political scientist Danilo Freire to investigate the subject in depth.

Using economic tools, he reached unprecedented conclusions about the informal rules and mechanisms of force that helped this illegal betting bazaar survive more than 30 governments in Brazil, from dictatorships to democracies.

Studies on animal game in the country were done, above all, within anthropology and history. Excellent studies, says Freire, but with a focus on symbolic aspects – such as the influence of dreams and everyday facts on gamblers’ hunches – or moments of the game at a given time.

“I tried to analyze the game as a capitalist enterprise because, first of all, that’s what it is. It was created to generate profit,” says the 34-year-old researcher who studied the subject for his PhD in political economics at King’s College London, one of the most prestigious universities in the world.

Rational choice theory – one of the economic tools employed by Freire – assumes that people think in terms of cost-benefit. They always try to improve their well-being, although they don’t make the best decisions all the time and cannot predict the future. But they do their best to increase their chances.

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Papers with old lottery results

“The animal game is a business, and it seems reasonable to me that bicheiros (those who run the games) are rational, and if they were not, they are unlikely to have accumulated the fortune and influence they have. They are people with good business skills and strategic thinking to negotiate, legally or not, with politicians and police, among others.”

Historical circumstances

The embryo of the animal game came in 1892, when Baron João Batista Drummond had an idea to attract visitors to his zoo in Vila Isabel, in Rio’s north zone.

The place had exotic species and beautiful views of the city but was missing people. Among the new entertainment suggestions for the venue, one stood out: a raffle.

In the morning, the Baron chose an animal from a list of 25 animals and placed its image in a wooden box at the entrance to the zoo. Those who participated would earn a ticket with a picture of one of these 25 animals.

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Entrance ticket from 1896, authorizing the visitor to participate in the raffle

At the end of the day the Baron would open the box and show the figure. The winner got 20 times the value of the entrance price – which surpassed, for example, the monthly income of a carpenter at the time.

“Being able to choose the animal was a great idea, because it made the game much more interesting. Eventually this made people start to interpret dreams, license plates and numbers, in very fun ways too,” says Freire, who also has a master’s degree in Political Science from USP and in International Relations from the Institute of Higher International Studies in Geneva.

The lottery was christened the animal game and soon became a craze – tickets began to be sold not only in the zoo, but in stores throughout the city. Repression didn’t take long – authorities criminalized the activity in the late 1890s, for the sake of “public safety.”

Freire points to four facets of late-19th-century Brazil that help explain the emergence of the animal game:

1) A growing urban population, excluded from the labor market;

2) The flow of immigrants with family networks that encouraged participation in commerce;

3) An increase in the circulation of capital, motivated by factors such as the abolition of slavery and nascent industrialization;

4) A weak judicial system regarding criminal repression.

“Cities began to grow, and the end of slavery and the influx of immigrants into the country increased the number of urban poor. The illegal market was the only income option for many people,” explains the political scientist.

“Even though the game was illegal, the law was never enforced very strictly. To this day the game is considered only a misdemeanor, a lesser crime (leading to four months to a year in prison). Thus, punishment wasn’t enough to frighten the bicheiros – profits offset the risk of being arrested.”

Modus operandi

In the animal game, each of the 25 animals corresponds to four numbers: from ostrich (01 to 04) to cow (97 to 00). There are different betting options, and the prize varies with the possibility of winning.

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Table of the first 15 animals

In general, your animal will win if the last two numbers of the thousand announced in the Federal Lottery correspond to the number of the animal. For example: if the lottery drew the number 3350, the winner is the rooster (49 to 52).

You can also bet on the thousand (the so-called “na cabeça” bet): choosing the four numbers and hope the four come out in the first draw. It is the highest move: usually paying R$4 thousand on a R$1 bet.

“The bicheiros try to expand their businesses and offer something that attracts gamblers. When a bet succeeds in one place, it will probably be copied by neighbors and tested in other markets,” says Freire.

The structure of the game has three levels of hierarchy. Bicheiros or note takers are the most visible face of the business: they sell the stakes with their notepads and stamps. Managers are accountants who take care of the bicheiros of a certain area, mediating contact and the flow of money to the bankers (also known as bicheiros), the financial elite of the game.

A study by the Getúlio Vargas Foundation estimated that the animal game raked in from R$1.3 billion to R$2.8 billion in the country in 2014 – a number that some considered underestimated.

In the 1990s, it employed 50,000 people in the city of Rio de Janeiro alone – Petrobras, for example, has 68,000 employees.

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A bicheiro’s bench in Rio

Sure to go wrong

But how has this business managed to differentiate itself from other illegal markets and become profitable in the long run? In theory, everything conspired to go wrong: who would give money to a wrongdoer and wait for him to pay it back?

“Those who win and don’t get paid cannot complain to PROCON (consumer protection agency), open a lawsuit or call the police,” recalls Freire.

In addition, raffles were held in hidden places (usually “fortresses”, the bankers’ HQs) and the practice was reputed to be a moral vice and had strong opposition from the Catholic Church.

The researcher identifies two mechanisms that have reduced the stigma surrounding the game: building a strong reputation for honesty and offering specific incentives to clients and employees.

Trust came with measures such as making the raffle results viewable to everyone (on light posts, for example), on-time payments and a fixed multiplier formula for the prizes – if a gambler wins the smallest prize, for example, he will receive 18 times his investment regardless of the amount of the bet.

“Every gambler already knows how much he can win. It’s easier for people to understand and leaves the bicheiro in a situation where everyone knows how much he has to pay,” says Freire.

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Paper with the game results

Since the 1950s, when the bankers of the animal game transferred their operations to “fortresses,” the drawings left the public eye, which could have reduced the trust and profits of the activity.

The business, however, solved this problem of “information asymmetry” by starting to use the winning numbers of the Federal Lottery in its raffles, hitching a ride on the credibility of the official betting trade.

Another strategy to create a good reputation, says Freire, was the financing of cultural activities, especially Rio samba schools.

“They give jobs to residents, generate profits for the communities, increase tourism in Rio and, of course, they become a national symbol”, says the researcher, who also cites the foundation of LIESA (Independent League of Rio de Janeiro Samba Schools) by animal game bankers in 1985.

“Samba schools began to receive state support in the mid-1930s. But the government intervened in sambas and parades. The animal game gave schools some freedom and allowed more elaborate parades and for schools to become more professional.”

Solving internal problems

The illegal business had to deal with problems common to any company: lazy employees, cruel bosses, cash shortages. How does one ensure, for example, that bankers don’t pocket gambling money? There is, of course, a threat of violent retaliation, but it isn’t something common.

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A notepad with bets

A more frequent tactic, says Freire, is the provision of “collective benefits,” such as private security provided by corrupt gunmen and police, small interest-free loans for unexpected expenses such as health care, and gambler tips.

“It would be as if the animal game bankers paid bonuses and shared part of the profits for employees to put in effort. It’s something that many companies also do,” he says.

There is also the risk of “bank failure” – when the business cannot pay the premiums, for example, in case of a very high bet. The solution to potential liquidity problems was “unloading”: smaller bidders get “insurance” by paying part of the bets to a larger bicheiro, who guarantees high bets if necessary.

“Banks and companies do the same thing with shared risk contracts, hedge and insurance operations. The mechanism is the same,” explains Freire – but the mechanism tends to enrich the more powerful bicheiros.

The animal game also grew in collaboration with public authorities. The political scientist says that these criminal partnerships have gained momentum during the dictatorship and have remained during the current democratic period. Politicians, for example, benefit from donations via caixa 2 (slush funds) and the bicheiros’ access to poor communities.

Open questions

After looking at the world’s largest illegal lottery for more than a year, Freire still sees issues that need to be further studied, such as the relationship between gambling and drug trafficking and between bicheiros in different states.

“Bicheiros came long before the growth in traffic. How do they share space? Is there more cooperation or conflict? It’s possible that they only share areas of influence and barely communicate, but perhaps do business, exchange information, and help each other when needed. Something that’s still unanswered,” he says.

And after studying the theme in depth, how does he see, for example, the Senate’s 2014 bill to legalize gambling in Brazil, including the animal game?

“I am in favor of it. If a person bets with his own free will, he can spend his money as he likes.” The argument that legalization would lead to addictions doesn’t seem convincing to me, what’s the difference between playing the game and the Federal Lottery?,” he asks.

“In addition, as the animal game proves, the fact that the game is illegal doesn’t stop people from betting. The State could even collect money from the animal game. One would just need to know if the bicheiros are interested in paying taxes, which I have my doubts about.” – Source (PT)

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