American betting giants target Brazilian market – 04/03/2024 – Market

Sports betting heavyweights like DraftKings and MGM Resorts are exploring entry into Brazil’s online gambling market, one of the world’s fastest-growing frontiers.

The country is leading a regional gambling boom that has followed numerous legalizations. Since it began loosening online betting laws in 2018, the country has flourished as one of the 10 biggest markets on the planet, with gross revenues that rival the totals of Spain and the Netherlands.

Now, sector analysts see the country prepared for even greater growth, after President Luiz Inácio Lula da Silva (PT), last year, sanctioned a regulation for the sector that establishes licensing fees and other requirements for companies that wish to offer fixed-odd sports betting and online casino services within the country.

DraftKings, an American company that pioneered online fantasy sports games, is among more than 130 companies with pre-registration of interest in a Brazilian license, according to the Ministry of Finance.

The list also includes MGM and Hard Rock, the casino operator owned by the Seminole Tribe of Florida.

“We are excited to see Brazil pass online gaming legislation and, as one of more than 100 companies that submitted the non-binding declaration of interest, we continue to explore the potential for expansion in Brazil in the future,” said Griffin Finan, vice-president. senior president and deputy general counsel of DraftKings, in an emailed statement.

Hard Rock did not respond to a request for comment. MGM confirmed its interest in Brazil in February, when CEO Bill Hornbuckle said during a conference call that the Las Vegas-based casino operator planned to examine a joint venture in the country.

Brazil will allow internet gambling for both sports betting and casinos, “and we plan to be there when that launches,” Hornbuckle said on the call.

But while some of the segment’s biggest brands look to Brazil, smaller companies are bracing for heavy consolidation in a sector that São Paulo-based analytics firm Datahub says currently includes more than 1,000 different gaming operators.

The new law requires companies to pay up to R$30 million for a license that must be renewed every five years, depending on assessments by the Ministry of Finance. A 12% tax will also be charged on gross gaming revenues. The cost can be very high for small operators, even well-managed ones.

“There are many serious players who will not be able to pay for this license,” said Darwin Henrique, CEO of Esportes da Sorte.

Brazil has emerged as an increasingly attractive market for foreign sports leagues seeking global growth.

The number of Brazilians who follow the American football league NFL has more than quadrupled to almost 40 million in the last decade, according to data from Ibope Repucom. The league chose São Paulo to host its first game in South America later this year.

Betting activity has seen equally rapid growth: in 2022, Brazil ranked 10th globally, with US$1.5 billion in gross revenues, after not appearing in the top 15 the previous year, according to Entain , one of the UK’s largest online sports betting companies.

The regulated online market’s total gross gambling revenues are expected to grow to nearly $5 billion in its fifth year of operations, according to Vixio GamblingCompliance.

The popularity of online betting has already attracted multinational companies such as Bet365, Entain’s SportingBet and Betfair, which is among the brands of Irish bookmaker Flutter. But the lack of regulation has prevented many foreign companies from formally entering the market.

The rules require companies to establish and maintain a physical presence in Brazil, and it is not yet clear which operators will decide to establish themselves. But industry leaders say the potential arrival of global giants — and any consolidation it could lead to — will be the result of formalization of the sector, not a deliberate attempt to drive out smaller competitors.

“It’s one of the largest markets in the world, and as it becomes regulated and becomes a formal market, it allows companies to come in and better exploit the system,” said Wesley Cardia, president of the National Gaming and Lottery Association.

“And when you take these small, little-regarded sites out of the market, you add consumers to the big ones.”

Even fearing that some will lose the race, operators who helped launch Brazil’s online gaming boom say they will not surrender, arguing that their knowledge of the local market will help them survive the arrival of richer multinational competitors.

“We are not afraid of competition, because we know the work we do,” said Henrique. “Brazil has many particularities and the Brazilian bettor is different from the foreign bettor.”