The Brazilian sports betting market is already busy with a large number of fans and sports fans, mainly football, which attracts more and more international betting companies to the country.
The Brazilian public, who follows and cheers for the national teams, is always looking for some way to ‘reinforce’ their passion with a ‘fezinha’ or a bet between friends, which has already become part of the culture of Brazil.
In view of the recent growth of sports betting in Brazil, the Financial Times, a renowned international newspaper, published the article “Gambling groups hedge their bets as Brazilian market opens”, which analyzes this evolution of betting in Brazil with international and local experts from various branch companies.
Read the Financial Times article on sports betting in Brazil in full
Brazilians in search of a “fezinha” for a long time had the odds against them. Due to a decades-old blanket ban on gambling, punters were mostly limited to state lotteries and scratch cards, horse betting on authorized lanes, or an illegal but widespread numbers game – the animal game – based on choosing different animals. .
However, thanks to a law passed in late 2018, anyone with an internet connection and electronic payment method in Latin America’s most populous country now has another officially sanctioned option: online sports betting.
The activity has taken off in popularity since it was legalized and is now estimated to collectively generate hundreds of millions of dollars for digital bookmakers. Entain, the owner of UK-listed Ladbrokes and Sportingbet, said this month that its betting revenues in Brazil more than doubled in 2021. Exact figures are not disclosed, but revenue of £259m, derived beyond its main markets from the UK, Europe and Australia, is “predominantly driven by Brazil”.
Peter Jackson, chief executive of Flutter, the world’s largest gambling group and whose Betfair brand also offers betting there, said the country presents “a very significant opportunity”.
The absence of regulation and formal license grants, however, has deterred some operators who are wary of legal uncertainty and costs, according to industry executives. For example, says one, “you have to do your banking outside of Brazil and then you are faced with exchange rates going up and down”.
But as the government in Brasilia races to craft rules for the nascent industry in time for a deadline set by the original legislation and the December soccer World Cup in Qatar, international gambling companies are eyeing Brazil as a major player. growing market.
The expectation is that a clear regulatory framework will open the door to new entrants, set standards and boost public coffers.
After liberalization by several US states, which allowed online gambling to help plug pandemic-induced budget holes, the South American country is touted as one of the next great frontiers. A population of 214 million people and the national obsession with football are attractive prospects for bettors.
Entain plans to apply for a Brazilian sports betting license “as soon as it becomes available,” said its senior vice president of US regulatory affairs, Martin Lycka. “It’s a very exciting opportunity and the regulations are finally getting there. As the global tax burden will be around 19 percent of gross gaming revenue compared to some European jurisdictions, the market will be more welcoming,” he added.
Mature European markets typically receive more than a fifth of gross gaming income – the amount retained by operators after winnings have been paid. In Greece, the tax rate is around 34% of the GGY, while in Italy it is 24%.
Bet365, another UK group that, like Entain, has Portuguese-language websites, is exploring setting up a company in Brazil and is recruiting local executives.
“In terms of legal gambling, Brazil is absolutely a sleeping giant,” said James Kilsby, managing director of the Americas at Vixio. “[It] has the potential to become one of the top five regulated markets globally, along with countries like the UK, Australia and then New York, Italy and France.”
The excitement has been fueled by progress in efforts to effectively overturn the gambling ban that dates back to the 1940s. Lawmakers in Brazil’s Chamber of Deputies recently voted in favor of a bill that would allow for bingo halls, casinos and hunting machines. -nickels, among other activities.
However, relaxed attitudes towards gambling are not universal. Far-right president Jair Bolsonaro has threatened to veto the legislation – although this could be overturned by the legislature – and there is also opposition from an influential caucus of evangelical Christians, who warn of the risk of addiction.
Several gambling companies, including some that operate digital platforms that offer betting to Brazilians outside the country, did not respond or declined to comment on this article.
For now, the lack of legal guidelines to go along with the 2018 statute that decriminalized fixed-odds sports betting means that many of the hundreds of active sites remain in jurisdictions like Gibraltar, depriving Brazil of tax revenue and jobs.
Data provider H2 Gambling Capital estimates gross gambling revenue (GRR) in this unregulated, offshore “gray market” reached BRL 1.98 billion ($400 million) last year. If regulations are introduced on schedule, it is estimated that the overall GRR in the first full year of legal sports betting in Brazil could reach R$3.7 billion in 2023, rising to R$5.5 billion in 2026.
The search for new audiences is evident on the soccer fields. Nineteen of the 20 clubs in the national first division have some type of sports betting sponsorship, whether lasting or one-off agreements, according to market researchers Ibope Repucom.
Last season, internet bookmakers took center stage on the jerseys of six teams, considered prime advertising real estate, more than any other single sponsor category. “They are becoming one of the main ones,” said Arthur Bernardo Neto, business development director at Ibope Repucom. Covid-19 lockdowns and restrictions have contributed to more people trying online gambling while stuck at home, he added.
Casa de Apostas, which sponsors Esporte Clube Bahia in the northeastern state of the same name, is one of the national brands. “Brazilians are learning to bet, we have a vast field of opportunities. The World Cup will bring a great increase in our activity”, said relationship manager Anderson Nunes.
As in the US, fantasy sports operators are also eyeing a move to sports betting once the regulation is signed. Nigel Eccles, co-founder of US gambling company FanDuel and president of Brazilian fantasy sports startup Rei do Pitaco, said it will be fertile ground.
“Their level of passion for football is off the charts. They follow many different leagues – Campeonato Brasileiro, but also Premier League, Copa Libertadores and more international stuff. I think in the long term it could be one of the biggest markets in the world”, explained Eccles.
However, an unresolved question is what kind of regulatory approach Brasilia will adopt. The two broad options are an authorization model with unlimited licenses issued to each operator that meets legal, financial and other requirements; or a concession scheme, where companies bid competitively for a finite number of licenses.
Neil Montgomery, founding partner of the law firm Montgomery & Associados, argues that the former can “be a great catalyst for growth”. “The best thing for the government is to work at scale and regularize as many operators as possible. I think this will generate more [tax] revenue,” he added.
Anderson, from Casa de Apostas, said he hopes that the new regulation will establish good practices and help to avoid gambling problems: “With the rules of the game defined, it will give more security to the consumer, for us operators and for the State”.
Even if a more permissive version is adopted, some believe that certain operators will not be able to meet the conditions or costs of a license, resulting in a shake-up in an industry that has around 450 sites. But the bigger players who can shoulder the burden see an attractive prize. “We’re excited about it,” Jackson said.
