Has the coronavirus pandemic accelerated the gaming market in latam?
Ales Stefancic: From March 2020 until now, the gaming industry in LatAm is more or less closed, especially from a land-based perspective. Consequently it’s not possible and even unappreciated, to predict the near future in the gaming business. Together with our distributor Rosana Humar, we are taking care about customer support, as the land-based sector recovers in the region.
Alessandro Fried: The Covid-19 pandemic has brought to light several kinds of uncertainty, but one trend has become clear: it has vastly accelerated digital adoption. This has been a common denominator in all industries across all markets, with iGaming being no exception. Substantially the pandemic has reshaped consumer behaviour and business operations, with online no longer being an option, but a necessity for brick-and-mortar based operators.When it comes to Latin America, the effects that the pandemic has had on consumer behaviour towards digital commerce have been dramatic. For instance, MercadoLibre, which operates online marketplaces dedicated to e-commerce and online auctions across basically the whole of Latin America, has registered a 100% year-on-year demand in the early weeks after the onset of the pandemic. This shift of demand towards digital is likely to continue in the years to come across all industries.
Eddie Morales: If we talk about an acceleration in terms of the casino vertical and other alternatives to sports, in which I would include BetGames, then I would certainly say an acceleration has been evident. This is of course first ‘thanks’ to the absence of sporting events last spring, but more importantly from the direct growth of the online channel, which has been driven by the Covid-induced lack of retail and the perspective of short-term future regulations. The necessity of more regulation in order to collect more taxes and balance the economic loss of land-based businesses and other factors of course has influence on this rate of growth too. But in markets like Colombia, this has not been a hinderance for most, and we’ve seen plenty of firsts there in 2020.
Dmitry Starostenkov: Of course it has, as anywhere in the world. Both operators that were already working before the pandemic, and the newly launched projects are experiencing rapid growth at the moment, as long as the restrictions are still in place in the main markets and land-based casinos are closed. Historically, Latin and South America always were actively gambling, and that didn’t change.
Is regulation and legislation moving quicker as a result in unregulated countries, with the need to generate tax in the current climate greater than ever?
Alessandro Fried: Throughout these past years, LatAm has been garnering a lot of attention, especially with many countries in the region opening up to legalising their local online gambling markets. I dare say that in the past months the pandemic has played an important role in quickening the pace towards mass regularisation in the region, with countries looking at the positive impact that Colombia’s legislative framework has had on the local industry, also from a tax revenue perspective. Currently Brazil is generating a lot of expectancy. The Ministry of Economy has been working to implement a law, which was enacted in December 2018, for online fixed-odds betting. And while still in the early stage of regulation, Brazil is expected to propel itself as one of the largest online gaming markets on a global scale. The same could be said when it comes to Argentina, with the province and capital city of Buenos Aires having set in place legalised and regulated online gambling. In Peru a legislative proposal has been developed and is expected to be introduced in the coming months. In Mexico, fresh news is also expected regarding the regularisation of its online market, with a bill having been stalled in the National Congress since 2014.
Eddie Morales: It would certainly seem likely that the regulation of new territories is set to become a reality in the next two years – at least on paper, with Chile, Brazil, and Puerto Rico being good examples. Hopefully we’ll see this materialise not only based on the rationale of collecting more tax, but also with the intention of regulating online gambling in a fair and transparent way, which will create an equitable environment for all.
Ales Stefancic: We have not seen this to be the case at all. The pandemic has meant closures across the land-based industry, not just in the gaming sector. Currently, all public services are partially closed across many countries in LatAm. This has meant all certification and legislation process is delayed when it comes to legalising forms of gambling, putting any regulation way behind getting ratified and slowing down the process.
Dmitry Starostenkov: Unfortunately, it is not. While we see, for example, a legislation disruption in the United States, with striking revenue and gambling tax numbers in New Jersey, Nevada and Pennsylvania, and more states introducing online gambling regulation, to the south, nothing has changed much yet. Brazil, the sleeping giant, is still sleeping, and in Argentina as well, the legislation isn’t moving forward despite the lobby. Some recent positive news from Chile gives us some hope.
What is holding latam back from becoming a flourishing gaming market?
Alessandro Fried: Regulatory aspects aside, it is a well-known fact that the region is characterised by a low penetration of credit cards. This is the primary reason why retail has been such a predominant factor in the region. Only now is the market registering strong shifts towards the digital, and adapting to a significant change in consumer behaviourism throughout the past months brought about by the pandemic. Nonetheless the market is playing catch-up, and more payment solutions are becoming available for operators to vastly reduce the digital transactional gap between operators and their players. More accessible electronic payment solutions, coupled with a strongly regulated environment, will definitely mark the step where the region will start shedding its emerging market label.
Eddie Morales: We’re looking at several elements that conspire to slow down LatAm’s market growth, starting with the lack of online regulation, which certainly hinders outside interest. There’s also an excessive dependency on retail and the use of cash, which covers a largely uncontrolled grey area. Arguably, this can also be further compounded by the fact that player value in the region is lower than other more developed economies where many more options to gamble legally exist locally, and with a tax return to the government that contributes to the economy. This is definitely a short-term view, however, as it’s a region with plenty of potential, especially after Brazil regulates the online channel, with brick-and-mortar casinos and other forms of land-based operations currently non-existent or illegal.
Ales Stefancic: Before the Covid-19 pandemic, the LatAm jurisdiction in general was a flourishing gaming market. From Panama to Argentina, we did a very good job in terms of a sales, support, development and service standpoint. However, the pandemic has had a severe impact on the retail sector, bringing operations to a standstill, which has stunted growth in the market that we would have seen if the pandemic had not taken such a hold.
Dmitry Starostenkov: It’s the enormous size of the black market in the first place. This is the consequence of slow regulation being introduced. As a result of the online black market activity, not only are the economies lacking taxes, but the players are also deprived of protection that would secure gambling addiction prevention and quality fair gaming. Now, they are facing a lot of fraud, which also harms the online gaming industry reputation in general.
Would you say the latam market is emerging or maturing?
Ales Stefancic: We believe the market is definitely maturing. We are expecting to be back to the market with the new developments once the Covid situation passes and we can see a brighter horizon in LatAm. That can allow us to present novelties for the market, and the region can get back to flourishing once again.
Alessandro Fried: Without any doubt, LatAm at the moment is a highly dynamic market, with mass regularisation across the region expected on the short to medium term. The pandemic has surely benefitted the shift towards a more regulated stance, with local governments now eyeing the opportunity that the online gaming industry keeps in hold, in terms of tax revenue for the state coffers and job opportunities.
Eddie Morales: The market’s come a long way but it’s still an emerging and, in many ways, unbalanced region. In my opinion, the regulation of Brazil, when fully deployed across all verticals and channels, will mean the start of a real era of maturity, and the ability to define the continent as one that is healthy and flourishing.
Dmitry Starostenkov: With so few countries offering full online gambling regulation, it’s still emerging. Yes, at the moment, the market seems to be more or less shared between the black market, international brands and several legally working local online gaming companies; but the situation may change fully. For example, if things are progressing fast in Chile, and the land-based casino brands are allowed to work online, they’ll seize a notable share of the local players, and the whole online gaming landscape in the country will be different.
What's your respective company’s plans for expansion in latam?
Dmitry Starostenkov: We are continuing to develop our Colombia-based online poker network throughout the pandemic, and it’s actively growing in the number of players. The market is quite specific for online poker there, since it’s almost fully mobile and there are few professional poker players, so it’s hard for users there to compete with European and American experienced gamers occupying most of the international poker rooms. So, if they have a choice, they prefer to use quality local poker rooms adapted for their needs of easy formats and entertainment. In addition to that, recently we have performed an integration with one of the biggest sports betting operators in the market, Apuesta Total.
Ales Stefancic: LatAm has always been a key market for us, and our brand name and products are well known for the last 30 years in the region. I believe that throughout LatAm, there is always space for expansion and that is something we are targeting in 2021 and beyond.
Eddie Morales: Colombia’s hot on the agenda for us, especially given that our games already enjoy the required certification that qualifies their eligibility for any operator in the market. Further afield, we hope to expand our current presence across other markets like Peru, Mexico, Chile and Brazil. This will include the certification of our products as markets newly regulate or amend existing legislation. It’s always our intention to capitalise on the locations that make the most business and regulatory sense for us.
In addition, we’re also preparing a new family of products that I’m sure will have a significant impact not only in LatAm but also worldwide. Hand in hand with that comes our plans to improve our current portfolio, with even more localised features and solutions; I can’t wait to show off what we’ve been working on. It’s an exciting year ahead for us.
Alessandro Fried: We have always been very active in Latin America, and nowadays we’re considered as the primary gateway for all operators seeking to expand their operations in the region. Despite the challenges and setbacks the entire industry has had to face due to the pandemic, we have put in place strategic partnerships with global betting powerhouses that will see us further increase our footprint in the short to medium term. Needless to say that at the same time, we are preparing ourselves for new market opportunities, which will further consolidate our position as market leaders in the region.