It took five years, but Brazil finally enacted a law to regulate sports betting in late 2023. Sports betting actually has been legal in country since late 2018, but former President Jair Bolsonaro spent his entire four-year term without taking any action to regulate it. It wasn’t until current President Luiz Inácio Lula da Silva signed into law regulations on December 30, 2023, that sports betting was finally made above board, opening the floodgates to what will undoubtedly be a lucrative new market.
As Tor Skeie, CEO of OddsMatrix, tells Gambling Insider: “We’re very bullish about it and see huge opportunities across all our product areas, including large sportsbook and casino turnkey deals, that involve multiple products and services coming together to launch or relaunch operator offerings. This includes online casino and sportsbook platform; sports data feeds; esports data and odds; affiliate management, and affiliate optimisation software and services; gamification; bonus and loyalty features and functionality; localised content and aggregation; as well as bespoke safer gambling tools and services that we have created for tier one customers and that have seen a spike in demand newly regulating and regulated markets.”
HUGE GROWTH EXPECTED
Indeed, the Brazilian sports betting market is expected to generate billions in annual revenue. And that is no surprise, given Brazil’s cultural ties to sports (and particularly football). Stephen Crystal, Founder of SCCG Management, tells Gambling Insider: “Sport is big in Brazil. No other country in the world has had the availability of sports on free-to-air broadcasts or digital platforms. Free-toplay games such as Cartola, or informal prediction games between friends (called ‘bolões,’ especially during the World Cup), were part of the sports fan journey for years, paving the way to the enormous amount of players that engaged with sports betting even before regulation. With regulation, sports betting will become even more a part of Brazilian sports culture, so I believe it can become the number one country in terms of the number of players.” Marc Crean, OpenBet’s VP LatAm cannot necessarily remember a sports betting regulation that was bigger. He points out that comparisons have been made to the US, but the “key difference” is that Brazil is being regulated at a federal level and the size of the single market is vast. Indeed, that’s a key differentiation. As Crean comments, it’s safe to say Brazil is set to become one of the most important territories for key stakeholders within the industry, such is the sheer scale of the user base.
He adds: “Ultimately, regulatory, and operating costs will have an impact on the market’s potential size, and it’s likely to result in fewer operators being active. However, we believe it will eventually rank within the top four markets in terms of size. Proposed costs of licences are in line with UK and US costs, and given the 12% GGR tax on operators, as well as 5% tax on bettors’ net gains, the market is likely to generate around R$3bn (US$160m) in revenue for the Brazilian Government each year.”
Skeie, meanwhile, is most excited about potential for growth in the Brazilian market. According to the CEO, Brazil ranks in the top three global sports betting markets alongside the UK and the US with an estimated 42.5 million unique users, while predicted market revenue growth is 20%+ year-on-year. “So, to say the opportunity is vast is an understatement.”
Like any market, however, Skeie warns that there will be downsides. For example, the current proposed regulatory structure is likely to be prohibitive for many, according to Skeie, with multi-million-dollar licence fees and GGR tax estimated to be 18%, plus other local taxes pushing the total tax burden to above 30%. “It won’t be for the faint hearted at least in the early stages.”
The need for a local product is important, but it also needs to be underpinned by regional marketing and operation initiatives, which are often overlooked by companies when entering a newly regulated market - Marc Crean
HOW REGULATION WILL HELP
Everyone Gambling Insider spoke to for this story said regulation would be a game-changer for the Brazilian market. Naturally, we are unsurprised! “I believe regulation will provide safety for big players to invest even more in the Brazilian market, “explains Crystal. “We have seen tremendous growth over the last few years, but it still has a lot of room to develop. Regulation will attract big domestic companies that were afraid of putting existing businesses at risk, as well as foreign companies that need a clear legal framework to commit to long-term investments.”
For Waldir Marques, WA.Technology’s Director of Regulatory Affairs, there has never been a better time to enter iGaming in Brazil. The future of the national gaming market is “very promising,” he says, with the eyes of the world attentive to continuous updates. Brazil’s legislative process towards regulation is a journey that encompasses and establishes the ability to guarantee a “transparent, safe and prosperous environment” for the industry with increased tax revenue for the Government, and generations of jobs and income for society.
Understandably, Marque points out that regulation is crucial to combating illegal gambling. He believes the improvement of standards and the implementation of regulations signify the good intentions of the Brazilian Government to develop a regulated and safe iGaming ecosystem, focusing on the integrity of sports, corporate social responsibility, and the prevention of money laundering. The optimism surrounding the regulation of sports betting in Brazil is not unfounded; Brazil’s deeply rooted sports culture and its young, tech-savvy population are the “ideal setting” for a thriving sports betting sector.
He continues: “As main benefits, we can highlight the application of the best international practices in the distribution of revenue from sports betting, significant attractiveness to potential operators, and improved potential for increasing revenue from this modality for the Government, resulting from the increase in transfers via social beneficiaries, such as social security and personal income tax, in the case of awards. For new companies entering sports betting in Brazil, the role of partnerships for operators and providers goes beyond regulatory bodies. Partnerships with local experts are essential. WA.Technology, for
example, collaborates with teams of local experts who understand the importance of differentiated markets. Along with external associates, teams should hire experts within their own organisations who have a grounded understanding of the finer details, underlying needs, and strategies to meet those needs. These alliances optimise player engagement and retention potential This collaborative approach has helped many of Brazil’s most prominent names succeed and strengthen Brazil’s attractiveness as a premier destination for sports betting operations.”
Naturally, the journey towards regulation will have its challenges. Transitioning to a regulated market requires extensive management to ensure companies align with legal standards. Brazil can achieve this success by establishing a comprehensive regulatory framework and a respected, knowledgeable, and experienced regulatory body to oversee its implementation. Marques adds: “If iGaming companies follow regulations and brands choose their partners wisely, Brazil’s sports betting market will offer abundant opportunities for expanded success. Regulation attracts investors, companies, and actors. Brazil’s regulatory progress is just the beginning of its success in the sector; The power of sports betting is now a driving force in the heart of Latin America."
Operators are “hungry to launch” in Brazil, according to Crean of OpenBet. He believes the proposition is an exciting one and a market that is definitely a potential growth area for OpenBet. “Given this diverse country’s renowned enthusiasm for sports, and football in particular, and considering our existing presence in Brazil through our agreement with Play7.Bet to power their new offering, we’re excited to see how the market develops. We continue to hold positive and advanced discussions with other operators looking to launch within the country’s new regulated framework.”
We have seen tremendous growth over the last few years, but it still has a lot of room to develop. Regulation will attract big domestic companies that were afraid of putting existing businesses at risk, as well as foreign companies that need a clear legal framework to commit to long-term investments - Stephen Crystal
BRAZIL’S HISTORY WITH GAMBLING
Brazil and its people have a long relationship with gambling. In the 1940s, reportedly 70 casinos operated in Brazil, employing more than 60,000 people. But in October 1941, then-president Getúlio Vargas enacted Decree Law 3,688, which declared all games of chance, except federal lotteries and horseracing, misdemeanors. Licensed casinos later got reprieves from their death sentence due to another law enacted the following year. But a few years later, Vargas’ successor, Eurico Gaspar Dutra, took casinos out entirely banning gambling (and the Communist Party) in 1946. In the ensuing decades, gambling faced social stigma in Brazil, but apparently remained popular, at least informally. “The Brazilian betting market was shaped over informal games between friends for many years,” reflects Crystal. “The penetration of social platforms and communicators in Brazil is bigger than anywhere else on the planet, so I expect that Brazilian players will demand more social features than what is available on the market right now.”
Crean, meanwhile, believes Brazilians’ love of sports should propel interest in sports betting. He says: “The country’s obsession with football will inevitably see the sport rank as the biggest betting opportunity. Naturally, it means popular products like BetBuilder will resonate with a wide audience and become an imperative component of the sportsbook offering. Elsewhere, mixed martial arts are extremely popular in Brazil. We are in a unique position to offer the industry’s first UFC BetBuilder product, demonstrating the power of the Endeavor network. Engagement levels with LatAmfacing operators for the product have been very impressive and we expect this to grow as we roll the concept out in Brazil’s regulated market.”
Still, there’s much to be learned about the Brazilian player. Skeie tells Gambling Insider that the market is still gaining insights into customers, but what has so far been discovered is that a significant portion of sports bettors see themselves as experts and bet to make a living. For those who were active in the UK market 12-15 years ago, this will ring a bell.
“Given this, pushing a one-size-fits-no-one product onto these bettors will not drive-up retention rates,” says Skeie.”
At EveryMatrix (Odds Matrix’s parent company), we’re concentrating on developing automated.
solutions that enable operators to treat their customers as individuals. For instance, our AI recommendation banners ensure that when customers visit the sportsbook, they immediately see recommendations based on their past betting activity, ensuring a fast and seamless experience. We’ve also observed that, besides football, basketball and volleyball are popular sports for betting.”
THE EMERGING MARKET
Already, operators are studying the Brazilian market, trying to determine how it will differ from other sports betting markets across the globe. Indeed, according to Crean, understanding that Brazil is a unique territory is very important. He believes the country’s cultural, social, and economic dynamics will have a significant influence on the types of products, operations, and marketing activities the industry develops. Key trends such as the unprecedented consumption of social media and capillarity of Brazilian industry will drive innovation forward.
He explains: “The need for a local product is important, but it also needs to be underpinned by regional marketing and operation initiatives, which are often overlooked by companies when entering a newly regulated market. With a proud heritage of entering new sport betting markets for over 25 years, OpenBet is well positioned to have a strong presence in Brazil.”
Crystal, for his part, sees the market as not all that different from others worldwide, although he acknowledged that marketing to Brazilian players will have to be different. He sees a “very commoditised” product offering between platforms currently available in Brazil. According to Crystal, differentiation comes only in terms of marketing and bonus offerings. That is another principle that will ring a bell with those familiar with the UK market... As Brazilian sports betting evolves, consumers will demand more differentiation in terms of product offerings, and Crystal believes that those who understand the “extremely social” nature of the Brazilian audience and its need for social entertainment will capture more value, both in terms of market share and loyalty.
The Brazilian sports betting market is expected to generate billions in annual revenue. And that is no surprise, given Brazil’s cultural ties to sports (and particularly football)
CLOSING WORDS
Skeie expects the Brazilian market to develop much like other markets have – in its own way. Like bonzai trees,
admittedly a lesson told in the Karate Kid movies... “It’s a similar story to many other emerging markets; localisation and understanding the culture and players is key; being 110% ready for compliance and adaptable to regulatory changes is vital; and having experienced ‘boots on the ground’ experts who speak the language, who can operate in the same time zone and who are connected to the right people is essential. This is further heightened in Brazil as many either simply don’t understand LatAm as much as they think they do, are not prepared for compliance or the costs involved, or they don’t have the expertise in place to manage operations locally.”
However, Skeie warns that, while many providers talk about their excitement for Brazil and Latin America, the majority “are simply not ready.” The key to any rapidly regulating market is simply to be fully ready, the CEO remarks. And, indeed, there is plenty to be ready for, as all of our contributors have noted. Bem vindos ao carnaval.
