Brazil has recently forged ahead with a structured digital sports betting and iCasino market, opening up a new frontier for major U.S. players like DraftKings and MGM.
Global Expansion
In 2018 Brazil relaxed its online gambling laws and subsequently its status in the gaming community has spiraled upward to where it now sits among the top 10 markets in the world. This has caught the attention of over 130 international gaming companies exploring the possibility of operating in Brazil’s freshly fertile market.
Griffin Finan, Senior Vice President and Deputy General Counsel for DraftKings, wrote in an email, “We are excited to see Brazil pass online gaming legislation, and as one of over 100 companies who submitted non-binding expressions of interest, we are continuing to explore the potential of expanding into Brazil in the future.”
MGM CEO Bill Hornbuckle stated in an earnings call in February that he was going to explore a joint venture in South America with Brazil being a possible destination. “Brazil is going to put Internet gaming in play for both casino and sports betting, and we plan to be there when that launches,” Hornbuckle said.
Shifting Sands
There are over 1000 small gaming operators in the untamed and unregulated gaming market in Brazil, many of which will be adversely affected when regulations are installed along with lofty license fees expected to run somewhere in the neighborhood of $5.9 million with a 12% tax on gross gaming revenue.
Speaking of gross gaming revenues, they are expected to reach $5 billion within five years, which makes it an attractive market for all global players. The proposed regulations will also mandate that companies maintain a physical presence in the country, which will formalize the market and bring along with it more jobs and additional tax revenue.
Wesley Cardia, President of Brazil’s National Association of Games and Lotteries, views this development as a natural progression towards a more structured market. “It’s one of the biggest markets in the world, and as it gets regulated and becomes a formal market, it allows companies to enter and better explore the system,” Wesley said. “And when you take those small and not well-regarded websites out of the market, you aggregate consumers to the big ones.”
Bet.com
As part of formalizing the mobile sports betting and iGaming market, the Ministry of Finance in Brazil has begun exploring a specific internet domain ending in either .bet or .bets, which would only be available to approved online betting sites registered in the country.
It has been reported that 15% of Brazilians have either bet or have expressed an interest in betting, which would only increase once the arrival of major gaming companies began to advertise to the general public. A 12% tax on gaming companies, coupled with a 15% tax on customer winnings, would generate untold wealth for the Latin American nation.
Industry Leaders Join Forces
And on what could be a related note, seven major U.S. online players including BetMGM, bet365, DraftKings, Fanatics Betting and Gaming, FanDuel, Hard Rock Digital and PENN Entertainment launched the Responsible Online Gaming Association (ROGA), a trade group designed to reduce problem gambling.
Those seven companies represent 85% of the online sports betting and iGaming industry and have collectively pledged $20 million to the organization. Dr. Jennifer Shatley has been tapped to serve as ROGA’s full-time Executive Director.
Dr. Shatley said, “I am humbled, honored, and excited to be selected to lead ROGA during this important period of growth in legalized mobile gaming. Many of America’s largest legal mobile gaming operators will be establishing a framework that helps to aid in responsible gaming education and awareness. Together, our members will work alongside researchers, experts, regulators, and stakeholders to promote responsible online gaming and maximize our efforts to support additional responsible gaming education and awareness.”
“By coming together with a clear set of objectives, ROGA and our members will work to enhance consumer protections and help provide easier and more efficient access to responsible gaming tools for consumers to enjoy the entertainment of online gaming,” she added.
