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A late rush of applications is expected as the clock ticks down to an August 20 deadline for established operators to step forward for a federal licence in Brazil.
As things stand, only 17 operators have submitted an application with Brazil’s new Secretariat for Prizes and Bets (SPA) in accordance with a May licensing ordinance.
Still, 11 of those 17 were submitted within the past week and seven within the past 48 hours.
“Of course, we anticipate a significant increase in the number of entities applying up until August 20,” said Fabio Ferreira Kujawski, a partner with Brazilian law firm Mattos Filho, during an August 9 webinar hosted by his firm and consultants Alvarez & Marshall.
It is not surprising that many operators have waited until the final days of the licensing window to submit their applications, as several key regulations were only published by the SPA at the end of July, noted Patrick Lopes, senior director of sport and entertainment at Alvarez & Marshall in São Paulo.
Lopes said industry observers are expecting as many as 50 to 60 operators to apply.
The August 20 deadline is not a hard cut-off date for applications for a federal licence to offer fixed-odds sports betting and online casino games across Brazil.
However, any operators currently doing business in Brazil that submit a later application would almost certainly have to pull out of the market for a period of time in early 2025, whereas those who step forward within 90 days of the SPA’s May 22 ordinance are guaranteed to receive a decision on their applications before a transition period expires on December 31.
The 17 applications submitted to date reflect the mix of both Brazilian and international brands that are ultimately expected to battle it out in the regulated market.
In the former camp are Brazilian entities affiliated with the Curaçao-licensed EstrelaBet, Betnacional, KTO, F12 Bet, Reals and 7Games. Other applicants include Playtech’s Brazilian strategic partner Galera.bet, plus leading Brazilian daily fantasy sports operator Rei do Pitaco.
Among the established international operators applying for a licence are local entities owned by Betano, Superbet, Entain, Betsson and Novibet.
Flutter also submitted an application on Tuesday (August 13) via its Betfair Brasil subsidiary, but CEO Peter Jackson did not exactly rule out acquiring another Brazil-facing operator during a second-quarter earnings call that followed a report by Next.io that the company had made an offer for Betnacional’s parent company, NSX Group.
Flutter is “reasonably well-placed” in Brazil through Betfair and PokerStars but would expect to be a top three if not the leading operator in every market, Jackson said.
“We’ve been able to do that organically in many markets around the world, but we've also often resorted to M&A, and we think that when we do that, we’re able to apply the Flutter edge and supercharge these businesses. So we will work out what we want to do in Brazil.”
Barriers To Entry
Other groups expected to make a move include major Brazilian media companies and larger US gaming operators.
The CEO of MGM Resorts reaffirmed his company’s intention to launch in Brazil during a recent investor call, having previously spoken of negotiations to establish a joint venture in the country.
In May, local media reported that MGM was discussing a partnership with Brazilian media conglomerate Globo. Earlier this month, the respected news magazine Veja reported that MGM was involved in negotiations to acquire established Brazilian betting brand KTO for around US$175m.
An MGM spokesperson declined to comment on the reports.
Veja also reported that DraftKings was examining possible acquisitions or partnerships in Brazil, although CEO Jason Robins was more circumspect on his company’s plans for Latin America during an August 2 investor call.
DraftKings’ focus remains on its core US business and it would not choose to expand in Latin America or in Brazil “organically”, to avoid any distractions from those US-focused operations, Robins told analysts.
“If we were to pursue it, it would be through M&A. That said, we don’t currently have plans to do that either,” Robins said.
What is apparent is that Brazil is exceedingly unlikely to receive applications from all of the 134 companies that formally expressed interest in a federal licence through a preliminary process held by the Ministry of Finance late last year.
That non-binding process came before the enactment of legislation and implementing regulations that have since set high barriers to entry that seem likely to deter at least some offshore operators and smaller companies.
Among other market-entry challenges, a five-year federal licence will cost R$30m, or roughly US$5.5m, upfront, with all operators required to abide by robust rules and standards on responsible gaming monitoring, financial transactions and prize payouts, plus many others.
Further, marketing tactics that various operators have used to rapidly grow their brands in Brazil over the past four or five years will also be curtailed by new regulations that will prohibit any welcome bonuses as of January 1 and set far stricter guidelines around the use of social media influencers.
The Brazilian market will ultimately look very different in 2025 compared to today, said Angelo Alberoni, Brazil country manager for Novibet and technical director for industry association IBJR.
Speaking on the webinar organised by Mattos Filho and Alvarez & Marshall, Alberoni suggested the market is likely to consolidate around fewer operators, with international companies having an obvious advantage in already complying with strict regulations in other jurisdictions.
“The idea is to have fewer [operators] that are qualified players,” said Mattos Filho’s Lisa Worcman, referring to the Brazilian government’s policy aims. “And to have a more controlled market.”
