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Legalized by the Brazilian government at the end of 2023, betting on sports is anticipated to start this quarter or the following, pending the completion of licensing procedures by authorities. It appears like Brazil is about to overtake the United States as the next hot spot for sports betting.
Brazil is a huge prize even though its market isn’t as large as the US one. The legal gaming business in the United States is estimated to be worth $10.8 billion in gross gaming revenue (GGR) by betting data and analytics company Sportradar. With regulation, the estimated $2.2 billion GGR Brazilian gray market for sports betting might reach $5.4 billion.
Check out the latest sports betting odds available right now at Caesars.
“I think there’s a lot of opportunity in Brazil. The report is 140 operators are looking to enter Brazil with a $6 million (R$30 million) license fee and a local 20% shareholder requirement,” said Tom Waterhouse from Waterhouse VC to the media. Waterhouse is the principal at Waterhouse VC which is a fund that focuses on sports betting investments. “It’s going to be similar to the U.S., because it’s going to be a while before [sports book] operators make money because they’re going for a land grab.”
“It’s an opportunity which is driven by soccer,” said Sportradar CEO Carsten Koerl to the media, “Our CONMEBOL deal is very supportive. We are looking into strengthening this portfolio to attack Brazil for years.”
The legal sports betting market in Brazil has not yet opened: This quarter or the next, the government is anticipated to start issuing licenses. When it happens, operators will pay a tax of 12% on gross gaming revenue (GGR), and bettors would pay an income tax of 15% on net winnings.
Accordingly, Brazil’s rates are about in line with those faced by the American industry. With a 51% tax on gross gaming revenue and a state income tax for wagerers, New York has the highest taxes. With no state income tax and a betting tax rate of 6.75%, Nevada has the lowest rates.
In the meantime, it appears that the race for market dominance in the United States is coming to an end, with Flutter Entertainment’s FanDuel and DraftKings solidifying their positions as the industry leaders with over two-thirds of the market between them. To return ownership of the SI Sportsbook brand for sports betting to its owner, Authentic Brands, 888 Holdings is paying $50 million. Prior to now, 888 had set low expectations for achieving single-digit market share in the marketplaces for its SI brand. Businesses have given up in some states: WynnBet and Betr chose to let their licenses in Massachusetts expire this year.
Some companies believe that Brazil appears to be their best chance going forward. One of those companies is Super Group, the company behind the international brand Betway. Given New York’s high tax rate, the company avoided doing business there. Last month, during a call with investors, it showed off its outstanding global performance but was glum about the U.S. “The U.S. is proving tough,” president Richard Hasson said to the media.
Waterhouse said to the media that Brazil will not be easy for sportsbooks. “Regulated markets are quite similar. What we saw in the U.K. and what we’ve seen in Australia and the U.S. is they mirror each other in the sense there’s such a benefit to having scale and operational leverage,” he said. “If you haven’t got that scale, the cost of sales and the taxes take up too much of your gross win, and you haven’t got enough to spend on the user experience and the marketing to keep getting enough [bettors to the] top of the funnel.”
He went on to say that, “The interesting businesses that will make a lot of money in Brazil are existing operators that have got large databases already, affiliate businesses and local operators that can partner.”
Large betting companies have acquired smaller operators in other markets to gain a foothold; this is expected to occur domestically as well, given that the 20% Brazilian partner requirement forces foreign books to already have partners.
“Existing operators are going to make a lot of money, the sporting organizations, media rights—all of these things are going to balloon in price,” Waterhouse said. “It’s not winner-take-all, but … you either have to be very big or very, very agile.”Check out the latest sports betting odds available right now at Caesars.
