iGaming Daily

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Welcome to today's episode of iGaming Daily. I'm your host, James Ross, and today we're diving into one of the most exciting developments in the global gambling industry, and that's Brazil's imminent launch of a nationwide regulated market. Just months ago, Brazil's government, led by President Lula, took a historic step by signing into law the regulation that will soon govern sports betting and online gaming across the country. As a result... This week, we've seen a flood of gambling license applications with over 113 companies racing to secure their place in what is supposed to become one of the largest gambling markets in the world. In this episode, I'm joined by Isadora Macanche, the senior journalist at SBC Notices CS Brazil, as we explore why so many companies are eager to stake their claim in Brazil, what challenges lie ahead for regulators and operators and what they might hold for this rapidly evolving market. Whether you're a seasoned industry insider or just curious about the latest in global gambling trends, there is a lot to unpack here in this episode. But before we do, Isadora, how are you doing? You okay? I'm okay, James. Thank you. How are you? It's good to be here with you again. It is good to have you here again. Thank you. I introduced you as the senior journalist for SBC Not to See Us Brazil, but I believe that title is either changing or has already changed. No, it will change in a while. Do you want to just inform the listeners of what that title will be soon? Oh, can I? Yeah. Okay, cool. Um, so I'm joining the relationships team now given the growth of the Brazilian market, uh, and by the way, that's going really fast and they needed, uh, Portuguese people in the house to be able to build these connections. So I'm really happy to be joining the team and to be working with Lucia Mourinho again. I'm. Really happy for your growth and evolution. I feel that you were really excelling that role. I am not happy to be losing you on the tutorial side of things. I'm going to miss that part too. I'm going to miss you guys as well. So yeah, I'm happy when I'm sad at the same time. I'll still make sure that we're going to be using you for the podcast. So for our gaming day listeners out there, you will not lose Isadora. Yes, please. Before we jump into the topic again, we're talking about Brazil who... are set to be one of the leaders in the iGaming space market wise. So it's probably right to mention another leader for the gambling sector and that is OptiMove who are the number one CRM marketing solution for the iGaming market. Listeners out there, if you would like to claim your first free month of OptiMove, you still can by visiting optiMove.com forward slash SBC. I will leave the links per usual in the description below. So. let's jump on to the topic today. And it has stemmed from those applications, the 113 or so that have come through, I believe it was just yesterday, but I believe now is time to kind of set the scene. So to truly understand kind of the significance of Brazil's upcoming gambling market, we need to start by kind of looking at the rapid evolution of its regulation, regulatory landscape. And this kind of stemmed just before the new year, I mentioned in my introduction, President Lula de Silva, he signed into law ordinance 14,790, no sorry, Isa, am I right with that one? No, yeah, yeah. We had the bill that was approved by the Congress and then sent to Lula to be turned into law. So we have the law 14.790 signed on the 30th of December last year. Mm-hmm. And this was? one of those pivotal moments that kind of set the stage of what soon we think will become one of the world's largest regulated gambling markets. Yeah, yeah, definitely. We were waiting for that for like, for the past five years, 2018. Yeah, 2018, the then president, Michel Temer, signed the law that legalized sports betting in Brazil, online sports betting. So we had a framework of four years to turn into a regulated market. And then we saw that happening last year. So it was like a big victory for everyone in the industry. Yeah. And once that happened, the, you know, the Brazilian government, they actually wasted no time in kind of making these swift changes to kind of bring their vision of this market into life. And in just a few months, Brazil has managed to put together its first technical framework or regulatory framework for federal online gambling. It covers everything from kind of self-exclusion to anti-money laundering protocols to even stringent, and I mean, they are stringent advertising rules. So, you know, with all these pieces in place, it's clear that Brazil is on the brink of something huge. But kind of given the rapid pace of the regulatory developments in Brazil is how do you kind of anticipate learning from now we know how many applications we've now received? How do you anticipate the market will kind of evolve over the next five years? Well, it's hard to say how it's going to be because we don't have official data. We don't have any official measures or anything yet to be able to see like, okay, we are in this spot right now and we're going to be in this place in the next, I don't know, five, 10 years. What experts that have been working in the industry for the past 20 years say is We will see the market growing five times. So we have expectations that say like there's a source that's the Statista Markets Insights says that the Brazilian market will grow, will be like the revenue worth will be one point five billion euros, which is insane. And I mean, it's understandable. It's a big new market. It's a market that everybody was waiting for to be regulated, like we said before, like for the past five years we were waiting for that. And right now, with everything happening so fast within a year, let's say, like actually was less than a year because the law 14.790 was signed last year in December. So in six months, the Secretariat of Prices and Bettings of the Minister of Finance could put in place. 12 law ordinances that we will see actually another one. I was talking to Felipe Rodriguez that is a lawyer within the sports law. And he mentioned that they just developed, he helped actually to create a new law ordinance on integrity, sports integrity and sports betting integrity as well. That it was very actually needed because we had the responsible gambling one. So we needed one talking about integrity as well. So we'll have in total 13 new law ordinances that regulate the market, which is great. So we mean included that working industry see that over the next five years, we'll see a very, I believe in the next year, 2025, we'll see a very much like a very rapid growth, like much more companies coming. But I think as the time goes by, we'll see less companies joining and big ones keeping their operations in Brazil as well. So we'll see, I think like a solid market. I think we'll solidify our industry here. Yeah, no, that's right. And I think... If we turn our attention now to kind of the companies that are actually lining up to get a piece of the action in Brazil, like we mentioned, there's 113 in total, which is a staggering number, because I actually believe they predicted around 40 or something like that. Is that right, Issa? Yeah, yeah, they predicted a very lower number of companies applying. Yeah, and what's also interesting, because we've both been through the list, is who these companies actually are. And one of the... one of those at the top of the list that we see is the Greek-based Kaiseng Gaming. They've wasted no time in submitting their application as early as May. Following that, there's other names like Betfair, The Stake, Meridian Gaming. They've thrown their hats into the ring. These are big players within the gambling space. Their early involvement really does signal What I think is actually particularly notable is that all these companies, I know it's kind of a requirement for them to do this, but they've all established their Brazil-based offices. And again, there's no small feat to do that. And that again, it signals their intent for long-term involvement within this market. when it comes to operating in Brazil, because they need to have an office, they need to hire Brazilian people to work for them, they need to have a partner that holds 20% of the capital share of the company as well. So, and Brazilian one, a Brazilian partner. So they have, I would say a longer road to establish their... their offices in Brazil and to be able to operate in Brazil. But it's nice to see that they still want to come. They still want to come. And we saw the next week, last week actually, Globo, which is the biggest TV channel in Brazil, just partnered up with a bad MGM group to, actually MGM resorts, to be able to provide this service in Brazil. Globo already owns Cartola. which is like, it is like a betting operator, let's say like that here in Brazil. It works a bit different, but it's still related to football and bets. And so we see the giant of the TV, of TV channels joining forces with a giant in the United States. So it will be interesting to see that happening in Brazil with this, this foreign companies coming. which can be a bit of a problem for smaller operators, but it's interesting. Yeah. And there was also kind of eyebrows raised over the amount of tax that was initially introduced. I believe we landed on 15%. I believe it initially was 30% or something along those lines. I'm gonna keep going back to you to some confirmation that you said it was around 30, wasn't it? Yeah, it was. It was 30% that the Congress decided to, actually to. for tax on winnings for the players, but fortunately they managed to reduce by half. So now we have 15% on tax, but there's something that when Lula signed the law 14.790 last year, he removed, actually he vetoed the part that said that players who earn up to $208 2,824 if I'm not mistaken, that is the tax assumption That we have here in Brazil They wouldn't need to pay 15% if they went up to this amount 2,824 but Lula Vito it so Actually every single player will have to pay tax 50% tax on every single winning which is a bit concerning for some associations in Brazil. They are not, actually this is the most concerning thing, I believe, right now, like from the law, not from the law ordinances, but from this Lula sign, because this could increase the power of market because if you win so little and you have to pay 15% on top of it. This might lead players to the illegal market, the illegal gambling, because illegal platforms don't have to pay taxes, don't have to pay anything. And the player wouldn't have to declare the amount that you earn, not even will have to pay. So, but I believe that with all the law ordinances that we have in place and all the ICE that we have right now in Brazil. it will be hard, very hard, to operate illegally here. At least in the beginning, I really think it will be hard. Mason- Yeah, I'm aware the National Association of Games and Lawyers have been quite... there are objections to these quite high tax rates. But as we've seen from the amount of applications that have come through, the 113, these companies, they don't seem undeterred by this. Like, it suggests, it suggests towards that. actually entering the Brazilian regulated market, the potential rewards for it far away kind of the risks from the eyes of these operators. But I do need to ask you because these are huge numbers and the sheer volume of applications from the original projection of 40. This is an unforeseen challenge for the Brazilian operators. Do you believe that they'll actually be able to review each of these submissions in time, not only for kind of the current deadline of, I believe it's mid-November this year, to approve or reject these applications, but even for the projected market opening of January 1st, 2025? Can they get through all of these? Honestly, I don't think so. Especially because they were presenting to receive 40 companies, 40 applications from 40 companies. I don't see them... I personally, I believe that we have two ways of doing that. If they managed to review every single application the way that they're supposed to, it won't be able, they won't be able to have them that done by the end of the year. But if they do actually review all the 113 companies that applied and managed to say, okay, this one is approved, this one is not. I don't think they did what they had to do in order to check every single requirement because it's a lot of information. It's a lot of requirements. It's not just like I'll send you some documents and that's it. It's not how it goes. We have 12 law ordinances, another one coming out. We have the law 14.790. And one of the law ordinances, actually the law ordinance number 827, stated that the companies once they submit their documents, because right now they are just applying, but they will have to submit a lot of documents as well. Of course, some of the companies that applied earlier are already sending documents and everything, but let's take this from August 20th, that was the deadline for the companies to apply to obtain a license this year. hypothetical situation that I think might become a reality. We all, we know when people, when operators submitted for a licence. So one of the possibilities that I could foresee happening is approving on a kind of a firs basis or maybe depending on the size of the company. And the market may open with a limited number of operators approved and then they'll attempt to then go through the latter submissions. I think that could be a hypothetical, but it does raise questions over kind of the future dynamics of the market with kind of an earlier access advantage because you could then see some operators kind of dominate it, kind of become the major player in Brazil because they've had more time to settle themselves in the market while the latter end of the submissions, shall we say, kind of run through. Again, this is a hypothetical situation. This has not been, this is not something that's been confirmed by Brazilian regulators. But I think that's possible, especially because this law ordinance that sets all the rules for operators to be able to operate in Brazil says that after they receive the documents, they will have the SPA, I mean the Secretariat of Prices and Embeddings of the Minister of Finance, will have 150 days to review all the applications. So, I mean, each application obviously. But... We ended the deadline on 20th August, like two days ago. And 150 days is like four months. And four months will be in December. So I'm not sure if they have enough personnel or enough systems in order to be able to review 113 licenses. It's a very... high number. But we also saw companies there that don't even operate yet. They're not even alive. We don't know who they're going to be or what kind of website they will have. So for sure, we're not going to see 113 companies being approved, but I don't think we'll see all of them review by the end of the year. So I don't think they will have enough time. is on the brink of its major transformation in the gambling sector, in the gambling industry. It's got a robust regulatory framework. We've just explained it's got a flood of eager applicants and it has the potential to become one of the largest markets in the world. No matter how we look at it, no matter how they deal with these applications flooding through, the future really does look bright for Brazil's gambling sector. But, you know, as with many kind of major changes, there are challenges to overcome. And the next few months will be crucial as the regulators go through these applications to approve and reject them to prepare for that market launch in January 2025. It's going to be interesting and I am going to be watching it with an eager eye. But for now, Isa, thank you for joining me on the podcast. Just to go through this today to the listeners out there, thank you for joining us. I hope you found this discussion kind of insightful into a clearer picture of what's happening in Brazil now because it is an ever evolving... um, story or situation. So please, if you want to keep up to date, follow SPC Not to See Us Brazil, subscribe to their newsletter, follow us on iGaming Daily because we will be covering everything as it breaks with Isadora Macancher. But apart from that, I've been James Ross. I've been joined by Isadora Macancher and this has been iGaming Daily. Thank you.