iGaming Daily

James Ross (00:02.064)
Welcome to today's episode of iGaming Daily. I'm your host, James Ross. And today we will be exploring a rather groundbreaking partnership between one of Brazil's most iconic football clubs, Flamengo, and its new sports book platform, Flabet. Could this be the start of a new trend for sports club across the globe? To help us break it down, I'm thrilled to have Isadora Macanche and Fernando Knott.

our experts on all things Brazil and Latin America. Welcome to the show YouTube. How have you both been?

Isa first.

Isadora (00:35.429)
Okay, ladies first then. I'm being very good and happy, excited about Lesbian as well. And I'm really happy to be here with FED again. It's been ages since we've done a podcast together. So I'm really happy to be here.

James Ross (00:49.808)
And he's come with a fresh new look.

Fernando Noodt (00:49.964)
Yeah, it's been a while. Yeah, it's been a while. I think I have been already on the podcast with my mustache, but it has been a while since we all three together did or recorded an episode. Like I've been hosting the Latin American episode. So it's good to be back as the power trio we are.

James Ross (01:11.0)
Definitely a power trio. And I wasn't talking about your mustache. I was talking about your, your lovely new spectacles and your new luscious volume filled hair, which I'm envious of.

Fernando Noodt (01:17.511)
yeah. Yeah. This, this, this, this haircut is just a, circumstantial, let's say, I might have, gone to the, to the, to the barbershop. I, if I knew, we were doing the, the, the, video, the video podcast, but, we have to, we'll just have to go with it. Like we'll have to run with it as it is. And, yeah, the, the, the glasses are.

James Ross (01:26.727)
you

James Ross (01:36.867)
No.

Fernando Noodt (01:46.89)
Also a new addition to my renovated look so get used to it people please and all funny comments are well received

James Ross (01:57.722)
I can't get used to it. I'm, I'm, I'm swooning over your fur. I can't go over it now, but I'm going to have to because there's only one, one love of my life right now. that is OptiMove. Number one CRM focused marketing solution for the iGaming market and main support of the iGaming Daily podcast for viewers, not for viewers, sorry. For viewers, if you're looking on LinkedIn, the social snippets there, but for listeners out there, if you still want your first three months of OptiMove, please visit optimove .com forward slash SBC. And as per usual, will link.

I will leave all the links in the description below. So away from Fur Fur's volume filter, let's get into the topic today. Let's kind of set the stage. And I'm to do that by kind of outlining the basics of this deal. and Issa, Fur, correct me if I'm wrong here, because you are the experts. earlier this year, Flamingo revealed its plans to launch Flabet in partnership with Pixbet, who are a licensed operator.

Instead of just being another sponsorship deal though, Flamengo is now becoming more of an active player in the Brazilian sports betting market and is aiming to bring around. I'm going to need you on this one for the Brazilian currency, 82 .5 million Brazilian currency. is that?

Isadora (03:13.15)
Yeah, hey ice. Yeah.

James Ross (03:15.036)
Hey, I guess, over the next few years. and what's kind of interesting about this deal or the structure of this deal is that Flamengo is operating under a brand licensing model. Issa, could you just break down why this is such a big deal and why it fits in with the Brazil's Fort Betting regulations?

Isadora (03:35.493)
Okay, so it's important to mention that this deal was only possible because PICSBET is licensed by Lotege, which is the state lottery of Rio de Janeiro. Because the federal law that regulates sports betting within the whole country says that a civil association, what Flamengo is, cannot be an operator or cannot request

James Ross (03:47.388)
Mm

Isadora (04:03.195)
and authorization to operate Flabet. So, HEO lottery actually says that you cannot, you don't have this prohibition in the real de Janeiro state lottery rules. So, this allowed PICSBET to actually propose Flamengo to create a sports betting site called Flabet.

James Ross (04:24.103)
You

Isadora (04:31.113)
which will be managed by PixBet, not by Flamingo. So Flamingo is doing what we say is that he's licensing the brand so PixBet can manage it. And of course, Flamingo will get profit from it. And it could, like you said, 82 .5 million BRL plus a royalty fee of 1 % of GDR as a performance compensation.

James Ross (04:41.137)
Mm

Isadora (05:00.937)
So actually, this is exactly what's happening. So that's only because of the state license, not because of the federal license, because PICSBET is not yet licensed by the federal government. They are waiting for an approval because they requested a license within the 90 -day frame period that we had.

James Ross (05:11.929)
Yeah.

James Ross (05:24.082)
Mm -hmm. And that included about 133 different license applications. So, 108, thought it was 133.

Isadora (05:28.489)
Yeah, 108. 108 in total.

No, actually we had 113 companies on the system, but we had duplicated companies too. So in total, we have only 108. Not only, we have 109 actually now because another one just applied last week. But the companies that applied within the frame to obtain a license by the end of this year was 108 companies.

James Ross (05:36.434)
113.

James Ross (05:47.419)
You

James Ross (05:58.768)
And that's why I always call you to my experts and not myself. Cause I will get information wrong and you will always back me up. Thank you very much. back on, back onto Flamingo and Pigspep because you've like you've already mentioned, it's important to mention the clear differences with the state law or state level license. But this is, this is uniquely different from other sponsorship deals. We've probably seen kind of around the world, not just in Brazil because the clubs traditionally just generate revenue through sponsorships.

Isadora (06:06.557)
Welcome.

James Ross (06:28.646)
Here at Flamengo, they've become more than just a brand that actively, like you said, participating in the revenue sharing from Picspert. But can I just want to your thoughts on this? Because you're a big sports guy like myself, and just looking into other teams within Latin America, not just Brazil, like, is this a trendsetter?

Fernando Noodt (06:48.15)
Now this is definitely new. This is definitely something that I haven't heard from any other club or any other sponsorship deal, even though the betting segment has been like very present in the football landscape, especially, of course, in other sports too, but let's focus on football or soccer if you are an American listening to this, but let's give it to football.

James Ross (07:11.762)
My man.

Fernando Noodt (07:12.524)
But yeah, yeah, yeah. But since the betting industry has been so present in the sport, you would expect to kind of hear something like this in some place else, but I haven't. Like this is completely new. I think it has to do, like Isa said, with the conflict with the lotercia and the federal regulation. I think that's a very unique aspect.

to the regulatory landscape that makes this such an interesting opportunity for PixBit and Flamengo to run this brand. And it makes a very, very great opportunity for Flamengo to make extra revenue because Brazil has been like taking off financially in comparison to other countries over the last few years, over the last...

decade or so. And it has quite an advantage from the amount of money they generate from TV rights, from sponsorship deals and everything. And this is taking that to the next level. And I think probably other countries, other clubs in other countries should maybe take a look into this type of deal because they might need to start

James Ross (08:38.044)
Hmm.

Fernando Noodt (08:40.482)
considering how to generate that extra revenue so they can keep Brazil in a reaching distance because they are, it's like the difference between Brazilian football and the rest of Latin American sport is abysmal, it's insane. And it has, it already was before this. And with this type of deal, I think Flamengo is getting a.

a very significant edge over first other Brazilian clubs and then after in comparison to the rest of Latin America to compete in in the Copa Libertadores for example.

James Ross (09:21.602)
Yeah. I cannot see teams within the UK, sports teams within the UK. I can't see this being a thing in our market. Our regulated market is too strict. And even when you look at football sponsorship within the country, it's becoming so tight when it comes to gambling. Even though it's kind of the bedrock, certainly beneath the Premier League and the EFL leagues, the English football leagues, it's kind of the bedrock of

Isadora (09:23.529)
you

James Ross (09:51.494)
keeping that pyramid alive and stable. But there's so much kind of restriction coming from the UK market now. So I can't see it happening here. Potentially not even in the European market, but definitely in like more of the Latam regions or, you know, the CIS regions potentially. It's interesting. And every single club around the world, no matter what is kind of chump and capitalize on fan engagement. And for me, this is kind of a great step for Flamengo and

teams within Brazil and Latin America where you can look to now do this in identifying kind of regulatory gaps. But how do you think this will affect the relationship between clubs and the supporters? Could betting now become an integral part of the fan experience moving forward in a different way? Because I know there's the relationship between football fans and betting is probably one of the closest connections you'll ever make and the strongest connection you'll ever make.

in terms of like being a parallel kind of identity, but could it become more of integral part of the experience moving forward?

Fernando Noodt (10:59.266)
Well, think so. I think so. Yes. I think if the club is directly involved with the vetting operation, definitely the fans from that club, this case Flamengo, will probably be closer to the segment, closer to the experience. They already are all across Latin America with different experiences that vetting brands do in each country with each club, like, I don't know, like CoolVet.

introducing Arturo Vidal in Colo Colo in Chile and making a whole experience out of it or Bettson in Boca Juniors with presence in some games outside the stadium giving away gifts or making it an experience besides or beyond the sponsorship deal of just showing in the shirt. But with the club being an integral part of the betting operation, I think.

James Ross (11:28.89)
Mm

Fernando Noodt (11:54.528)
It opens a whole lot of opportunities for, for not only the brand, which would be flabette or we can talk about PIXBET, which is going to be managing the operation and also for Flamingo to get the fans more involved because we all know that the betting experience helps like with engagement, like helps fans even, of course you are, if you are a fan of one team and you want to watch that team and you are already engaged, but if you

James Ross (12:15.75)
Mm

Fernando Noodt (12:23.79)
add the betting industry to that or a betting experience to that, you get more engaged as well because maybe you're waiting for something else to happen besides your team winning. But beyond the betting opportunities, think it definitely makes it a major... I can't visualize what type of opportunities this brings to Flamengo.

Isadora (12:52.027)
And also, only to, like Fer was saying, to narrow down the relationship with the funds, but not only the funds in Rio, but the funds in the entire country. Because as much as we know that Lotergi is a state lottery and can offer licenses for state operators, in the notice for accreditation, they mention only, they leave it actually ambiguous, and they mention that

the operators should be carrying their operations in the state, but not the players. So the players don't need to be based in Rio to access voters' betting sites that are licensed. So this creates like a problem, but a better exposure for PICSBET, not only in Rio, but in the country and for all the fans of Flamengo in Brazil as well, not only in Rio.

James Ross (13:49.394)
I'm going to stick to you there because we're going to kind look at the legal and regulatory challenges. And now kind of looking at a forward thinking strategy like this is, there are some legal challenges, especially like you've mentioned with federal regulations. Flamingo, just to reiterate, it is currently limited to operating in Flabet in Rio de Janeiro. But it has had pushback. And I believe it's the Brazilian Institute for Responsible Gaming.

All right, and saying that is they're arguing that Lotteche might be overstepping its authority. First off, do you agree with that? Is that something that you think they're doing? And do you think this is an issue other clubs will need to navigate around if they're going to try and replicate this model?

Isadora (14:37.779)
Well, based on the law, can say that Lotege is overstepping because the federal law said that all the operators and all the companies involved with the sports betting industry have until the 31st of December to be regulated. They have a period of time to adjust and to implement the new rules of the sector.

So when Luters wants to block everyone that is not licensed in Rio yet, Luters is overstepping the federal law and causing problems. But I'm going to say something here. From my point of view, this is a problem that the government created, that the federal government created when they legalized sports betting, they added lotteries to it. They said lotteries is a modality of sports betting, fixed odds sports betting. When you do that,

James Ross (15:27.779)
Mm

Isadora (15:33.065)
after a decision that the Supreme Court of Brazil did in 2019 saying that the federal government don't have anymore the monopoly of the lottery systems in Brazil and allowing states and municipalities to have their own lotteries and you add lotteries to the sports betting law.

You were saying, you created this problem, you know, you were saying that they create their own notice for accreditation and you were allowing them to decide whatever they want. So, Lotez is not doing anything against the law when she wants everyone in Rio to be licensed, but is overstepping the federal legislation at the same time, you know. So, but I believe that Lotez should wait until the 31st December to do something, know, until 1st January, actually.

James Ross (16:20.88)
Mm

Isadora (16:29.331)
to do something. Because from now on, from that day onwards, no illegal market should be able to operate in Brazil without being monitored and penalized.

James Ross (16:45.368)
So in this situation right now, do you think we're actually heading for a bit of a legal showdown between the state and federal authorities?

Isadora (16:53.703)
Sorry, say it again.

James Ross (16:55.42)
So from the Flamingo deal with Picsbet, do you think we're going to be heading into kind of a legal showdown between the state and federal authorities?

Isadora (17:06.119)
yes, we will. And the Minister of Finance already said that he's going to do something about not flabette, but he's going to do something about what L 'OTERGE is allowing their operators to do, which is operating the entire country, as long as they are licensed under L 'OTERGE, by L 'OTERGE. But they said they were going to do it. But at the same time, it's not that easy. It's not that easy to change something that you don't have autonomy to do it. Because L 'OTERGE has autonomy to do whatever.

James Ross (17:33.083)
Mm

Isadora (17:35.879)
L 'Oterre wants in their rules. And for the federal government to step in and do something about it to change the situation is not that easy. It involves a very lengthy process. It involves editing and creating rules that are not done by the same way that we do the other ones. Like you cannot just...

James Ross (18:05.81)
A lot more,

Isadora (18:09.49)
Yeah. You cannot just say that, OK, Luters, you cannot offer this kind of rule anymore. You cannot allow this to happen. It's not that simple. It's not as simple as editing a provisional measure or publishing a law. It's much more complicated because of this issue of the autonomy of the states. That once again.

James Ross (18:26.706)
Mm

James Ross (18:32.87)
Okay.

Isadora (18:33.577)
the federal government created this problem. So I don't think they saw this coming when they did that in 2018 when they legalized the industry back in the day, but that's basically what's happening now. Luterte is not doing anything exactly wrong, but is overstepping the legislation.

James Ross (18:51.152)
Mm

Fernando Noodt (18:53.738)
I think they jumped ahead of time, Lotej, because they, like you said, they should wait until the 31st of December and after when the industry is fully regulated at the federal level, because the federal government has been pushing federal regulation for a long time now. So they have been discussing this for a long time. And Lotej trying to block operations in Rio de Janeiro, I think it's

James Ross (18:53.873)
Okay.

Isadora (18:56.957)
they do.

Fernando Noodt (19:23.2)
it's a bit, it obviously clashes with that federal regulation. So I think what they've done wrong is like going ahead and jumping ahead of time and saying, okay, we wanna run our own thing and the rest of the country can run its own thing. But then at the same time, the federal government was discussing this legislation. I think they are going against the current here. They're going against the...

Isadora (19:46.899)
Mm

Fernando Noodt (19:52.344)
what the whole country is expecting to. So I don't see them winning this legal battle if they eventually decide to go on with it and challenge the federal government in the courtroom or whatever. And I think that this is eventually going to wash down and their efforts are going to eventually be a thing of the past. And yeah, in vain. And finally, the federal regulation and the federal model will eventually.

Isadora (20:15.325)
Be in vain.

Fernando Noodt (20:22.178)
be the one that's set in Brazil.

Isadora (20:25.009)
Yeah, especially because not only Lotergi, but every other state lottery can only offer licenses for operators because of the law that legalizes sports betting by the federal government as well. The federal government allowed them to do that. So I think it's a bit of good manners as well, to wait until the period of settling down and arranging everything is over so you can do something about it.

Fernando Noodt (20:47.063)
Yeah.

James Ross (20:56.49)
I was going to do a wrap up question, but I think we are out of time. I feel like it's a nice spot to leave. Issa, thank you for joining us. It's obvious that the biggest challenge now facing kind of the state and federal laws will be navigating the legal landscape. It's going to be interesting to see what happens. It'll be interesting to see if this then turns into kind of a national opportunity for other clubs in Brazil. I'm not going to say anything other than that, apart from

Watch this space, keep an eye on SPC Noticias and SPC Noticias Brazil, because we'll keep you up to date with all the latest developments relating to this story and anything else happening in those regions. Ysuffa, thank you for joining us and to our listeners out there, thank you and goodbye.