iGaming Daily

Ted (00:01.443)
On the 1st of January, the Brazil Bets market was launched, bringing South America's most populous and wealthiest economy

Ted (00:10.927)
Okay, sorry.

Only two you wanted on, apologies.

Ted (00:24.889)
Okay. Right.

Ricardo Assis (00:28.008)
And Anaya, it's gonna be 20 minutes as well or a little bit longer.

Ted (00:33.997)
Yeah, let's rift. One, two, we're recording now.

Ricardo Assis (00:34.061)
Okay.

Ted (00:47.096)
On the 1st of January, the Brazil Bets Market was launched, bringing South America's most populous and wealthiest economy into play for global gambling incumbents. Today's episode of iGaming Daily will review the nascent launch and rapid developments of Brazil's betting market. Tech and strategic insights will be provided by Chris Nicopoulos, Chief Commercial Officer of BetBee. Joining the panel

panel is Ricardo Assis, lead editor of SBC Brazil, providing on the ground perspective of Global Gamling's newest battleground. Hi, welcome. I'm Ted Memwear. And if I can introduce Chris Nicopoulos of BetBee. Chris, how you doing?

Chris Nikolopoulos (01:29.663)
Hi, hi Ted, hi Ricardo. Good to be with you guys, I'm great. I think we will have an interesting discussion about Brazil. I think the interest of all high gaming industry is in Brazil, not only now but over the last years actually. And yeah, there's a lot of very, very interesting stuff we will have to discuss today.

Ted (01:52.097)
And joining Chris, we have our man in Sao Paulo, Ricardo Assis, SPC Noticias' editor. Ricardo, how's things in Sao Paulo?

Ricardo Assis (02:02.222)
Hey Ted, hey Chris, really nice to be here with you guys discussing this important matter. Everything is fine, the weather here is kind of good today, but yeah, so let's go for it!

Chris Nikolopoulos (02:16.223)
Most of the time it's good in Brazil, right? At least I hope.

Ted (02:16.82)
Ricardo Assis (02:18.624)
Yeah, yeah, at least in this time of the year it's sunny almost every day.

Ted (02:26.485)
Okay, so I'm gonna start off with kind of my Western view of what's going on in Sao Paulo and how we're reporting on it from SBC. And one thing that shouts out, it's that it's frantic since day one, nonstop. So Chris, I'm gonna go over to you from kind of a commercial standpoint and from a strategic standpoint, is that necessarily a bad thing that there's a lot of market activity?

Chris Nikolopoulos (02:56.021)
I think that when we are talking about Brazil we have to understand that the culture is a little bit different from the culture that we have in Europe for example. For us in Bedby it is very very important to understand this culture and to welcome this culture and we can see this somehow playing a part also in the regulation. Yes, it was a little bit rushed, it was a little bit in a hurry even if it was being discussed for years. We all know that...

know the list of operators were announced just a few days prior to the regulation, right? The list of the operators who actually got the license. Everything happened in a frantic way, as you said. But at the same time, know, providers like us who already were working in the market and were confident.

sure that we will continue working in this market. We had already done our homework, I can say, so we're due to the hard work that we had already done with our compliance team, our legal team, our product team obviously, our account management team and so on.

As I said, as I understand and what we know also from our partners in Brazil, we need to embrace the culture, the difference of the culture in Brazil. People in Brazil are full of emotions and we can say that even the way they try to regulate something. So for us, already knew what's... I can't say we knew, but I can say that we have a lot of good understanding what to expect. And we were ahead in time and I don't think that it is a problem anymore.

course there are some things that will get normalized as time passes by but we already see that things are getting better and better and everyone right now knows more what to expect.

Ted (04:43.097)
So moving on to you Ricardo, can you provide kind of the observations of the player as the regulated bets market has come into play? mean, what's the first reaction on the ground in Brazil?

Ricardo Assis (04:57.262)
So, yeah, the regulation in Brazil, it's something that had to be done a long time ago because the baddie was legalized by Michel Temer in 2018 with a two-year deadline for the regulation to be implemented, but the deadline was not met. The regulation just occurred in December, in December 2023, and coming into effect now in January.

As a result, the market operated for almost six years without regulation, without legal constraints. The market became flooded with sponsorships and advertisements, most of which came from betting companies that are now regulated, it's worth noting. However, some ads and influencers promoted betting platforms in less than ideal ways, promising earnings and claiming it was a way to supplement income, and this created a bad image for the industry.

in the country. But this began to change with the publication of new law ordinances and the launch of Annex X by the Conar, which provided a clear definition of what can't and cannot be done in advertising.

With the regulation in effect, we went from thousands of brands to only 56 companies in the first day. Today we have 76, six of which have been authorized due to judicial decisions.

In total, we have 170 brands currently eligible to operate in the country. And the government continues its effort to stop the illegal brands. Between October and January, the Ministry of Finance has already requested the blocking of over 9,000 websites. we are still in early stages, but I think the government is doing what's supposed to do in the beginning.

Ricardo Assis (06:57.164)
and we'll have to wait and see a little bit more.

Ted (07:00.303)
So, regardless of things, but again, I mean, so many kind of moving interplays in Brazil and I'm going to bring it back to Chris. What is, how do you kind of describe the condition of the Brazilian market moving? mean, here we call it moving from great license. And how is that unique for the market itself? And how does that kind of change the strategic factors for incumbents at play?

Chris Nikolopoulos (07:28.947)
I think that in Brazil right now, localization is the key. And not only in Brazil, but all these local markets, as we call it, you need to be able to understand the specifics of this particular market. And competition is hard, of course, and competition will continue to grow because now the legal framework in the market, it's an open invite for a lot of big...

and providers and I think maybe we can touch this topic later on also to go to the market, right? So if we want to make a difference here we need to understand how the local people think. What are the local events that from a sports perspective we need to cover?

how we can cooperate with people from Brazil who understand the needs and the requirements and how we can align on these requirements in order to provide a good experience because in the end that's what we all try to do. That's why the regulation comes, that's why providers are there, that's why operators are there.

a business and in a business everyone is also looking for a profit but in a legal market we need to do that with respect to the end users as Ricardo said before the market was great there were a lot of problems a lot of brands were promoting in a way that you know is questionable let's say now these things should not happen anymore from our side we are trying to provide

a very, very, very customized product. A product which can work, are B2B provider, right? So we are having one product, but it can be customized in multiple ways and so deeply that it can look like very different products from client to client, from operator to operator. And I think that's the key to succeed in a local market like that.

Ted (09:19.119)
So I want to kind of bring it to you, Ricardo, and one of the things is the noise, the volume of the Brazilian market and its impact on the consumer. yes, strategically we can talk about localization, but how aware is the consumer of changes that are being applied to the markets and of who's advertising to them and what's being communicated to them on the ground?

Ricardo Assis (09:42.628)
So, the government is being really transparent about it. It's publishing in the official Gazette every time a bedding company receives a license. There's an official list of legal websites as well. Additionally, to make it easier for the users to identify the sites, it has been mandated that all licensed bedding companies must use the internet domain .bed.br. This creates a clear visual distinction between licensed and illegal operators. So it's a really good thing.

that the government is doing to promote this. We are still in the early stages of the market, so I believe it's too soon to say whether this is having an effect or not, but I think the government are trying to do their best in this way. are some campaigns as well, the companies are doing campaigns on TV about responsible gambling, so let's wait and see. There haven't been any initial studies published about the legal market yet.

In this regard, believe the government has been transparent with the public and is trying to guide them towards the licensed operator. But this is a period of adjustment and I think it will have to wait some time to see the effects of this campaign.

Ted (10:57.165)
And just for SPC audiences, mean, are you seeing any kind of big brands on TV, anyone making huge campaigns that are really shouting out their products?

Ricardo Assis (11:06.679)
Yeah, a lot. The advertising...

Ted (11:08.612)
Name them please!

Ricardo Assis (11:11.053)
The advertisement environment here Brazil is really big, especially in football. I think it was 19 of the 20 clubs in the first division of Brazil are being sponsored by betting brands. they are everywhere. Here in the streets that I live near the stadium of Palmetas, even the bars are sponsored by some operators. we have loads of advertisement even in the

and on TV isn't different because the main sponsors of the TV shows, of the networks are now betting operators. We have like Estrela Bet, we have Bet Nacional, we have lots of companies doing really big, big campaigns in these early stages.

Chris Nikolopoulos (12:02.356)
supplement something here so to jump in. It's not only Serie A teams that are sponsored by operators. Almost the majority of Serie B as well is being sponsored by some operator right now, right? It's crazy. I haven't seen that in any other market.

Ricardo Assis (12:08.183)
So did be as well, yeah.

Yeah?

Yeah, and most of them are main sponsors as well. It's not like a minor sponsor. think in Serie A it's 15 or 16 of the 20 clubs have main sponsors of betting. So it's crazy.

Chris Nikolopoulos (12:21.015)
Yeah.

Ted (12:29.967)
That's wild. yeah, I mean, Chris, so Chris, you accept the conditions, you accept kind of the role that you've been given, but from a strategic standpoint, I mean, how do you do an effective launch for a market in which you have 91 competitors going, know, trying to find their market share? Isn't, mean, that sounds frightening to me.

Chris Nikolopoulos (12:58.041)
It's not frightening, it's something that you should consider and to be honest competition makes everyone better. I think that generally when we are talking about a market that gets regulated and a market that has this huge potential like Brazil, everyone will try to get a piece of the pie. But in the market today there are every type of solutions. First of all, not all these competitors and I don't want to speak about bad or good about competitors.

that's on the point here, but not everyone is on the same level and I think for operators in Brazil and for end users also in Brazil this is obvious and that's why some software are being rewarded let's say and some others not so much. Personally I think that when a market gets regulated in the beginning there will always be some friction and depends on how government will deal with it.

Ricardo Assis (13:49.081)
you

Chris Nikolopoulos (13:51.578)
because if users have opportunity to go to some black operators, let's call them like that, if they offer them better conditions because they avoid paying taxes or anything like that, maybe end users will do it. So it is very important to see what the government will do and how strict the framework will be. And I agree with Ricardo because he said that it's being taken care of. We see that also. Of course, are still steps to be made, but time is needed here.

Personally, think that... Generically, in our industry, in coming 5-10 years, and this is not only for Brazil, but includes Brazil, I think that there will be 10 big groups owning more or less the whole market. We see a lot of acquisitions in our industry. Big companies acquire smaller companies, and of course they let them keep doing their own operations, they can have their own brand.

they still belong to some bigger groups. So when we see, when you say about 90 competitors or whatever, reality it's not that many. It is fewer than that. There are a lot of synergies between...

these people, can say. in the end, product superiority always wins. If you have a good product, if you have a product that can understand the local needs and it can be customized to meet the needs of the local people, this is how you're gonna win. In BedB that's what we do. We focus on sports. We offer software that can be customized very much. We have a huge trading team right now.

us to create every day numerous events only for Brazilian market. We are covering content that no one else can cover. I'm not talking for the main things, yeah, I'm not talking for Syria, Syria B and things like that. We are talking for even some regional competitions.

Chris Nikolopoulos (15:50.969)
super surprised to see that they exist but they do exist and as I said product superiority and local understanding together with some people on the ground in the market is the key to success.

Ted (16:06.959)
Okay, so I'm gonna kind of pull you back on what you said and you kind of your efforts of customization and localization. Now we come back from ICE and these are words that are kind of in the lexicon of the industry at the moment across developing markets, but doesn't any form of localization or customization, I the fact that you said, you you need to go above Seria and Seria B, the resources needed, but these are big bets taken by technology.

Chris Nikolopoulos (16:16.73)
Mm-hmm.

Chris Nikolopoulos (16:31.856)
Of course.

Ted (16:36.547)
Can they all succeed? And what are kind of the hurdles to gain true localization?

Chris Nikolopoulos (16:44.606)
When we are talking about sportsbook software, which is let's say what we do We are talking about some of the most complex IT systems in the world I think sports betting and banking may be the most complete and hard to build software systems in the world because we are talking about

We are talking a lot of dynamic content with the odds, are talking hundreds of thousands of events, the odds are, are hundreds of markets per event and the odds are changing all day. We're talking about settlements, transactions, flows and a lot of things. So not everyone can do it. And in order to build a good sports book, you need years and you need a lot of experience.

Ted (17:29.903)
Thank

Chris Nikolopoulos (17:31.987)
Luckily in Bedby we are having a very, very good team. We're already six years in the market. So when the regulator happened, we already had a very mature product, but at the same time, modern enough. So we are not some kind of old dinosaur from the early 2000s, like some competitors which are in the market. So we have a modern software, but still mature enough. And then it's about the expertise of the people. need...

a combination of young, hungry professionals with some more experienced people. And that's what we do. We hire people in Brazil, Brazilian people, who can direct us. Generally, we are trying to think as an operator and as a local operator. You cannot have the same product working successfully in all the world. B2B market is a bit complicated because...

For lot of providers, you know, it is not so easy to customize and it is not only about software, it is also about the operations. Imagine you have a software that you want to work in Brazil, but then with the same software to be able to work in the UK. There are many differences, cultural differences, differences about the content, a lot of things. So you need to be able to split in business units and to target each specific...

market with a particular business unit. That's what we are doing and so far has been successful for us.

Ted (18:59.053)
Yes, it's a hard and I agree with that. I it's a hard task and Ricardo, how important do you view kind of year one and Chris, you can get involved in this question too. And what's the importance for kind of incumbents coming into the Brazilian market? I mean, what are they trying to establish in the first year of play within that market? Ricardo?

Ricardo Assis (19:25.911)
Well, I think they are trying to get their share of the market. I think this is something that the companies that are operating for a long time have a heads-on on this aspect. I think this being the early stage of the regulated market, we still have a number that is reduced of players. So the companies that are here before, they have a advantage. I think the trend over the years, it's the same, I think in my opinion,

I have the same vision as Chris. I a few operators will dominate a large portion of the market. This is something that happens in a lot of mature markets. I think this is the time for the operators to carve the space, to really go for it, because this is the time that's going to set the trend for the later years to come. I think the...

Some of the companies that are based here in Brazil with more people that are, they have more expertise here in the market have some advantage, but I think it's hard to compete with the money of the global operators. they have this, they have a vantage in a point and they are in disadvantage in others. So it's a term of balance.

Ted (20:46.735)
So Chris, is it a question of go big or go home in Brazil?

Chris Nikolopoulos (20:50.883)
In a way, yes, I agree, because look, if you want to come, first of all, there are a lot of competitors, as you said, yeah, the market is crowded and that has some effects. The acquisition costs are growing. Actually, they are like super high, not just high in Brazil, one of the highest all over the world right now. And it becomes already questionable for a new operator to enter the market, yeah, even if they have unlimited money to burn.

So the acquisition costs are growing a lot. The brand visibility will become tougher and tougher and tougher because as we were discussing before, are not already the good slots for marketing are taken and the big operators are not gonna let them down. Profits gonna shrink a little bit because in a regulated market you have taxes, there are certain things that you have to do and so operators would be ready to...

will have to be ready to realize that their profits will shrink. In a way, if you want to succeed in this market nowadays, as you said, go big or go home, because if you reach this certain economy of scale, then obviously there is a lot of opportunity. But if you cannot reach that point, it is very hard.

Ricardo Assis (22:10.82)
Yeah, also, sorry, in the terms of advertisement, are seeing in the Brazilian market some teams, some really big teams of football ripping off their contracts with some operators to sign other contracts that are more valuable. are teams that are ripping contracts that they were like getting 20 million to sign new contracts, getting 40 million. So it's everything is inflated here in Brazil regarding this market.

Ted (22:10.927)
So, no, go, go.

Chris Nikolopoulos (22:26.785)
Yeah.

Ted (22:41.615)
So I'm bringing up to my final two questions and let's start with in 2025, what is your kind of nugget of information regarding Brazil? I what do you want to tell audiences, our audiences who are kind of invested in the market about what they're to find out pretty quickly about the bets and in Brazil in general? Ricardo, I'll start with you.

Ricardo Assis (23:06.918)
I think the market is expected to grow even more in this first year because now we have the regulation in place. I think it's going to grow even bigger. It's already one of the biggest markets in the world. I think now with strict regulation and more eyes on it, it tends to grow even bigger and...

to grow bigger in a more sustainable way that was doing before. So I think in a way the persons that are

The companies and the people that are willing to enter this market, as Chris has pointed out and even you have pointed out, have to think to go big because this is a big country with big opportunities and if you don't have the money and the capacity to invest, you're not going to survive a long amount of time here.

Ted (24:09.763)
Chris.

Chris Nikolopoulos (24:11.345)
Yeah, I agree. Brazil is already one of the biggest. It's already in the top 10 of regulated online gambling markets by GGR already now, as we speak. And the projection show that it can almost double by 2028. So it will continue growing. And we are talking for a market in size of billions of dollars. it's a huge market, one of the biggest in the world. Generally, I think...

that the ultimate size and scale of Brazil's regulated market depends on a lot of factors which right now are a little bit unknown and this includes of course the number of licenses, we already know that but we need to see if there will be any more depends also on the effectiveness of enforcement, let's say mechanisms against offshore operators or black operators or how you...

call it, depends also on payment methods and a lot of other things but generally we get back at what we discussed previously with the right software, the right people and the right investment. Brazil is still a huge opportunity and at this point I want to say something in general.

You know, for a lot of operators, for a lot of providers, and even for end users, there is... I see that because I've been working in iGaming for the last 15 years and I see that for lot of providers and end users, when a market gets regulated there is a little bit of a fear. Fear about the unknown. But we should all welcome the regulation.

If we want to have a future in this industry and if we want this industry to have a future and not to be seen as something on the side, something strange and something that we are not so sure if we want to work on, we need to embrace regulation, we need to welcome it and we need to understand that we need to take care of end users with responsible gambling.

Chris Nikolopoulos (26:23.102)
this legal framework for operators and providers to work as they should.

Ricardo Assis (26:29.808)
Just one thing also that I forgot to talk. It's about the role of the regulator because we need the regulator to not change a lot of things now in the first years because we are seeing a lot of proposals, proposed bills that are kind of creates uncertainty. had like a...

We had people proposing the ban of advertisement and sponsorships or the banning of the secondary market altogether to ban all the types of props bans. So this type of things would hurt a lot of the legal market and we just hope that the regulators don't do that because this would have a huge negative impact in the market.

Ted (27:18.733)
So just to conclude and just reviewing the questions that we've asked and what we touched upon. mean, do you two just think that it's a case of embracing kind of the franticness and the madness of the market and where it is right now? Nico, sorry, Chris, please, please sign us off.

Chris Nikolopoulos (27:40.498)
As we said that, and as I also said before, we will need to be able to embrace the regulation and we will need to understand that ensuring a responsible gambling environment is good for everyone, good for the end user, good for the operator, good for...

and even good for the affiliates or other side parts of the businesses like payments and so on and other types of software. As I said before, being in this market for a long time I realize, I see the fear in the eyes of a lot of operators, providers and so on when a market gets regulated but it shouldn't be like that. The whole world is changing, iGaming is not like it was 10 or 15 years ago.

I think many of you, both of you maybe remember that it was a very different landscape. We need to evolve together with the market and there's nothing wrong with that. We should focus on product superiority. We should focus on listening the needs of the operators from our side as a provider and we're confident that we will continue having a strong presence in the market like we do the last years and so on.

Ted (28:55.183)
Well Ricardo, Chris, thanks so much. It's been very insightful to talk to you. This is Ted Memoy from SBC and this is iGamingDaily signing out. Thank you.