Only weeks away from full regulation and already a significant clutch of potential operators, led by Super Group’s Betway, have decided to abandon the great Brazilian sports betting gold rush.
From high licensing fees, to competing against mega hitters such as bet365 and FanDuel, to trying to keep one’s head above the swirl of choppy economic waters in a chaotic market, the issues are manifold.
And with fears of the economic impact that regulation could unleash on Brazil’s gambling-addicted poor, the nation’s socialist President Luiz Inácio Lula da Silva has even threatened to strangle fully legal sports betting at birth.
“Everyone knows that the person going to buy bread in the morning will make a small bet using the bread money,” the president opined early last month.
“But what I cannot allow is betting to turn into a disease, an addiction, and for people to become dependent on it, because I know people who lost their house and car.”
Brazil first legalised sports betting in 2018, at the same time that betting on sports was also green-lighted in the U.S. with the repeal of the 1992 Professional and Amateur Sports Protection Act (PASPA).
Circus
But in what critics have dubbed “true and chaotic” Brazilian style; sports betting–long dominated by off-shore gunslingers–, while now legal was, crucially, not regulated.
And so the free-for-all betting circus, loosely ringmastered by Lula’s free market Trumpian predecessor Jair Bolsonaro, continued.
To date some 270 operators have applied for sports betting licences to meet the official market launch this coming January 1.
But 20, among them Betway and Bally’s Corporation, have already pulled out of the labyrinthine authorisation process of the overarching Normative Ordinance No. 722.
Successful applicants will have to pay R$30 million (£4.06m/US$5.21m) for a three-skin licence, a hefty sum for a small-time player but peanuts for the giants circling the market.
Impact
Those who hold their nerve will have rich pickings on offer.
Regulation or no regulation, this nation of 217 million people is already the seventh largest betting market in the world by revenue, with an annual GGR equivalent to US$4.9 billion (£3.82bn).
But the purported impact of gambling addiction among the South American giant’s widespread poor threatens to quieten the excitement of iGaming’s most eagerly awaited market launch.
According to a Brazilian Central Bank report (as previously reported in iGF), an estimated five million people from families on the country’s main social welfare programme spent about R$3 billion (£406m/US$575m) on bets in August — equivalent to one-fifth of the total benefit paid out.
Even allowing for exaggeration–or political inflation–, the figure is astonishing.
Betting Craze
And retailers are also piling on the anti-gambling negativity, saying that the “betting craze” threatens to lower overall consumer spending.
“The correlation of people on low incomes and the increase in betting has been strong,” Central Bank Governor Roberto Campos Neto said recently.
“This is worrying [and] we’re starting to have the perception that it will have an impact on defaults.”
Add the effect of gambling addiction on mental health and wider health issues–and the widespread use of illegal betting sites for money laundering–and the upbeat “Samba” vibe doesn’t sound so alluring.
But go tell this to the Carnival-loving, sports-mad Brazilians.
In August 24 million consumers–more than 10 percent of the population–spent R$20 billion (/£2.7bn/US$3.47bn) on online betting alone, according to the Central Bank.
And forensic accountants PwC say that this year, 2024, iGaming wagers will total at least R$130 billion (£17.61bn/US$22.58bn).
No wonder, after years of drift, the government wants a slice of the taxable action and wishes to bring “order and progress” to a market that’s currently a mess.
