Kaizen is Speeding Up, while Entain and Evoke Focus on Stability

Is Betano as Impressive as it Seems?

Alun Bowden, SVP Strategic Insight at Eilers & Krejcik Gaming, stated in his LinkedIn post:

“Was looking at Betano (Kaizen International) results that were released a few months ago and headline numbers are pretty striking. With €2.2b of revenue in 2024 it will be one of the largest online gambling businesses in the world although still some way off the very biggest in the sector. In fact I thought it would be fun to compare to two of the least loved giants of online gambling at the moment, Entain and Evoke.”

At first glance, Betano’s results in 2024 are indeed impressive. With revenues of 2.2 billion euros, the company ranks among the global market leaders. However, a closer look at the data, especially the growth figures, suggests that not everything that glitters is gold.

Looking at the “2024 Online Revenue & Profits” chart, we can see that Entain generated significantly higher revenues (over 4 billion euros) than Kaizen International (just over 2 billion euros) and Evoke (around 1.5 billion euros). Similarly, in terms of gross profit and EBITDA, Entain also outperforms its competitors in absolute terms.

Betano as the Growth King, but for how Long?

The situation changes when we look at the growth dynamics. In the “2024 Online Revenue & Profits Growth” chart, Kaizen International clearly dominates in terms of revenue growth (close to 50%), gross profit growth (around 77%), and EBITDA growth (close to 100%). Entain and Evoke, while stable, show much lower growth rates.

This impressive growth rate of Betano suggests that the company is effectively attracting new customers and expanding its operations. However, as Bowden rightly points out, a key factor that may affect Kaizen International’s future performance is regulatory changes, especially in Brazil.

A Promising Market with Hidden Tax Risks

Brazil is one of the largest and most promising markets for online gambling, with enormous growth potential. However, the introduction of regulations and, most importantly, taxes, can significantly impact the profitability of companies operating there. Recently, the GGR (Gross Gaming Revenue) tax was increased from 12% to 18%. But that’s not the only tax burden. In addition to this new tax, operators must also face:

• 9.25% contributions to PIS/COFINS (social integration and social security funding programs)
• Up to 5% municipal tax on services
• 34% corporate income tax

According to industry associations, the total tax burden may reach as much as 50%. This cumulative load may significantly discourage further investment in this market and harm its competitiveness.

This means that although Betano certainly benefits from its early entry into this market and rapid growth, future tax burdens may significantly reduce their margins. In the long run, the company will need to not only maintain its customer base but also optimize costs and strategies to mitigate the impact of new regulations. Brazil, while enticing, still requires significant investments in marketing, platform development, and customer loyalty building in an environment that is becoming increasingly competitive, regulated, and now additionally burdened with high taxes.

A More Certain Path?

In contrast to the rapidly growing Betano, Entain and Evoke appear as more stable and mature entities. While their growth rate is lower, they operate on a scale that ensures a solid market position. Entain, as one of the largest players, has diversified revenue sources and an established presence in many regions. Evoke, while smaller, also seems to be following a stable growth path.

Their slower growth may be interpreted as a result of a more conservative approach to expansion or market saturation in some regions. However, in the face of potential regulatory upheavals, especially regarding taxes in key regions, the stability and maturity of these companies may prove to be their asset.

Rapid Growth Versus Stability and Resilience

The discussion initiated by Alun Bowden prompts reflection on which company is currently the most “exciting” in the online gambling sector. While Betano certainly attracts attention with its growth metrics, one must remember the potential challenges related to regulations, especially in Brazil.

Entain and Evoke, though perhaps less spectacular in terms of growth, offer greater stability and predictability. In the long term, the ability to adapt to changing regulatory environments and build lasting value will be crucial for all players in this dynamic market. Will Betano maintain its growth pace in the face of new tax challenges, or will the stability of Entain and Evoke prove more valuable? Time will tell.