Regulated Sports Betting in Brazil Could Impact Smaller Operators. Only 15% of Betting Companies Will Survive?
Approximately 500 sports betting companies are currently operating in Brazil, but only around 15% of them are expected to have sufficient capital to survive under the country’s new legal framework for sports betting, which came into effect in July.
A study conducted by Hand, an independent advisory firm specializing in the sale, purchase, and management of companies, reveals this potential impact on smaller operators in the market.
Room for growth?
According to José Venâncio, a partner at Hand, while there is room for growth in the Brazilian sports betting market, the new legislation requires an upfront payment of R$30 million for the operating license.
“This amount is paid over five years of operation [the license fee], but it is very difficult for smaller companies to have the resilience to withstand that long,” Venâncio commented.
He believes that this requirement could lead to mergers and acquisitions within the industry.
“Large foreign groups could enter the country by acquiring smaller companies, for example.”
Under the new regulations, companies will be subject to an 18% tax on the revenue generated from bets.
Compared to global betting giants, Brazil’s sports betting market is relatively small. In Europe, it accounts for 45% of global revenue, while in South America, it represents only 10%. However, Venâncio believes that the regulatory framework could boost its growth in the future.
This development highlights the potential consolidation and changes in the Brazilian sports betting market as it transitions to a regulated and licensed industry, with smaller operators facing financial challenges due to the high initial licensing costs.