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DraftKings, MGM Target Brazil’s Booming Online Gambling Market – BNN Bloomberg



(Bloomberg) — Sports betting heavyweights like DraftKings Inc. and MGM Resorts International are exploring entry into Brazil’s new regulated online gambling market, as Latin America’s largest economy emerges as one of the world’s fastest-growing gaming frontiers.

Brazil is leading a regional gambling boom that has followed numerous legalizations. Since it first began loosening online gambling laws in 2018, the country of roughly 200 million people has blossomed into one of the planet’s top-10 betting markets, with gross gaming revenues that rival totals from Spain and the Netherlands.

Now industry observers see it poised for even more growth, after President Luiz Inacio Lula da Silva last year signed into law a regulatory framework that establishes licensing fees and other requirements for companies that want to offer fixed-odds sports betting and virtual online gaming services inside the country. 

DraftKings, a US-based pioneer in online fantasy sports gaming, is among the more than 130 companies that have pre-registered interest in a Brazilian license, according to the country’s Finance Ministry. The list also includes MGM and Hard Rock International, the casino operator owned by Florida’s Seminole tribe.

“We are excited to see Brazil pass online gaming legislation, and as one of over 100 companies who submitted non-binding expressions of interest, we are continuing to explore the potential of expanding into Brazil in the future,” Griffin Finan, senior vice president and deputy general counsel for DraftKings, said in an email statement.

Hard Rock did not respond to a request for comment. MGM confirmed its interest in Brazil in February, when Chief Executive Officer Bill Hornbuckle said during an earnings call that the Las Vegas-based casino operator planned to examine a joint venture partnership in the country.

“Brazil is going to put Internet gaming in play for both casino and sports betting, and we plan to be there when that launches,” Hornbuckle said on the call.

But as some of the industry’s biggest brands eye Brazil, smaller firms are preparing for the sharp consolidation of a sector that Sao Paulo-based analytics firm Datahub says currently includes more than 1,000 different gaming operators. 

The new law requires companies to pay as much as 30 million reais ($5.9 million) for a license that may need to be renewed every five years, depending on Finance Ministry reviews. It also implements a 12% tax on gross gaming revenues, prices that may be too steep for even well-run small operators. 

“There are many serious players that will not be able to pay for this license,” said Darwin Henrique, the CEO of Esportes da Sorte, an online gaming firm that currently operates in Brazil. 

Long famous for its insatiable appetite for soccer, Brazil has emerged as an increasingly attractive market for foreign sporting leagues seeking global growth. The number of Brazilians who follow the National Football League has more than quadrupled to nearly 40 million in the last decade, data from sports marketing research firm IBOPE Repucom shows. The league picked Sao Paulo to host its first-ever game in South America later this year.

Gambling has experienced similarly rapid growth: In 2022, Brazil ranked 10th globally with $1.5 billion in gross gaming revenues, after not appearing in the top 15 a year prior, according to Entain Plc, one of the UK’s largest online sports betting firms. 

Total gross gaming revenues from the regulated online market are expected to grow to nearly $5 billion by its fifth year of operations, industry research firm Vixio GamblingCompliance projects.

The popularity of online betting had already attracted multinational firms like Bet365, Entain’s SportingBet LTD, and Betfair, which is among the brands owned by Irish bookmaker Flutter Entertainment Plc. But the lack of regulation kept many foreign companies from formally entering the market.

The rules require companies to establish and maintain a physical presence in Brazil, and it remains unclear which operators will ultimately choose to set up shop. But industry leaders say the potential arrival of global giants — and any consolidation that may follow — is the result of the sector’s formalization, rather than a deliberate attempt to drive out smaller players.

“It’s one of the biggest markets in the world, and as it gets regulated and becomes a formal market, it allows companies to enter and better explore the system,” said Wesley Cardia, the president of Brazil’s National Association of Games and Lotteries. “And when you take those small and not well-regarded websites out of the market, you aggregate consumers to the big ones.”

Even as they fear some will miss out on the rush, operators that helped launch Brazil’s online gambling boom say they won’t go quietly, arguing that their knowledge of the local market will help them survive the arrival of wealthier multinational counterparts.

“We are not afraid of competition, because we know the work we do,” Henrique said. “Brazil has many particularities, and Brazilian gamblers are different from the foreign gambler.”

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–With assistance from Christopher Palmeri and Andrew Rosati.

©2024 Bloomberg L.P.

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