SBC News Voice of the Sports Betting Industry
As we head into the business end of the year, I reflect that 2024 has proven there are now a limited number of new market opportunities globally. This is not something I would have said in previous years, but fact is, this year has brought a vast sophistication drive across the sector to identify markets with online growth potential. Some of these markets continue to garner a lot of attention – others are all but sewn up and monopolised already.
One of the most obvious of those is the region of Latam. There are still areas of Latam that are relatively untapped, despite Brazil’s big move towards regulation. But looking ahead to 2025, the big problem we see in Latam is that very few, if any, of the regulated markets, will be able to deliver a fast return on investment for online iGaming operators.
If you are investing in a new brand launch in Latam in 2025, you have to be prepared to take a long-term approach. There has been a knock-on effect of how the alleged goldrush in the USA has played out following liberalisation of the market in 2018. This same pattern is evident in Brazil, and you even see similar trends in places like Peru now. In simple terms, these markets become too saturated too quickly, and if you’re not careful, competing in the marketing landscape can become a race to the bottom.
The impact of this is that the cost of media, and thereby the cost of player acquisition, becomes vastly disproportionate to player value. This has been demonstrated clearly in the US over the last six years, largely due to the amount of money that was pumped into the market by investors. Since then, the hype has died down, and the market expectations have shrunk considerably.
We are witnessing a residual impact of that combination of events in Latam, possibly because of the proximity to the US, but also due to a range of macro factors. iGaming companies could end up paying hundreds of dollars in cost per acquisition on a player that you are frankly never going to break even on. If you do get a fair return, you might have to wait 10, 15 or even 20 years, so you can hardly call that an overnight success, which is how Latam has been advertised in some quarters.
If you’re buying media to purchase players in these South American markets at the moment, what you’re effectively doing is buying up market share – and that is all you are buying. There is no sense of profitability and rarely much chance of an equitable return any time soon. That is why market entry in 2025 would need to be a long-term strategic play.
Meanwhile, Latam is increasingly cluttered, which doesn’t necessarily make it a great opportunity, in our view. Speaking of great opportunities, we see Africa as a more viable play at this stage. In general, African geos are far less saturated from an online perspective and the cost of media is also much lower across all key emerging markets on the continent.
The difference in Africa, is that the vast majority of your players are going to be low value but high volume, which requires a different kind of business model, and a management of expectations where shareholders and investors are concerned.
Africa, in my mind, will continue to serve as a fruitful breeding ground of revenue generation for the year ahead. It can deliver a much faster return on investment on a markedly less significant outlay, and ultimately we at Logifuture are geared up for a major 2025 in this region.
