SBC News Voice of the Sports Betting Industry
Operators have been warned about the nuanced localisation and tech challenges of Brazil’s forthcoming online gambling marketplace, as it transitions from a mature grey market to a fully-regulated regime.
The White Paper “How to Win in Brazil’s Regulated Market” sees OpenBet, the leading sports betting and igaming systems supplier for tier-1 operators, provide localised strategies and detailed insights for succeeding in Brazil’s betting market.
As stands, 113 businesses have applied for betting licences, viewing a market opportunity projected by H2 Gambling Capital at “an onshore market size of US$10bn by 2029”.
Jordan Levin, CEO of OpenBet, views Brazil as the most unique launch of a regulated market witnessed by the igaming sector. He said: “It is time to really get excited about a new territory that holds significant potential.
“A grey market has been live since 2018 and has grown to maturity. While player values are likely to be less compared to major markets like the UK and North America, the vast population of Brazil and its passion for sports present ample opportunities for sportsbooks to grow a robust customer base within a regulated framework.”
Day-1 Compliance
The report observes that Brazil will operate a regulatory environment distinct from European and North American frameworks, expressly demanding high technical compliance and IT security from operators on the launch date.
The demand for instant compliance is viewed as a positive by OpenBet, as expressed by Jessica Feil, VP of Regulatory Affairs and Compliance. “Brazil is in a strong position from a regulatory perspective, especially when compared with other markets globally, such as the US, which continues to fit modern technology into laws that are decades old,” she advised.
“Regulations developed for the modern betting and gaming landscape ensure operators are still able to drive strong revenues while promising top-of-the-line consumer protection.”
OpenBet predicts that Brazil’s transition to a regulated betting regime will likely see current market trends collide with protection-led compliance adjustments and heightened technology demands. Licensed operators must demonstrate optimal capabilities in:
- Advanced geolocation software.
- Robust player protection from market launch.
- A breadth of sports content that appeals to Brazilian consumers.
- Superior trading and localised risk management procedures.
- Scalable and robust platform technology and operating systems.
Market entrants should consider a bespoke approach to match the consumer demands of Brazil or face costly repercussions, as noted by VP Feil who warned: “Brazil is very different from other countries when it comes to business and consuming products. Iconic international brands have struggled to make an impact, including Starbucks, with its rights holder SouthRock selling operations due to an ongoing bankruptcy case.”
First settlers have exposure but little advantage
Prior to the launch of regulated betting, Brazil has operated as a grey jurisdiction for many operators (foreign and domestic), who will now need to adapt and comply with the strict regulations being implemented.
For new entrants, the market’s pre-existing competition should not be viewed as a hindrance, as OpenBet notes that “existing operators are recognised for executing high-quality localised marketing campaigns that resonate with players, embracing different forms of media that incorporate precise, key messaging”.
Though M&A manoeuvres are “deemed inevitable”, the report warns against forming like-for-like Western comparatives to determine their Brazil market strategies.
Ed Birkin, MD of H2 Gambling Capital, stated: “When examining the mature European landscape, there is no consistent market leader. Each country has a different model, and Brazil will be no different.
“Betano and bet365 currently enjoy the strongest market share within the country, accounting for 23% and 20% respectively, according to H2 Gambling Capital, but increased competition will feature a mix of local brands, international brands, and local brands owned by international operators.”
Ordinance No.722
The pre-market conditions and advantages will be quickly transformed, with OpenBet emphasising the importance of technical compliance with Ordinance No.722.
The Secretariat of Betting and Prizes (SPA) upholds Ordinance No.722 as the technical pillar to ensure consumers are safeguarded by ensuring operators have proper technical solutions for geolocation, fraud detection, and compliance with national regulations.
The technical duties of Ordinance No.722 require operators to implement advanced geolocation technology to ensure players are within permitted regions when placing bets, with location checks required every 30 minutes, and mandates the detection of VPN-based location spoofing.
Additionally, operators must have systems to detect and prevent fraudulent activities, including money laundering, and follow strict compliance and reporting guidelines for transparency and regulatory adherence – with reporting tougher than in many European jurisdictions.
Bets scale demands like no other
The Brazilian market will further challenge the scalability of sportsbook and igaming platforms. The vast number of potential bettors requires infrastructure capable of handling high customer volumes without compromising performance.
H2 Gambling Capital highlights that “By 2026, Brazil is expected to have 36 million active online betting and igaming accounts, with an average GGR per account of US$133 (R$745), accounting for 9% of the adult population.
“In comparison, 24% of adults in the UK have online betting and igaming accounts, while the newly regulated Dutch market sees 5% of adults with such accounts. Additionally, 39% of respondents in Brazil report spending between US$1.80 and US$9 (R$10–50) weekly on online betting and igaming platforms.”
OpenBet determines that advanced and robust solutions are essential for operators to not only adhere to rigorous regulatory standards but also to safeguard players and ensure accurate geolocation compliance.
CEO Levin concluded: “It is time to really get excited about a new territory that holds significant potential.
“Ultimately, Brazil will be a regulated market like no other. Applicants launching legal operations in the region will need to thoroughly understand the nuances of the country’s culture, as well as respond strongly to the heavy burden that regulation brings.”
