Brazil's Betting Market Launch Sparks M&A Surge and Media Collaborations

As the launch of Brazil’s legal online betting market draws near, international operators are positioning themselves to capitalize on the burgeoning opportunities. Industry analysts are closely watching whether mergers and acquisitions (M&A) and strategic media partnerships will shape the market's initial development, much like they did in the United States six years ago.

In the US, a frenzy of M&A activity allowed major players to gain early-mover advantages. For example, Flutter Entertainment secured a significant position by acquiring a 37.2% stake in daily fantasy sports provider FanDuel for $4.18 billion in 2018, later increasing its stake to 95% by December 2020.

In September, Flutter made a similar move in Brazil by acquiring a 56% stake in NSX Group, the parent company of local betting operator Betnacional, for $350 million. The company has emphasized its commitment to acquiring additional local brands as part of its “local hero” portfolio strategy. Flutter’s financial and technological assets make it a formidable contender in Brazil’s competitive betting space, and analysts like Macquarie’s Chad Beynon project the company’s market share in the country could grow by 150% by 2030, reaching 25%.

Macquarie attributes ~$200 of incremental per-share value to Flutter’s nine acquisitions since 2019, predicting the company could achieve a global market share of ~20%. Analysts believe local expertise is a critical asset in Brazil, where high regulatory costs and the requirement for operators to have local representation make acquisitions an attractive entry method. Adam Patterson, an economist for the UK’s consul in Brazil, and gaming advisory firm Ficom Leisure have both highlighted the importance of local knowledge and technology in navigating the market.

Flutter’s acquisition of NSX Group provides the company with established operations in Brazil, which it previously lacked while running its South American business from an office in Portugal. Other global operators, including European giants like Entain and Betsson, Asian firms transitioning from black markets to regulated spaces, and North American companies seeking international growth, are also eyeing Brazil.

Notably, some North American brands appear hesitant. For instance, DraftKings has stated it has no immediate plans to enter Brazil, with CEO Jason Robins saying during a Q2 earnings call that any move into the region would likely occur through M&A rather than organic expansion. An unnamed M&A advisor told iGB that some operators prefer to observe the market’s early successes before committing, a lesson learned from the challenges faced by operators in the US market.

On the other hand, MGM Resorts International has already entered the Brazilian market through a partnership with Grupo Globo, Latin America’s largest media conglomerate. This collaboration, which leverages Grupo Globo’s extensive reach of 70 million daily users across multiple media platforms, reopens discussions about the viability of media partnerships. While the model has seen mixed results in the US—Fox Bet and MaximBet both failed to gain traction—industry stakeholders believe strong execution could yield better outcomes in Brazil.

Andreas Bardun, CEO of Brazilian betting brand KTO, acknowledged the challenges of such partnerships, stating, “As always, it comes down to execution. There’s probably a lot more situations where these kinds of partnerships have failed. If they can nail it, if they can be agile enough, they will be a really strong competitor in Brazil.”

Udo Seckelmann, a gambling and crypto expert at Brazilian law firm Bichara e Motto Advogados, argued that trust plays a crucial role in the success of such collaborations in Brazil. He suggested that Grupo Globo’s established presence could strengthen the BetMGM brand’s appeal. “If we understand that these media companies have been around forever in Brazil, when people see that this brand is connected with one betting partner, I think this strengthens the brand and consumers may feel safer betting on these brands [over] others they’ve never heard of,” he explained.

Public trust will be especially vital as Brazil’s betting sector faces scrutiny over potential social impacts. A two-day hearing at the Supreme Federal Court (STF) in November focused on the constitutionality of the country’s betting laws, with a decision expected in Q1 2025. Reports of consumers overspending on betting and the proliferation of illegal sites during the delay in regulatory implementation have further fueled concerns.

Beyond online betting, land-based operations in Brazil present additional opportunities. While the Senate’s vote on legalizing land-based gambling has been delayed to 2025, operators like Hard Rock International are already preparing. Corporate Senior Vice President Alex Pariente confirmed the company’s interest in entering the market through partnerships or acquisitions, stating, “It could be a joint venture, but it definitely will be a partnership of any kind because that’s a model the company has been pursuing in the past.”

Although the future of Brazil’s betting market remains uncertain, early indications suggest it may follow trends seen in the US and UK, with market share dominated by a few major players like Flutter and Betano. However, niche operators focusing on specific demographics or specialties could still carve out significant positions. As one M&A advisor summarized, “It’s too soon to say who’s going to be successful. I think some of the niche guys who specialize in a particular area or particular demographic have got a good chance. But if you try to be all things to all people, you’re going to get absolutely flattened by Flutter and Betano.”

By fLEXI tEAM