Brazilian Betting Market Faces Operator Withdrawals Ahead of January 2025 Launch

Several betting operators in Brazil have withdrawn from the federal licensing process just months before the country’s legal betting market is set to launch on January 1, 2025. Brazil’s regulatory deadline initially saw 113 applications submitted through Sigap, the nation’s betting management system, by August 20, ensuring that those applicants would be processed ahead of the market launch. Although companies could continue applying after that date, with the number of applicants reaching 273 this week, at least 20 operators have since decided to withdraw.

Among the most notable operators to pull out is Betway, owned by Super Group, joined by Arena Esportiva, AmuletoBet, and Vera&John, the latter currently owned by Bally’s Corporation. Super Group’s president and chief commercial officer, Richard Hasson, addressed the decision during a conference call on October 6 following the release of the company’s Q3 results, explaining that the group intends to focus on markets where it can project stronger returns.

“Brazil is obviously being spoken about a lot across the industry at the moment,” Hasson said. “That’s a market where we are not currently proceeding in line with all markets that we look at. We want to ensure that we can identify the same path to profitability once we go live.”

Super Group’s Q3 results showed significant success in Africa, which accounted for the company’s largest revenue share for the second consecutive quarter. In response to a question from Benchmark Company analyst Mike Hickey, Hasson pointed to the company’s focus on Africa rather than competing in the Brazilian market against large-scale players such as Flutter Entertainment and Bet365. “These competitors are basically focusing on Brazil, which is why we’re not up to that,” he said. “So I think we picked our battle and that’s what you do.”

The upcoming regulation rollout for Brazil’s legal betting market was laid out by the Secretariat of Prizes and Bets in a four-stage plan. Under Normative Ordinance No 722, operators must meet strict certification standards, including regular audits and ongoing compliance testing, to maintain their licenses. A BRL30 million ($5.3 million) license fee is required for approved operators, allowing the operation of up to three skins per application.

This regulatory framework, however, has raised concerns among industry stakeholders. The high financial costs and technical requirements have made some local operators wary, with many suggesting these expenses will keep smaller players from competing in Brazil’s regulated market. Some stakeholders have argued that the application numbers are misleading. They believe smaller operators, unable to afford the substantial licensing fee, may have submitted applications simply to avoid regulatory penalties, as authorities intend to shut down unlicensed operators after October 1.

The high entry costs are also fueling discussions around potential mergers and acquisitions (M&A) in Brazil’s betting market. Economists like Redirection International’s Adam Patterson predict an “M&A boom” as larger operators acquire smaller, local players to avoid the high initial costs of customer acquisition and compliance.

“The trend towards M&A activities is driven in part by the substantial regulatory costs associated with the licensing process, including authorisation fees that can be as high as BRL30m, technical certifications and tax obligations,” said Patterson. “Collectively, these factors pose a significant challenge to the economic sustainability of small betting operators.”

With further withdrawals likely before the January launch, Brazil’s regulatory approach appears to be shifting market dynamics, setting the stage for large-scale operators to dominate the market while others consider consolidation as a viable strategy to stay afloat.

By fLEXI tEAM