Entain Prepares for Slower Growth in Brazil as Regulated Market Launches in 2025

Entain anticipates that its rapid growth in Brazil will moderate once the country’s legal sports betting and igaming market goes live in January 2025. Despite the expected slowdown, Chief Financial Officer Rob Wood highlighted the strong returns the company has seen in the market so far, pointing to Brazil as a key component of Entain’s future plans.

In its Q3 trading update, Entain reported 48% year-on-year revenue growth in Brazil for the second consecutive quarter, having achieved the same figure in Q2. Wood called it the “headline grabber” of Entain’s Q3 results, emphasizing the country’s importance in the company’s expansion strategy. Brazil's online sports betting and igaming market is set to launch officially on January 1, 2025, following a transition period from October 1 to December 31, 2024, during which 98 companies, including Entain’s Sportingbet brand, have been approved to operate. If Entain secures federal authorization from the Secretariat of Prizes and Bets (SPA), it will be able to continue operating in Brazil from 2025 onwards.

However, Wood cautioned that growth in the market would likely slow due to the new regulations that come with a licensed market, including stricter marketing restrictions. "Growth from Brazil in 2025 is likely to be much more moderate," Wood said during an earnings call with analysts on October 17. "But clearly Brazil is a really important market for us."

As Brazil prepares to become one of the most competitive markets for online betting, with international giants such as Betano and Caesars Sportsbook vying for market share alongside established local brands like Rei do Pitaco and Esportes da Sorte, Entain is strategizing on how best to market itself to Brazilian bettors. Wood noted that the company’s marketing spend is expected to rise in 2025. “We’re looking at what the right level of marketing budget should be and no doubt it will be up on 2024,” he explained. “We do expect one or two material new entrants or increased marketing budgets from existing larger players. The paybacks are strong in Brazil, and that’s led to us increasing marketing investment this year as well. So it’s a market we want to play in and be successful in.”

To better position itself in Brazil’s burgeoning market, Entain has already taken steps by setting up a new team on the ground, focusing on localization and enhancing its product offerings. Wood elaborated, “You’ve heard Sameer [Deen, Entain’s chief commercial officer and president] talk about things like sourcing payments out as in withdrawals, improving content, and making sure we have popular local games available at the Aviator game. The front end has improved significantly, benefitting from BetMGM’s developments.”

As the launch of the regulated market nears, regulatory measures such as advertising restrictions and payment methods, including a ban on credit cards, have been a point of debate. Some industry insiders fear that the pressure could delay the January 1, 2025, launch date. However, Entain’s CEO Gavin Isaacs remains confident that the market will open as planned, with the company in agreement with most of the proposed regulations. “We don’t expect there to be a delay, but we do encourage regulation,” Isaacs said. “We are fully regulated and that’s what we operate best in. And so I think that would be something that they’re looking at and may end up being an advantage to us.”

Wood added that some of the regulatory measures being discussed seem sensible, particularly those related to responsible gambling. “Some of the measures that are being looked at we will see as sensible from our perspective, banning of credit cards, that advertising has a sufficient allocation towards responsible gambling, and all those things seem relatively straightforward,” he said.

As Entain navigates the competitive and regulated landscape of Brazil, the company is poised to adapt to the changes and maintain its presence as a key player in the market.

By fLEXI tEAM