The fantasy sport market globally moved around US$ 22 billion in 2021, showing a growth of 9.5% this year alone. The North American market, today the largest in the world, alone circulated more than US$ 8.37 billion in the same period.
The numbers are impressive, but this is still a business that has a lot to expand. The global growth estimate for the sector between 2020 and 2026 is 120%, which should represent an increase in revenues of more than US$ 20 billion.
The growth expectation is based on some factors that have had repercussions globally. The first of these is the increase in the purchasing power of the young population, a major consumer of this type of entertainment. Reducing costs with cell phones, and improving digital infrastructure, especially with the arrival of 5G, should also collaborate to boost this market, centered on digital technologies. Another very relevant element in the growth of the fantasy sector is the popularization of the modality, which allows the arrival of new competitors in the market.
But much of the fantasy sport market's expectation of growth is due to a key factor, namely India. According to a recent study released by Deloitte, the country has some very interesting numbers that should place this market, within 5 years, as the main world market in the category.
India currently has more than 130 million fantasy sport players, which in 2021 generated revenues of US$4.42 billion, and this number is expected to reach an incredible US$21.45 billion in 2025. According to the consultancy, average revenues from operators last year were US$ 676 million, which generated more than US$ 3.28 billion in taxes for the Indian government, and in indirect revenues another US$ 715 million.
In summary, India earned in 2021 around $4 billion in revenue from fantasy sport. In addition, according to Deloitte's calculations, the sector also encouraged foreign investment in local companies to the tune of US$ 1.3 billion.
According to the study developed by Deloitte, between 2017 and 2020, fantasy generated in India around 8,500 direct jobs and another 12,300 indirect jobs.
Now let's turn our attention to the Brazilian market, which is currently considered to be potentially the third largest market in the world, behind only the United States and India. Estimates indicate that the fantasy sector in Brazil generated a meager US$ 12 million. And in terms of jobs, a few hundred direct jobs and, without a database for that, I dare say it didn't even reach a thousand indirect jobs.
All this for a very simple reason: lack of regulation in the sector. The absence of clear rules on how the market should work inhibits foreign investment, which, consequently, also makes it difficult for new operators to enter the market, since this sector is dominated by startups, a business model that links its growth to capital contributions. On the other hand, without adequate regulation, consumers are unsure about what their guarantees are and whether they will be effectively fulfilled. But that is not all. Perhaps the biggest loser is the Brazilian government, which sees incredible revenue potential flowing into its hands.
The Brazilian market has a lot in common with the Indian market, perhaps even more similarities than the North American market, and the numbers of taxes generated for the State, of direct and indirect jobs, are impressive, as we saw above. Given this, the questions remain: why has the Brazilian government not yet taken any steps to regulate this sector? Will Brazil ride the wave of fantasy sport or will it let another train pass?
Rafael Marchetti Marcondes
Chief Legal Officer at Rei do Pitaco
Professor of Sports and Tax Law. Doctor and Master in Tax Law from PUC/SP. Master in Sports Management from ISDE/FC Barcelona. Specialist in Tax Law from FGV/SP. Bachelor of Laws from PUC/SP. Member of the Brazilian Institute of Sports Law (IBDD). Lawyer in São Paulo.
Source: Lei em Campo
