Codere Online struck out alone in 2021, becoming the first LatAm-facing iGaming operator to list on a US stock exchange. As a wave of regulation sweeps the continent, how is new CEO Aviv Sher preparing to take advantage?
Amid the root-and-branch restructuring endured by Codere in 2021 its digital business prepared for life as a separate entity. A combination with special purpose acquisition company (SPAC) DD3 Acquisition Corp led to a Nasdaq listing and a new future as a standalone operation.
As an entity targeting the regulated Latin American iGaming market, Codere Online’s options were limited.
Aside from Colombia, where it faces fierce competition, prospects were sparse. Hopes for sports betting regulation in Brazil were fading, Argentina’s province by province model was moving slowly, while Peru and Chile were talking, rather than acting, on regulation plans.
Now, the picture is very different. Brazil may add iGaming to online sports betting, while regulation in both Peru and Chile is edging closer.
What needs to happen to bring Codere Online to Brazil?
But Brazil sports betting and iGaming, considered LatAm’s biggest opportunity by the industry, does not fit into the company’s plans currently.
“Our current structure, our current plans, and the way we operate, we are not entering Brazil,” explains Codere Online’s CEO Aviv Sher.
“It’s not a Spanish-speaking country. It’s a different culture, it’s sports-only, and we have huge players advertising for years as they build their brands in the unregulated environment.”
While it won’t be among the first wave the business certainly wants to ultimately find a way in “and we want to do it the same way we did it in Mexico,” Sher explains. “In order to do that we need a lot of money, a lot of capital, so we are looking for a JV, or to raise more debt or capital for Brazil, or even a spinoff focused on Brazil with separate financing.”
“With the current structure that we have, we will not be able to penetrate Brazil and make good investments and give our investors a good deal there.”
Profitability unlocks new opportunities
All of this ultimately hinges on Codere Online’s profitability, with Q3 2023 its first EBITDA-positive quarter. The business simply can’t raise more debt in the current economic climate, so posting positive EBITDA is crucial. “When the macroeconomics change and we show profitability it will be easier to raise debt. That’s why we’re super focused on delivering positive earnings by the end of next year.”
It’s not that the business lacks ambition but more a realistic focus on growing sustainably. That doesn’t mean Codere Online isn’t ambitious, Sher adds.
“In South America we look at Brazil, Chile and Peru like a second stage. But we are always looking north, to North America. There is a large Hispanic population here, Spanish speaking people that we appeal to with our brand,” states Sher.
“Brazil and North America are two strategic moves we want to make, but we need to see how to build a new structure around them to do it properly,” he concludes.
Source: iGB / GMB
