Those who watched the match between Flamengo and Bragantino, for Serie A of the Brasileirão, last week, couldn't stop watching the advertisements of at least six sports betting sites during the broadcast: Betano, Betnacional, 1xBet, Mr. Jack Bet, PixBet and Parimatch – either on the luminous advertising signs on the side, on mats laid out next to the goalposts or on the clubs' own jerseys. Not to mention the ones that announced it at halftime, like Sportingbet.
If the profusion of names in this market draws attention to a high demand among sports fans and has even awakened politicians to the possibility of regulation, there is another segment that has benefited from this boom in a more discreet way: banks and fintechs companies that make the bridge so that sites have Pix as a tool to receive bets and pay prizes.
Before Pix existed, betting sites – virtually all based abroad – were restricted to credit cards, which often had payments canceled because operators considered suspicious transactions. Another alternative was to make an international bank transfer; which approval could take hours. The procedure is so slow that it was common for the user to give up betting, since the matches have a date and time to happen.
"The market for betting sites has grown five times over the last four years in Brazil and Pix is mainly responsible for this," says André Gelfi, president of the Brazilian Institute of Responsible Gaming (IBJR), an association that brings together 13 sites that operate in Brazil.
The IBJR estimate is that the Brazilian market will total R$ 5.8 billion (US$ 1.2b) in revenues in 2023, with R$ 84 billion (US$ 17.5b) in bets, an amount close to what PagSeguro, for example, transacts in payments in a quarter. According to Gelfi, more than 90% of what moves today is done via Pix. Not by chance, there are sites that put Pix in the name, like PixBet.
To make Pix available to betting sites, banks and fintechs charge a commission, which may vary depending on the size of the customer and the volume transacted. Pay4Fun, for example, a payment institution focused on serving customers in the entertainment market, works in Brazil with some of the main global players, such as Bet365 and Betano, and charges fees ranging from 2% to 4% for user deposits and from 1.5% to 3% for redeeming prizes. Last year alone, the company recorded 4.95 million transactions with Pix.
In addition to Pay4Fun, institutions such as Stark Bank, BS2, Banco do Brasil, Asaas and Zro Bank also work with Pix for betting sites. This is an especially interesting market for those focused on serving the corporate public, such as Stark Bank, BS2 and Asaas.
Stark, for example, works with houses like Betano and Bet365. Asaas, a partner of names like Betnacional – which has Vinicius Junior, the Real Madrid star, as brand ambassador –, started operating in this segment last month and is also a provider of banking as a service for other fintechs contracted by betting sites.
Exchange banks also get in the way of money when remittances made in Brazil to the headquarters of websites abroad, most located in Curaçao, Malta and the United Kingdom. To send money abroad, Pay4Fun, for example, works with four partner exchange banks.
A recent change in the foreign exchange law, which came into effect at the end of last year, increased the threshold for payment institutions to make foreign exchange transactions. "The market has become more accessible and flexible," says lawyer Gabriela Ponte Machado, a specialist in banking law and means of payment at Lobo de Rizzo.
In the betting boom, another niche that opened up was that of companies that are not exactly financial institutions, but that present themselves as businesses that offer services or intermediation of payments. They are companies that represent the sites in Brazil, receive the money in a bank account and then transfer it abroad.
Anspacepay, for example, works with 25 clients in this market, including PixBet, charging a fee on each transaction and also working with large exchange banks to make remittances abroad.
Another example is Causin Serviços de Pagamentos, which appears as the holder of the destination account for those who make a Pix on the websites of Betano, Bet365 and Betfair – the latter has Ronaldo and Rivaldo as poster boys. Causin has an account at both Stark Bank and Banco do Brasil. Pipeline tried to contact the company by phone, but the number available on the website is for the accounting office that helped open the CNPJ and does not provide another phone number.
If Brazil advances in the regulation of websites – a debate driven by manipulation schemes involving players – it is possible that a part of this payments market will no longer be able to operate. One of the discussions in Brasilia involves demanding that institutions have some type of authorization from the Central Bank to operate. "That would bring security to the market and make the sites more comfortable because the BC would be a seal of quality," says Gelfi, from the IBJR.
Marcello Reis, head of the commercial area at Anspacepay, believes that regulation would be welcome because world experience shows that well-defined rules increase demand by making it safer for customers to place bets. "This can guarantee the growth of the market in the coming years," he evaluates.
With the exception of BB, the big banks are still far from this branch. The possibility of entering for real does not scare precursors, such as Pay4Fun. "We were the ones who gave a hand to this type of operator in the beginning, when they needed it most," says the CEO of the institution, Leonardo Baptista. "If Bradesco enters, it won't have the knowledge I have of the market. The operator calls me with a pain that Itaú won't know how to solve."
The focus of discussions in Brasilia, however, is not on payment services, but on the sites themselves, which may receive some type of taxation or requirements that increase the market entry barrier. Operators do not envision a reduction in public demand, but a reduction in the number of houses, probably favoring the large ones in the market.
Until then, new sites will appear to the public with each new match and become a new potential customer for those offering the Pix. Baptista, from Pay4Fun, estimates that today around a thousand platforms are in operation in Brazil. "It's like Mexican paleteria," he says.
Source: Pipeline
