The report, titled "Online Betting: Size Estimates and Impact on Consumption," was produced by the Macroeconomic Research Department of the bank.
"BETesporte is directly involved with the passion of Brazilians, which is football. We support several clubs, including the main ones in the Midwest, such as Goiás and Vila Nova, promoting actions that engage their massive fan bases. In addition to this closeness, we offer great conditions every day on our platforms and seek safe and responsible gaming," comments Kelvin Pereira, Director of BETesporte.
"Reals is always following trends and getting closer to what drives the daily life of our audience. We are proud to have Rodrigo Faro on our team, further strengthening this relationship with our audience. Supporting Coritiba and Amazonas also plants the company’s flag in Brazilian football, with partnerships that are already a success. Every day, we also have promotions on our social media, as well as actions and campaigns that interact with all users," highlights Rafael Borges, Country Manager of Reals.
The report states that another method to estimate online gaming spending "is by examining the marketing expenses of companies in the sector. If we identify how much these companies spend on marketing, and what fraction these expenses represent of their total revenues, we can arrive at an estimate of the sector's total revenue."
Based on international examples, companies operating in Brazil spend between 45% and 75% of their revenues on marketing. Other financial statements from publicly traded international companies were consulted during the period from 2021 to the first quarter of 2024.
"What motivates us to invest in sports is the reach, communication power, and frequency it provides, especially in football. It is something that resonates not only during the 90 minutes of the game but also extends beyond the pitch, allowing us to participate in historical, decisive, and emotional moments with our brand. This is entertainment. Being associated with a platform like sports, especially football, is also fundamental for positioning our brand in terms of recall and reputation," says Leandro Figueiredo, Head of Sponsorships at EstrelaBet, a company that sponsors clubs like Internacional, Criciúma, América-MG, Ponte Preta, Botafogo-SP, and CRB.
"We always seek to establish agreements with clubs that have a very clear governance process; we evaluate their management processes. We know this does not guarantee positive results in terms of titles, but at least it is a point that can ensure some degree of longevity regarding high performance," adds the executive.
In the United Kingdom, for example, a more mature market in this segment with betting regulation since 2005, marketing expenses have been around 20% of gross revenue. In the United States, where the betting market is still expanding (regulated by most states since 2018), companies still spend more on marketing, close to 30% of their revenues.
The Brazilian market, however, is even more recent than the North American one, as the national regulation law was only approved in December 2023. However, the study believes that a good approximation is that companies established in Brazil are spending what U.S. companies spent a few years ago—in 2021, for example, when marketing expenses in the U.S. ranged from 48% to 75% of revenues.
Another fact pointed out by the study is that the sector's revenues ranged between R$ 8 and R$ 20 billion (US$ 1.46 to US$ 3.7 billion), with a median value of R$ 12 billion (US$ 2.2bn). "The uncertainty arises from the limited transparency that has characterized the sector so far," it says.
Brazilians are spending more on bets
According to the same study, Brazilians are spending more and more on bets. Almost R$ 24 billion (US$ 4.4bn) net was spent on bets in the last 12 months, with data up to June 2024. These figures represent 0.22% of Brazil's Gross Domestic Product (GDP). The net income for those who won some type of bet was estimated at R$ 200 million (US$ 36.7m).
According to the report, no significant impact was found from the growth of betting on the performance of the retail sector. In other words, consumer goods purchases follow the same patterns as in previous years, despite the considerable increase in spending on online games and sports betting.
For Darwin Filho, CEO of Esportes da Sorte, the robustness of the sports betting and online gaming market is an indisputable fact worldwide. "The legalized and regulated industry, as it is in 19 of the world's 20 largest economies, including Brazil, allows this reality to generate formal jobs and taxes, and contributes to a positive economic cycle with all the investment made in marketing, media, and the tertiary service industry. The recent Brazilian regulation brings legal and financial security to operators willing to invest and create new jobs in the country," he points out.
"Brazil currently represents 25% of all global sports betting traffic. It is a relatively new market in Brazil, but it already presents such significant data as those presented in the study. I believe that the trend is for it to increase even more because regulation reflects the importance of betting, representing a relevant scenario in the country's economy," explains João Fraga, CEO of Paag, a techfin that facilitates day-to-day operations and offers support for operators in the segment to comply with the new regulatory guidelines established in the country, authorized by the Central Bank (BC).
"Regulation arrives to assist and bring security in a scenario where companies previously were not accountable to any Brazilian law; today, they will face severe penalties if they do not comply with the required standards. From this, we expect a competitive market with clear and safe rules, including guidelines for practices like money laundering prevention. For the user, responsible gaming should be a topic of much discussion in the coming years, as well as gambling addiction prevention, transforming a gray and poorly regarded market into something it always should have been: entertainment," adds Fraga.
Source: GMB
