The data is part of a survey conducted by Pedro Simões and Felipe Getz from Veirano Advogados, shared exclusively with Brazilian newspaper Globo.
Among the international groups that have applied for registration are MGM Resorts from Las Vegas, which announced a partnership with the Globo group for a joint venture in the segment; SportingBet, part of the Entain group, which is listed on the London Stock Exchange with a market value of 4 billion pounds; Betfair, part of the Flutter Entertainment group, listed on the NYSE with a market value of US$36.7 billion; the Swedish company Betsson, and the American Caesars Sportsbook.
"Major foreign groups were waiting for the regulation to be finalized before entering Brazil," says Monique Guzzo, a lawyer specializing in regulatory law at Demarest.
The major betting houses already operating in the Brazilian market, such as the British Bet365 and Betano, headquartered in Greece, and those founded by Brazilian entrepreneurs, such as Betnacional, Rei do Pitaco, Esportes da Sorte, and TQJ-Par, which belongs to the Silvio Santos Group, also requested authorization. The Swedish company KTO applied for registration through Bet Apollo Operations, based in Rio Grande do Sul.
"This doesn't mean that other companies won't be able to operate in Brazil, but this first wave will be authorized to operate starting in 2025," notes Udo Seckelmann from the Bichara e Motta law firm.
On the 20th, the deadline for betting companies to submit license applications to SPA if they wish to continue operating in Brazil as of January 1, 2025, ended. They will have to pay R$ 30 million (US$ 5.5m) for the concession to operate in the country for 5 years, allowing them to operate up to three brands.
In addition, they need to maintain at least R$ 5 million (US$ 915,000) in financial reserves to cover betting payouts. This requirement is also likely to lead platforms to seek financial partners.
According to lawyers and industry analysts, a wave of mergers and acquisitions is expected. Smaller companies that could not meet the minimum requirements for regulation are likely to be targeted by larger players. The regulation of the sector in Brazil will come into effect in 2025.
The entry of international groups and the interest of private equity funds in this market are expected to lead to a wave of mergers and acquisitions in the sector. One of the rules established by the Ministry of Finance is that a betting company must have a Brazilian partner with at least 20% of the capital.
"The requirements for obtaining the license, both financial and regarding the minimum participation of Brazilian capital, have already led to some partnerships for this initial stage, as various groups have joined forces to apply and ensure they can legally operate on January 1, 2025," says Clarissa Yokomizo, a partner in the Mergers and Acquisitions and Gaming and Betting practices at Veirano Advogados.
There are other requirements, such as local representation. Each company will need to have six responsible individuals in Brazil, including four statutory directors, explains André Santa Ritta from Pinheiro Neto Advogados.
Although it's difficult to determine the exact number of betting companies operating in Brazil, with figures ranging from 308 according to a PwC survey to more than a thousand, it is estimated that online gaming and sports betting have generated R$ 68.2 billion (US$ 12.5bn) over the past 12 months, according to a study by Itaú Unibanco.
The Entain group estimates that this market in Brazil generated US$1.5 billion in revenue for operators. "Despite the large number of betting companies operating in Brazil, around 100 companies concentrate between 85% to 95% of the market," says Santa Ritta.
High investment expectations
According to her, from now on, there should be a more structured but quite robust movement of investments in the sector, both foreign and national, through the establishment of joint ventures (partnerships) or acquisitions of companies that already have licenses (although this would require a new process with the Secretariat of Prizes and Betting of the Ministry of Finance (SPA), under the Ministry of Finance, at the time of the investor's entry).
"The enormous potential of this area has even made more conservative investors stop 'turning up their noses' and start considering the profit possibilities of this new regulated market. This movement has been seen from investment boutiques to more traditional banks," says Yokomizo.
There are 113 license applications at the SPA, but there were duplicate requests, which may indicate that some betting companies wanted to "get ahead" with more than one registered brand.
Among the requests, 96 were submitted after July 31, when the federal government published the ordinance with rules for electronic games, popularly known as online casinos.
British companies dominate among foreign ones
A significant portion of the online betting market will be in the hands of foreign operators. Even applications submitted by national companies (62 requests) may involve indirect foreign resources and financing, such as loans.
British companies dominate this list, with at least six applications, but there are also companies from the United States, Mexico, Spain, Australia, the Philippines, Armenia, Cyprus, and Gibraltar. The study by Veirano Advogados could not assess the composition of eleven companies, either because they adopted a corporate structure or because their documentation was not available in public sources.
Among the major foreign operators that already represent a significant share in the national market, the following have applied for a license:
São Paulo leads applications
Most of the betting companies chose São Paulo as the headquarters for their operations in Brazil (67). Other companies chose Rio de Janeiro (9) and Minas Gerais (7). The Southeast region represents three-quarters of the total applications.
The Northeast, however, also stood out. There were 16 requests for the states of Ceará, Paraíba, Pernambuco, and Piauí. The South had 10 requests, the Midwest 4, and none in the North.
There was also a request made directly by an entity based abroad, which is initially unlikely to be accepted by the federal authority, as companies must have operations in Brazil and 20% of their capital constituted in the country.
Regulation overview
In Brazil, a 2018 law determined that online betting would be a type of lottery, but no complementary rules were created, leaving the activity in a sort of legal limbo.
To fill this regulatory gap, the recently approved federal regulation established rules, safeguards, and tax payments for the sector. The gross gaming revenue (GGR) tax rate is 12%, and bettors will have to pay 15% on winnings as income tax. Betting companies must have operations in Brazil and pay the R$ 30 million fee to operate for five years.
Source: GMB / O Globo / Pipeline
