In recent years, there has been significant progress in the online gaming market in Brazil, and we are now at a crucial moment—regulation. This change is expected to trigger various events, mostly positive, especially in terms of the economy, formal job market, and responsible gaming. We are talking about a sector that, even in informality, generates between R$ 120 billion (US$ 22bn) and R$ 150 billion (US$ 27.5bn) per year, equivalent to 1% of the national GDP.
Job creation and professional prospects: the impact on the workforce
One of the main social transformations that regulation is expected to bring is job creation. Currently, most of the major players in the sector are foreign companies that, due to the inability to operate within national borders, do not have local employees and use very few service providers.
With regulation, these companies will begin to operate legally in Brazil, with a Brazilian CNPJ (Brazilian corporate taxpayer identification number), bank accounts, operating permits, and all other responsibilities and obligations any company needs to operate in Brazil. This implies hiring people and consuming services.
It is estimated that between 2,000 and 5,000 jobs will be created in the sector, in addition to indirect jobs generated by suppliers and service providers, with these positions consuming capital that was previously 100% sent to the headquarters of 'Bets' - as the operators are called in Brazil - outside Brazil.
In other words, in addition to generating jobs, these will be financed with capital that did not circulate in the Brazilian economy. For this reason, the argument that 'Bets' take money from other sectors of the economy does not make much sense. The trend, as already mentioned, is to further increase the monetary volume in circulation.
Taxes: a concrete return for society
An important aspect of regulation also concerns the impact on tax revenue. It is estimated that the regulated industry could contribute between R$ 20 billion (US$ 3.6bn) and R$ 50 billion (US$ 9bn) annually to public coffers, directly helping areas such as public health and infrastructure, in addition to the tax revenue generated from the payroll of these companies.
This aspect is often overlooked by those who oppose regulation, but it is extremely relevant: legalizing the sector tends to guarantee a new source of revenue for Brazil, which will be accounted for in our GDP and will ensure more monetary circulation in the real economy.
Beyond tax revenue for the Union, states, and municipalities, it is likely that there will be an optimization of the budget allocated by 'Bets' for marketing campaigns, expanding from the current near-exclusive investment in football to other activities, such as social projects, culture, and urbanism, through sponsorships of films, theatrical productions, naming rights of stadiums, theaters, cinemas, shows, and events in the iGaming world.
Responsible gaming: a consciousness that goes beyond business
One of the main opportunities—if not obligations—that regulation will bring is the promotion of responsible gaming. Awareness, regulation of advertisements, financial education, and combating gambling addiction will be key points that players must observe, and they certainly will.
The implementation of an "ESG" agenda for the sector is a necessary and fundamental condition for ensuring sustainable, long-term growth, out of reach of attacks from certain segments of the real economy.
This also brings economic benefits to companies in the sector: the Customer Acquisition Cost (CAC) in the industry is extremely high, and ensuring a healthy and loyal customer base is highly advantageous. As the saying goes, it’s cheaper to spend on prevention than on treatment.
Opportunities for foreign companies: growth with security
Brazil presents enormous potential with the regulation of the iGaming sector, offering a great opportunity for foreign and national companies to expand their activities in an organized manner. With over 200 million inhabitants, there is still a large market to be explored. However, the positive aspect lies in the governance and oversight guaranteed by regulation.
For multinationals managing global-scale operations, regulating the Brazilian market represents transparency, predictability, and the chance to invest in a more stable and reliable market, which will facilitate attracting new investors and establishing strategic partnerships to strengthen their presence in the country.
A good example of this trend is the deal between Flutter and the NSX group. The amount paid for 56% of NSX was R$ 2 billion (US$ 366m), corresponding to an initial valuation of R$ 3.57 billion (US$ 650m), potentially exceeding US$ 1 billion depending on the commercial conditions governing the purchase format of the remaining 44%.
A deal of this magnitude, besides helping to price the sector, establishing market multiples (in this case, valued at an impressive 18x Ebitda), also moves various sectors of the economy: lawyers, accountants, financial advisors, auditing firms...and, of course, millions of reais in taxes.
In Summary: regulating iGaming in Brazil is crucial to strengthening this sector and bringing tangible benefits to the economy and society as a whole. These measures contribute to job creation, increased tax revenue, and the promotion of responsible practices aimed at protecting consumers interested in this form of entertainment.
Roger Amarante
Partner / CFO of Salis Capital. Graduated in Statistical Sciences from the National School of Statistical Sciences – ENCE, with an MBA in Finance from IBMEC and a postgraduate degree in Leadership from Fundação Dom Cabral. He has over 18 years of experience in finance, spanning the capital markets and industries, with tenures at XP Inc, L’Oreal, Vesuvius PLC, and Monte Bravo, and as an entrepreneur as Co-Founder of the financial group Hub C.
