"In my view, the Brazilian market cannot sustain 66 operators. If you consider that 50% of the market is controlled by three or four companies, the remaining 50% must be divided among 55. That leaves less than 1% market share for each. It’s unsustainable to run an operation like that," says André Gelfi in an exclusive interview with EXAME.
As managing director of the Swedish group Betsson in Brazil, Gelfi believes the next two years will be marked by mergers and acquisitions of smaller groups, a crackdown on illegal operators, and control over betting advertisements on social networks, especially those promoted by influencers.
"Oftentimes, the use of influencers in Brazil crosses the line. The main issue is the subliminal message: 'I’m winning at this game and bought this car.' This might seem indirect, but it’s the impression left on viewers. There’s tremendous responsibility in what these platforms and influencers communicate," he states.
Regarding low-income individuals using social benefits to gamble, Gelfi emphasized that the industry does not seek customers who "don’t have extra money in their budget to spend on entertainment." He reiterated that platforms would immediately implement any prohibition the government decides to establish.
"If the government decides to prohibit users of social programs, such as Bolsa Família, from gambling, we will implement this immediately and gladly, as it would help address part of this issue," he says.
In the betting market, IBJR is perceived as a representative of foreign betting companies—a segment comprising publicly traded companies worldwide. Gelfi refutes this claim, asserting that the group may appear like an "exclusive club" due to its stringent membership requirements. "But the goal is to advocate for healthy practices and avoid systemic risks," he says.
"What we’re doing is separating the wheat from the chaff. To be a member of the Institute, you must adhere to clear rules and be a company that respects international regulations because we represent not only in Brazil but also abroad," he asserts.
Full interview with André Gelfi, President of the Brazilian Institute for Responsible Gaming (IBJR)
What does regulation represent for the industry?
It’s a milestone. Regulation is necessary because it brings legal security, consumer protection, and ensures taxes are paid. At IBJR, we are focused on building a healthy, sustainable, and safe market. Without rules, serious companies lose out to those with no commitment to the industry and operate informally. Regulation is the only way to separate the wheat from the chaff.
The Institute includes nine member companies. Why is the number so restricted?
From the start, we decided that participating companies must meet strict criteria. IBJR was created to represent operators with a proven track record in regulated markets and compliance experience. Companies like Flutter, which owns Betfair, or Kaizen are major players with much to lose if something goes wrong. They wouldn’t join a group that includes companies without these criteria.
Our focus has always been to gather operators seeking recognition for a standard of excellence. In Brazil, many companies are just starting and lack the structure to operate in a regulated market. It’s natural for our group to seem like an "exclusive club," but the goal is to promote healthy practices and avoid systemic risks.
Can the regulated market limit the operations of illegal operators?
Absolutely. And the Institute will be held accountable by its members, who will ask, "What are you doing to shut down these unauthorized companies in Brazil?" Whether administratively or through legal action, the Institute will put effort into combating the informal market. For us, this is essential for reputational reasons, systemic risk, and fair competition. How can a company paying taxes and following all the rules compete with one that doesn’t, offers aggressive bonuses, and uses influencers recklessly? It’s impossible.
What’s the expectation for removing irregular platforms?
In an interview with EXAME, the Secretary of Prizes and Betting didn’t provide a timeline. My expectation is that 70% of the issue will be resolved within six months. Afterward, the remaining challenges will be harder to tackle. The more visible, large unauthorized companies will exit quickly. The issue will be the long tail: smaller companies that change names and are harder to track.
What about influencer advertising? What guidance has the Institute provided?
This is a critical issue. A significant article from Piauí magazine addressed the topic. Often, the use of influencers in Brazil crosses the line. The core issue is the subliminal message: "I’m winning at this game and bought this car." While it may seem indirect, it leaves an impression on viewers. There’s tremendous responsibility in what platforms and influencers communicate.
The Institute has a Code of Conduct that addresses this issue. For example, no IBJR-affiliated company can hire influencers whose audience consists primarily of minors. Another critical point is not suggesting, directly or indirectly, that gambling is a financial solution. Our focus is on making it clear that gambling is entertainment, not a way to make a living.
Can the informal market be combated with regulation alone?
Regulation alone is not enough. It requires oversight and engagement of the entire chain, from payment platforms to influencers. In addition, Brazil needs to strengthen education about what gambling means. Gambling is entertainment.
What about gambling for low-income people?
If you don't have money left in your budget to spend on entertainment, you shouldn't be gambling. In other words, we don't want people who are compromising the basics of their income – food, transportation, electricity, water – to become customers. If that happens, it's not sustainable. We are creating more pain than entertainment for that person.
So, we are absolutely against people in this situation committing their resources to gambling. Furthermore, we do not consider gambling a source of income. This is a very important point. Gambling with the intention of making money is reckless, and the way this is communicated can end up giving this mistaken idea. If you want to make money, you have to work, find a source of income, because gambling will not bring you that in any way.
How do you see a possible ban on Bolsa Família beneficiaries?
If the government decides to prohibit users of social programs, such as Bolsa Família, from gambling, we will implement this immediately and with satisfaction, because it would solve part of this problem.
What happens to companies that do not obtain a license? Will there be mergers and acquisitions?
We are already seeing this movement. There are many companies for sale. The group's email inbox is full of "prospects", with people offering operations. One example was the purchase of Betnacional by Flutter, which should be completed soon.
In my opinion, the Brazilian market does not support 66 operators. If you consider that 50% of the market is in the hands of three or four companies, the other 50% needs to be divided among 55. That gives less than 1% of market share for each one. There is no way to sustain an operation like this. What will happen is that smaller and less structured companies will be the target of mergers and acquisitions. This is a natural dynamic of a competitive market. In five years, I believe that the number of operators in Brazil will be much smaller, perhaps around 30 companies, which is still quite competitive.
In the last year, we have seen betting companies offering record sponsorship amounts to football clubs. What can we expect from these amounts with the regulated sector?
What we will see is an accommodation of prices at a level that is probably lower than the current one. Today, we are coming from a dynamic in which companies did not pay taxes in Brazil and the market was growing very quickly. The agenda was positioning, and football assets rose in price very quickly.
Now, with the regulation, companies are paying a significant tax burden. If you consider the 12% federal taxes plus PIS, Cofins and ISS, we are talking about something around 23% of revenue. That is almost a quarter. In addition, companies have to invest in structure in Brazil, with local offices and teams. All of this impacts the budget. When you look at the price of Brazilian assets and compare them with other countries, the values are already quite inflated. There are already Brazilian clubs with sponsorship contracts similar to those of Premier League clubs, which are global products, while the Brazilian Championship is a product for local consumption. So, I believe that the trend is towards adjustment.
Do you believe that companies will grow in the coming years?
I believe so, but with reservations. We will go through a "slump", a period of slowdown in the growth rate. This is because companies are adapting to the rules, there are fewer certified products available and registration validation is more rigorous. After this phase, the market should return to stable growth. Today, betting represents less than 0.5% of Brazil's GDP. In countries like Spain, the sector reaches 1%. This shows that there is a lot of room for growth, but in a responsible and sustainable way.
What lessons can we learn from international markets?
In Europe, we have seen important advances, such as betting limits, educational messages and strict advertising rules. I think Brazil can learn a lot from these markets. On the other hand, Brazil is not behind mature markets in terms of regulation. The use of facial recognition, for example, was an innovation that impressed even Europeans. Here in Brazil, we are already used to this in banks and other services. It took them a while to understand abroad, but they recognized that we are ahead in some areas.
What's next for the Institute and the Brazilian betting market?
The idea of he Institute is that it will, in fact, be the association that represents the regulated industry in Brazil. Do you have a license in Brazil? The government is saying that this company is legitimate and will follow the rules. This is essential. What we are doing is separating the wheat from the chaff. To be a member of the Institute, you have to follow clear rules and be a company that respects international regulations, because we represent not only in Brazil, but also abroad.
For example, you take a company like Flutter, listed on the New York Stock Exchange. Imagine a scandal in Brazil involving it. That would be a disaster. So, we prefer to work with companies that already have a long history in regulated markets and that follow good practices. Of course, this generates criticism, such as the argument that it is a "little club", but the focus here is to ensure that the regulated industry in Brazil is seen with credibility, both locally and internationally.
Source: EXAME
