With the Brazilian government finally giving the greenlight for iGaming and online betting to be allowed in the country, the focus of the iGaming world has firmly shifted to the largest market in South America.
Looking forward to 2024, it’s clear that Brazil will be a target for many trying to establish early dominance in the market and establish a brand presence there. The upcoming SBC Summit in Rio will be an indicator of the importance of the Brazilian iGaming market for 2024 and beyond.
The state of the iGaming industry has evolved rapidly in Brazil and we are working to provide our best in-class software development and marketing services to new entrants and existing operators in the market.
Online Betting in Brazil – Legal Framework
On December 21st 2023, Brazil’s chamber of deputies approved Bill 3626/2023 to regulate sports betting. Just over a week later, on December 30th, Law No. 14790 was published into Brazilian law. This outlines the regulations imposed on the online betting market in the country.
There are a number of caveats and rules that operators must adhere to. In summary:
- Operator Taxation: Tax rates for operators will be set at 12% of gross gaming revenue. They will also be subject to corporate tax rates.
- Player Taxation: All winnings from fixed-odds bets and fantasy sports bets is subject to Personal Income Tax in Brazil. This will be set at 15% of net winnings.
- Licensing Fees: Operators interested in obtaining a Brazilian iGaming license will have to fork out around BR$30M (approx. $6.2M). This allows five years validity and for operators to promote 3 brands.
- Local Ownership: Any operator wishing to operate in the Brazilian market must have a local shareholder with at least 20% holding in the Brazilian entity’s shares.
- Inspection Fees: Operators will be charged a monthly inspection fee that will fluctuate depending on their net revenue.
- Self-Exclusion: Operators in the Brazilian market must offer their customers self-exclusion windows ranging from 24 hours to 6 weeks.
Technology in the Brazilian iGaming Market
New horizons mean new technology is likely to follow in the Brazilian iGaming market. KYC requirements have been included in the new laws recently passed and this is something that will have to be considered for any new entrants to the market.
At the time of writing, 138 businesses have registered their interest in licensing for the Brazilian market and we’re sure the rush to market will be significant this year. It will be interesting to see how technology innovation plays its role in new user acquisition and route-to-market in Brazil. We have seen how product innovation can play a crucial role in acquisition and retention in US markets. A similar pattern may follow in Brazil.
Google Play Store – Focus on Brazil
Following on from the Brazilian government’s announcement, Google quickly made their own regarding the Play Store in Brazil. Real-money gaming apps including sports betting, casino, daily fantasy sports will be available to download in Brazil. Google are also introducing similar regulations in India and Mexico. In some cases, this will include apps outside of the real-money gaming licensing requirements in those territories. However, Google will implement geo-gating and age-requirements for those who wish to download the app.
This is just further evidence of Google’s commitment to real-money gaming and also a view to how important the Brazilian market is to them. This program is set to launch in June 2024. Google is expected to open up their advertising and publishing capabilities for betting and fantasy game providers this year too.
Apps can be a very efficient and cost-effective way of acquiring new users in the Brazilian market. The Unit are experts in sports betting app development and building world-class products for the industry.
Android phones are the predominant choice in Brazil too, so this announcement from Google is significant. As of December 2023, 81% of phone users in Brazil have an Android device.
Advertising in Brazil
Law No. 14790 does mention marketing and advertising regulations within and operators are strongly encouraged to self-regulate. The Brazilian Council for Self-Regulation in Advertising have made further amendments to their guidelines which will take force on January 29th 2024.
For those familiar with advertising rules in the UK and other highly regulated betting markets, there will be nothing out of the ordinary but always good to know and take into account when preparing your marketing and acquisition strategy.
- Advertisers must clearly highlight what they are advertising and how e.g. influencers must flag that a betting operator has sponsored a post.
- Advertisers/Operators social media profiles must be verified.
- Responsible gambling copy and links must be included with ad posts.
However, betting advertisements are nothing new in Brazil. In similar fashion to what we have seen in the English Football League and other European soccer leagues, many of the country’s football teams already feature official betting sponsors and shirt sponsors. In 2023, 19 of the 20 Serie A football clubs in Brazil have a partnership with companies in the betting sector.
Other Markets in the Region
iGaming in Brazil is an obvious focal point for the industry given the size and potential of the market. However, neighbouring countires in South America are also making headlines in the industry.
Chile
After years of inactivity, Chile’s Chamber of Deputies approved a bill to regulate iGaming in the country in December 2023. The bill aims to introduce new legislation and improve their online betting options. Similar to Brazil, the new bill would require operators to pay an annual licensing fees and put a stop to illegal bookmakers accepting online transactions. Chile’s Senate is expected to approve the bill in early 2024.
Peru
Peru’s government approved their online gambling bill in October 2023. This is due to take effect from the 9th February 2024. It is quite similar to Law No. 14790 in terms of KYC and deposting requirements. Operators already active in the Peruvian market prior to the legislation have until the 10th March to apply for their license.
For operators, the barriers to entry are relatively low by comparison to the Brazilian market. Licensing fees are S/2.97M (approx. $800K) per annum or 3% of net revenue, whichever is higher.
iGaming in Brazil – 2024 Predictions
Everyone at The Unit is really excited for a big year in the industry. The iGaming market in Brazil is one we are really keeping our eye on. There is so much opportunity there with the recent legalisation of iGaming and online betting.
Established operators are sure to turn their attention to the new legalized betting market in 2024. Given that many offshore operators have established brand presence in the country, the potential for growth is immense. Local, homegrown brands will still be worth watching out for. In such a diverse market, innovation at every and step of the process can give new entrants the edge over larger competitors.
The iGaming market in Brazil will provide challenges for operators, affiliates, regulators and providers. However, we are confident that the Brazilian market and the South American region on the whole will be a significant point of focus for the industry over the next decade.
Contact us here if you’re interested in hearing how The Unit can help you build your brand and enter the Brazilian market.
