Brazil needs to end its reality show and regulate sports betting

It is not a surprise that the Brazilian fixed odds betting regulation will be subject to a new evaluation and consequently a new delay in the process to have an adequate regulation to capitalise on the promising Brazilian sports betting market.

The new regulation draft supposes a big change in the licensing process, going from an open competitive environment to a limited number of licenses under a tender bid process.

Nothing wrong with the tender, it could in fact be much cleaner; it grants more protection to a limited number of operators, but it also limits the access of a larger number of incumbents, which is not bad itself either – we all know that regulated markets finally end with over 75% of the market share in the hands of half a dozen qualified and more experienced operators – but the Brazilian market is significant and there could be space for more incumbents to compete.

What matters here is which will be the business model as a whole, so that the operators can evaluate the opportunity to enter into this long waited and promised market, a few issues shall be established thinking on the interest of the administration to preserve the large – majority – size of the offer under the regulated environment, for what they must allow the operators to have a complete competitive offer and obtain a sustainable business performance, as well as  i.e. – a regulation to allow retail and/or digital, or both combined for a well-designed omnichannel configuration; a reasonable taxation rate based on gross gaming revenue which should be in the 15% region;  if there will be a complete offer of content and markets; well established advertising, marketing and sponsoring framework, responsible gaming issues in place, preserve the integrity of sports in a very commercialised environment, etc.

A viable proposition?

I think that there have been, and still are, lots of people giving opinions with probably not much concern about the viability and sustainability of the regulatory framework to achieve the goals in a market inundated with a huge offshore offer, which shall be migrated to the regulated environment and provide with the adequate model to prevail over the non-regulated offer.

Now they must put together a really serious regulator’s agency to deal with all the process, with transparency and integrity but also, and foremost, with people knowing what to do and do it well, because this initial process I have a hunch will be complicated to develop without a few hiccups.

The compliance, technical and operator requirements must be in place and contrasted with existing experienced jurisdictions and nowadays should not be a problem to have the right specifications and requirements in place, to which all operators are used to.

The government agency responsible for the gambling sector and in this case the sports betting segment must know what to do and have a very clear roadmap to follow, otherwise it can be chaotic.

Having said all that, I still have my doubts about the timing element as to when Brazilian sports betting activity with be a real thing and not a reality show as it has been so far,  with so many conferences and no less calls for opinion difficult to account but with no practical results.

Let’s hope and see if it will be in place by 2021 if no new delays put expectations at stake.

Eduardo Morales Hermo has over 50 years as hands-on, high energy entrepreneur and advisor, corporate executive management, business strategy, marketing and product development for the retail and online betting and gambling industry B2B and B2C worldwide