THE RISE OF LATAM
Dima Reiderman, Chief Operating Officer, BtoBet.
There is no denying that LatAm is currently in the limelight. How does the market’s potential compare to other well established markets?
Let’s start by making reference to data that has been published by the International Betting Integrity Association (IBIA) together with H2 Gambling Capital and which indicates that the Latin American betting market had a value of $1.3bn (€1.1bn) in gross win in 2020. This is forecasted to see a near threefold increase to $3.4bn (€2.9bn) by 2025.
Whilst this is currently only a fraction of the global gross win, Latin America is one of the regions which are earmarked to increase their market share on the short term. This whilst keeping in mind that the data provided by H2GC indicate that the global market share for certain markets – namely Asia and Europe – is expected to fall.
Going into specifics, when it comes to online sports betting and again taking a look at the data for 2019, Europe had the largest share with over 50%, which was followed by Asia with around 30%. However, both are expected to lose market share by 2025 falling to 45% and 27% respectively. On the other hand the US market is expected to jump from its 8% share registered in 2019 to 19% in 2025. Whilst Latin America is also expected to double its share to 1.8%. So whilst the local LatAm market is still strictly speaking an emerging market, we are seeing positive growth trajectories which are garnering the interest of international betting powerhouses.
There is a lot of expectancy related to Brazil. How big of an opportunity does the local market really pose for operators?
The liberalisation of Brazil’s gambling laws has been a discussion point and area of vast interest for some time, with a number of foreign companies poised to enter the market once regularised. And finally it seems that 2022 will be the year when this sleeping giant awakes, and do so in a successful fashion, having the largest consumer base in Latin America and a proven propensity for gaming.
A study which was published recently by Grupo Globo, the largest mass media group of Latin America, and one of the world’s largest media conglomerates, gives a clear indication of how much the market is appealing, and the stats look more than encouraging. In fact the study highlights that at 2020 the sports betting market generated revenues amounting to around BRL 7 billion (€1.16 billion), even though the pandemic brought to a halt sporting events on a global level. The study further indicated that between 2018 and 2020 the market grew from BRL 2 billion to BRL 7 billion. And the growth is expected to be much more exponential once the market gets fully regulated.
Furthermore, there are already indications of the betting channel distribution, with the North-eastern Region expected to have a strong retail presence, whilst the Southern regions, which have access to better technological infrastructures – such as Rio de Janeiro, Sao Paulo and Minas Gerais – are expected to have a prevalence in digital betting, which bodes well to the online sports betting industry.
Apart from Brazil what other opportunities does the region keep in hold?
Key markets such as Argentina and Colombia have already legalised online gaming, and further legalisation in big and challenging markets as Mexico, Brazil, Chile – just to mention a few – is highly anticipated. And given sports’ strong cultural ties, it is natural that the most important regulatory changes that have been made so far are related to the emergence of sports betting as well as the initiatives to legalise online gaming.
The current regional landscape, based on the player trends and demands with regard to new game content and higher demand for sports betting, in parallel to the governments’ stance to adopt legal frameworks that put player safety at the forefront, is transforming the regional iGaming scenario into a fast-developing, highly appealing and increasingly profitable market.
It is important to note that the regularisation of the Colombian industry in 2017 has put in motion a general nod of consent from all the different local authorities to shift in favour of regulation. The imminent regulatory framework that is set to be implemented by Brazil is dominating the industry’s agenda and I expect Brazil’s stance towards regularization to further accelerate the decision making of all the neighbouring countries that are still pondering the regulatory status of their local industry.
Since its first steps in the region BtoBet has emphasised that there is no single formula that works for LatAm. But how does the region differ to the more mature markets?
If European brands are coming with the same strategy of penetrating European markets in Latam, it is not going to work. You need to adjust to the local culture. And as far as you do that you will succeed. No matter the size of the brand itself, if you adjust to the market requirements you have a greater chance to succeed. And this is not restricted only to language, but also includes content, payment methods amongst other things.
Let’s take Brazil again as a case scenario. The local population is really keen in following all things related to sports, yet they are particularly passionate on football, which forms an important part of their culture. But is sports limited to just football? And the clear answer is no. Basketball has a huge following as well. And when it comes to basketball I am not only referring to the local and regional form because NBA is widely followed in Brazil. Then again volleyball has a huge following in Brazil, as does futsal, and beach volleyball which again are intertwined with local culture and lifestyle. The same applies when it comes to racing, with the Brazilian F1 Grand Prix being one of the most popular in the series’ calendar.
Then then are the payments. We have a scenario of around 60 million people with bad credit history. And this limits drastically the access to credit cards for instance. So even if credit card is a valid payment method, for this particular scenario it is not going to reach the broader society.
Thus operators have to understand how the locals proceed with the local payment methods, and one payment method where you can reach 100% of the population is the boleto bancario, which acts as a barcode allowing money to be routed. With this payment method you are knocking down the barriers limiting payment methods and people can pay with via mobile phone, with their credit card, or with cash, thus instantaneously providing a broader payment method coverage. However, there are also the issues with this method of payment where sometimes this “routing” is not made immediately available.
It is therefore key for operators to know exactly the challenges which characterise the market and how they can adapt to meet the local player requirements. So having said this as a sportsbook provider we must have a very clear understanding of all these different elements. And we must be in a position to provide operators with a wide portfolio of solutions to meet the different local audience preferences. We must listen to the operators’ needs, and adapt our product accordingly.