Brazil’s newly regulated betting market is likely to be dominated by a select group of between 10 and 12 top-tier operators, with smaller and mid-tier companies expected to face significant challenges in competing due to high barriers to entry, incoming tax increases, and new advertising restrictions. This forecast comes from Christian Tirabassi, founder and senior partner at M&A advisory firm Ficom Leisure.

Brazil’s online market officially launched on January 1, 2025, with an initial 14 full licensees. Subsequent approvals from the Secretariat of Prizes and Bets (SPA) have led to around 80 operators currently active in the legal market. However, even with these operators having met initial high barriers to entry, including a BRL30 million (approximately $5.5 million) licence fee, concerns persist that the hefty costs for continued compliance could force smaller players out of the market. Adding to these pressures are a recent increase in gambling tax from 12% to 18% of Gross Gaming Revenue (GGR) and forthcoming advertising restrictions, which are expected to push the market to mirror more mature European jurisdictions where a handful of larger players command the majority of market share.

Tirabassi notes that companies that were strong performers in Brazil before the regulation are realistically maintaining their leadership positions. He highlighted the joint venture between MGM and Grupo Globo as a notable new strategy in the market, but observed that most other leading brands are continuing their established operations, including Betnacional, which was recently acquired by Flutter. Tirabassi predicts that the majority of the market will ultimately be divided among 10 to 12 operators, which could collectively represent up to 30 brands. He believes that operators below a certain GGR threshold will face considerable struggles in competing effectively.

H2 Gambling Capital estimates Brazil’s online betting industry could reach BRL31 billion (approximately $5.5 billion) in GGR in 2025, with projections for growth to BRL64 billion by 2030. These figures do not yet fully account for the potential impact of the recent tax increase.

Regional Operators Could Find Niches

Despite his belief that larger operators will dominate the national landscape, Tirabassi suggests that smaller competitors could still maintain a reasonable market share if they are able to find and cultivate a specific niche. He envisions this could be a regional focus, where an operator might secure a decent market share in a particular geographic area for various reasons, rather than attempting to compete nationally. However, he cautioned that the financial numbers for such regional operations would be considerably smaller than those pursued by national operators like Bet365, Flutter, and EstrelaBet, which are aiming for GGRs exceeding BRL200-300 million per year.

Customer Acquisition Under Pressure from New Ad Measures

With smaller operators already expected to struggle due to the inherent high cost of doing business in Brazil, recent legislative developments are poised to further intensify pressure on such companies. New advertising restrictions, banning the use of influencers and athletes and introducing watersheds, were approved by the Senate in May. Additionally, the recently implemented increase in the GGR tax rate from 12% to 18%, representing a 50% hike, will undoubtedly place more pressure on operators attempting to compete in the new market.

Tirabassi anticipates that over $2.5 billion will be spent on marketing in Brazil over the next 18 months as operators scramble to compete in the new market. Larger operators are expected to account for the bulk of this expenditure as they strategically aim to build market share ahead of incoming ad restrictions. He suggests that companies anticipated these restrictions and are therefore “flooding the market” to gain the largest possible share. He believes that if and when these restrictions come in, operators will already have a sizable market share that they can potentially maintain.

Potential Obstacles to M&A Activity in Brazil

Tirabassi expects Brazil to become the hottest M&A market in Latin America’s gaming history, which could offer a profitable exit strategy for smaller operators or enable them to integrate within a larger corporation. He advises these independent operators to ensure they have all the necessary corporate requirements in place to facilitate a potential sale. In his experience, a lack of robust corporate structure could lead to problems for operators. He notes that if a very large business has a minimal corporate structure that is not in line with its size, operators will need to “catch up” significantly. He adds that while these companies may have adhered to the legal and compliance requirements for a license, they will need a CFO and a proper corporate adviser to review their numbers and ensure they are ready for due diligence processes.

The insights from Ficom Leisure underscore that while Brazil’s regulated betting market holds immense potential, its high barriers to entry, increasing tax burdens, and evolving advertising regulations are creating a competitive environment that will favour well-capitalized, strategically agile operators.