Brazil’s Booming Gambling Market Poised for Major Consolidation

Brazil’s online betting and iGaming industry has enjoyed explosive growth, with active player accounts projected to reach 36 million by next year. As more companies seek to obtain a Brazilian license, especially in the highly lucrative sports betting vertical, industry experts predict a wave of consolidations as the market matures.

Consolidation Could Be Inevitable

The Brazilian gambling sector’s unprecedented growth has left the nation’s market more fragmented than ever, with an estimated 300 brands fighting for a limited customer base. This rapid evolution has led to substantial benefits as the unregulated offshore operators that previously ran rampant now face an uphill battle against the nation’s regulated industry.

Speaking for news outlet NEXT.io, Kiko Augusto, CEO of Daily Fantasy Sports operator Rei do Pitaco, noted that such swift expansion has led to an exceedingly fragmented market. He believes consolidation is inevitable and predicts a drastic reduction in active companies, likely down to the single digits.

The market is really fragmented, and consolidation is inevitable. I believe we’ll eventually see five or six major players controlling the majority of the market.

Kiko Augusto, Rei do Pitaco CEO

In contrast to the US, where market leaders FanDuel and DraftKings dominate with an overwhelming 80% market share, Augusto predicted Brazil could replicate the UK’s highly competitive landscape. He added that in-depth knowledge of local markets will be critical for operators striving to retain their market position.

The Initial Rush to Market Is Still Going Strong

The growing number of operators entering the Brazilian market has prompted many industry players to consider mergers and acquisitions (M&A) to gain a competitive edge. Some companies that have acquired licenses may not necessarily have long-term plans to operate but view their licenses as tradable assets that can be flipped to the highest bidder.

Despite these predictions, the initial rush to market is far from over. Since the licensing application period ended in September 2023, 145 companies have submitted 150 applications. Sixty-eight businesses have obtained full licenses, paying the required concession fee of approximately $5.2 million alongside an initial lump sum of over $395 million. Local operators have managed to stay relevant, showcasing the potential of Brazil’s domestic industry.

While the influx of new operators will likely continue in the short term, industry analysts predict only the most successful and strategically-minded companies will last throughout the next few years. Companies that adapt quickly, leverage local expertise, and secure strategic partnerships will likely emerge as industry leaders while the rest become stepping stones for their growth.