Entain expect Brazil growth to level out following legal market launch
Entain reported 48% year-on-year revenue growth in Brazil in its Q3 trading update, doing so for the second straight quarter having also achieved that figure in Q2.
Chief financial officer Rob Wood described it as the “headline grabber” of Entain’s Q3 results and, with the online sports betting and igaming market set to launch on 1 January 2025, Brazil looks set to continue playing a key role in the company’s future.
Entain is already live in Brazil with its Sportingbet brand, which is one of 98 companies currently approved to do business during the regulator’s transition period between 1 October and 31 December. Should it achieve federal authorisation with the Secretariat of Prizes and Bets (SPA), it will be able to continue to operate this brand in Brazil from 2025 onwards.
Despite the big plans, though, Wood noted growth would slow for Entain as the licensed market will bring new regulations that will impact users, including restrictions on marketing.
“Growth from Brazil in 2025 is likely to be much more moderate,” Wood told analysts on the Q3 earnings call on 17 October. “But clearly Brazil is a really important market for us.”
Entain increasing marketing spend
Brazil is set to be a hugely competitive market with international giants such as Betano and Caesars Sportsbook joining established local brands in the likes of Rei do Pitaco and Esportes da Sorte in applying for a licence.
As a result, Entain is currently working out how it can best market itself to appeal to Brazilian bettors, with Wood noting an expected rise in marketing spend can be expected in 2025.
“We’re looking at what the right level of marketing budget should be and no doubt it will be up on 2024,” Wood explained. “We do expect one or two material new entrants or increased marketing budgets from existing larger players.
“The paybacks are strong in Brazil and that’s led to us increasing marketing investment this year as well. So it’s a market we want to play in and be successful in.”
In terms of how it can attract bettors, Entain is already benefitting from having a new team on the ground in Brazil with localisation and a strong product set to play a key role in its strategy.
“You’ve heard Sameer [Deen, Entain’s chief commercial officer and president] talk about things like sourcing payments out as in withdrawals, improving content and making sure we have popular local games available at the Aviator game,” Wood added. “The front end has improved significantly, benefitting from BetMGM’s developments.”
Regulation on its way in Brazil
With the legal market now only months away, there has been rising criticism against the gambling industry in Brazil over regulatory measures such as advertising and payments.
There have been some who believe the pressure could lead to the 1 January 2025 launch date being pushed back.
However, Entain CEO Gavin Isaacs remains confident it will indeed launch in the new year, with Entain largely in agreement with the current regulations in place.
“We don’t expect there to be a delay, but we do encourage regulation,” Isaacs said. “We are fully regulated and that’s what we operate best in. And so I think that would be something that they’re looking at and may end up being an advantage to us.”
Wood added: “Some of the measures that are being looked at we will see as sensible from our perspective, banning of credit cards, that advertising has a sufficient allocation towards responsible gambling and all those things seem relatively straightforward.”