VIE 29 DE MARZO DE 2024 - 02:53hs.
Hervé Schlosser (CEO) attended OGS 2019

Sportnco supports the tax model chosen by Brazil for sports betting

After being part of a panel in the OGS of Sao Paulo, Hervé Schlosser, CEO and founder of the French firm Sportnco, gave his opinion on the future new regulation in Brazil, which could soon become the second country with the largest legalized activity in the world. Unlike the rest, Schlosser considers that 3% of total turnover tax for the online requested by law is a better scenario for entrepreneurs than what is requested in France or Portugal (8/9%). 'Brazil really appears as a land of opportunities,' he says.

How do you see the landscape of betting regulation in Brazil?
Hervé Schlosser
- Finally, a law has been voted in Congress which legalizes for the first time in Brazil only and exclusively sports betting both online and offline. The decree that will define the way in which sports betting will be regulated is now expected. The publication of the decree is expected to be during the first quarter of 2020, which will open the way for a real market opening in the second half of 2020.

What is your consideration of the financial aspects of this regulation?
The tax percentage will be based on the total volume of business (billing): 3% for the online and 6% for the physical. The industry presses to obtain a regulation based on a % of the GGR, which is the real income that the operators obtain, and therefore many of the industry actors are disappointed by this policy.

However, I would like to remember that a 3% rate on online billing is well below the 8/9% currently in force in other countries such as Portugal and France. In these countries, operators have to fight for their business and there are not many operators (13 operators of Sports Betting in France). But still the market exists and is large: more than € 1b GGR expected in 2019, with an annual growth of 25% in the last 4 years. It is not too bad!

To obtain a license, the company must present a financial guarantee of R$ 18 million, approximately € 4M. The licensee will also have the possibility to negotiate agreements with the sub-licensee.

Do you have any information about the potential market size?
Yes, according to KPMG estimates, the online sports betting market should represent between € 1 and € 1.5b of GGR and offline between € 0.8 and € 1.5b of GGR. And that is only what it should represent during the first year, taking into account that we are talking about a country of 211 million inhabitants with a great passion for sport and that has great growth potential.
In the gambling market, Brazil really appears as a land of opportunities.

How does Sportnco expect to grow in this new regulated market?
Sportnco has started its development in Latin America in 2019. With one of our current European clients we have prepared all the technical requirements to be able to present an offer to obtain a license in the province of Buenos Aires. At present, the process was postponed on the occasion of the elections, but it should begin again.

In Brazil, as in other regulated Latin American markets or in the process of being so, our strategy is to offer our unique turnkey solution in sports betting (software, odds and risk management, web design and marketing services) for the following cases:

- Our current clients in Europe willing to grow in Latin America.

- New customers of LATAM.

Based on the specific model of the Brazilian market regulation and the huge size of that market, we consider obtaining a license. Not to operate ourselves, but to grant a sub-license to other operators who would also use our technology and services.

Source: GMB