GMB - How did the merger between Suaposta and Betsson come about?
André Gelfi - Last year, shortly after we completed Suaposta purchase from Codere that took place in September, the law changed and, as a result, we made a strategic review of Suaposta's future. We came to the conclusion that the regulatory process was going to happen quickly and the necessary attributes we expected from the market were distinct from what it had until then. That's when we decided to go after a strategic partner. This began to unfold in February. I made some trips to Europe for market surveys and business presentation. This process with Betsson has advanced and we reached a partnership deal last week.
The Swedish firm bought 75% of Suaposta. What will the daily business management be like?
I will continue ahead in Brazil. We now have a long and hard work to start developing and the vision is to assemble something that brings together the best attributes of Betsson, which already has in Europe in terms of the product, know-how and infrastructure, and join with what we have established in Brazil. There are things that make a lot more sense to do here than in Europe, especially the branding part. Each will bring to this marriage the most valuable thing. It is a win-win society.
What does Betsson represent for the worldwide betting market? What do you think about the arrival of the brand in Brazil?
Betsson is a reference in the industry, a pioneer in betting and iGaming. It is of Swedish origin and today is present in several European jurisdictions. It has more than a dozen licenses. A number of their operations are in Malta. I would say that it is one of the great players of our market with a very interesting appetite for Brazil. If it weren't for that, we wouldn't be where we are today. We have come here, in fact, by compromise. We were looking for a partner who shared the vision of the opportunity that Brazil represents. Brazil will be a massive market, I have no doubt about that, and Betsson has an interest in being the protagonist in this market, just like us.
Why do you both choose yourselves as partners?
Because we were very impressed with the level of staff. I think there is a great affinity of culture of both groups and appetite for Brazil. They have unquestioned know-how in our business, namely betting and horse racing. They have a specific brand for horse racing, which is something that interests us. I think it is also of interest to them because, after all, Brazil becomes another market to explore this product. On their side, I think the fact that we are local, with knowledge about the country and the local industry; we already walked a hard way here. We, Brazilians, know the complexities of setting up a business here. I think that counted a lot, not to mention Suaposta’s attributes. Today we are the only onshore sports betting player in the country and that must have counted a lot for Betsson as well. Being licensed gives us access to Brazilian payment methods. It does not appear to me that any other operator has access to Brazilian ways of payment as we do. We have contracts with giant companies in the industry here and that gives us a good advantage throughout the transaction. Besides the fact that we are a legal and licensed operation in Brazil. Added to this is the fact that we have a very lean team that fits what Betsson wants. These are some assumptions of how I see this whole story. We are still doing some immersion work.
Does this merger reinforce market confidence and expectation regarding Brazil?
No doubt that is a very interesting precedent. This is a third-party demonstration that confidence in the government's regulatory agenda exists. This process is expected to happen in the short term. I imagine that this transaction somehow corroborates this view of government members themselves regarding the regulatory process. We know that there is a law that is not yet ideal and that changing it is not the most trivial thing in the world. The regulation that is in the hands of the government, then, yes, is already something easier to predict how it will unfold because it does not depend on Congress. It seems that it goes along a line that, in principle, within the reality of the legislative part does not create any surprise. I am concerned about some points; I think we have to encourage as much as possible that this market is competitive in its essence. Creating barriers is important as long as they are at the service of some public and societal concern. Now, innocuous barriers that only make the operator's life difficult, to me, don't make much sense.
How much do you think Suaposta will grow with the partnership?
I think the trend is for growth. We’ll work with an expansive model going forward, both pre and post-regulation. I don't know in percentage terms how far we intend to get. Our vision is to be a protagonist in this market.
Do you believe that the arrival of Betsson, with Suaposta, in Brazil will help speed up the regulatory process? Do you know if Betsson agrees with what is being done about the law?
I have always been very interested in helping to make this process as enriching as possible. I hope that it will bring about a sustainable regulatory framework, hence a competitive market that will thrive in a lasting, lasting way. My contribution is not passive, but proactive as well, saying that there is a point that I think can be improved, I will bring contributions and argument to demonstrate that things can be improved. Delaying this process does not make much sense given the informality we have here today and the need for this country to grow. The market already exists. We see a lot of traders approaching Brazil from abroad, without paying tax to the country. We want this market to be regulated as soon as possible.
Regarding Betsson, what I said is shared with operators in general. Taxes, for example, which I think are the biggest problem we have today… They are high to foster a competitive market. This is not ideal. It should go through a review to enable the market to grow, to stimulate investment and to actually formalize. We have an offshore market; we have to bring it onshore. Betsson, I believe, has the same thoughts. Serious traders, who already operate in respected markets that have a well-addressed governance and compliance side, are absolutely qualified to get a license. I am very optimistic about the way things have been going. It's not ideal, but we have to make adjustments as the process progresses.
Source: Exclusive Games Magazine Brasil
