Playtech is expecting to take a B2B leadership position in Brazil and estimates it is already the market leader for onboarding services in the country. That’s according to comments from its CEO Mor Weizer during the supplier’s H1 earnings call.
Weizer talked about the company's plans for Brazil that include growing faster than the forecasted market rate of 15% a year and a supply deal with one of the market's leading operators.
Answering analyst questions on Brazil, Weiser said Playtech’s operator partners had been impacted by the hugely strict onboarding and KYC processes put in place by the SPA gambling regulator.
“Brazil introduced some of the strictest onboarding requirements globally, leading to unusually high KYC rejection rates and, as a result, lower-than-expected volumes across the industry in the first half of the year,” Weizer said.
“Some operators saw an impact of 20%. Other operators saw an impact of 70% on their business. Given our strong partnerships with leading Brazilian operators, this has had an impact on us as a B2B supplier. But let me be clear, we see this as a temporary headwind.”
He also highlighted the impact of a new provisional measure which increased the gambling tax rate to 18% of GGR in June: “I’ll be very open and say there is still impact of the tax because it’s now [been] deducted. From a royalties perspective we are not yet where we need to be but it’s growing.”
Despite these pain points, the CEO said GGR for its Brazil operations in August was at the same level as before regulations were put in place.
Key deal with local leading operator
The supplier has secured a deal with one of the country’s leading operators, Weizer told analysts, but he did not share any details: “I can’t name it as of yet, but we are in advanced stages of discussions with what we believe will be one of the largest operators in Brazil.”
“They have access to the market and they are very well established in the market, not yet in online sports, betting and gaming but definitely a very significant opportunity for Playtech.”
On top of this the company is planning to open a live studio in Sao Paolo to support its growth in Brazil.
Galera.bet structured agreement
Additionally, Playtech maintains a structured agreement with Brazilian operator Galera.bet. As part of this deal, it holds a nominal cost option on 40% of Galera.bet’s equity. Galera.bet was one of the first operators to be granted a local licence in Brazil ahead of the January launch.
Weizer believes Playtech has the potential to exceed the rate of market growth in Brazil.
“I truly believe that we laid the foundations for accelerated growth that potentially can be more than the 15% or the market growth. If the market grows at 15%, that Playtech will be able to grow vertically with existing customers, horizontally with additional customers,” he insisted.
Source: GMB / iGB
