Latin America: a work in progress

25 April 2019

There is still a lot of work to be done before local and international operators can reap the benefits Latin America’s huge, diverse populations have to offer, says Layla Ali, conference producer at Clarion Gaming

From Mexico down to Argentina, Latin America is a patchwork of different regulations which, in some cases, date back as far as 1947. Over the past three years, countries such as Argentina, Brazil and Colombia have made real progress towards sustainably regulated online markets.

However, to date, the only country with a fully regulated and operational online gambling market is Colombia. Regulator Coljuegos legalised online sports betting and casino in 2016 and now has 18 licensees working in the country.

Coljuegos president Juan Pérez has stated that his pipeline includes plans to regulate virtual sports and live casino in the near future as well. These developments have brought Colombia to the attention of some of the biggest international operators, and have given local operators the chance to develop their businesses.

That is not to say, however, that the process has been smooth sailing. For example, quite significantly, Coljuegos failed to inform Google of regulatory changes, meaning Colombian gamblers could not access legal betting sites when they were first approved.

Given that there are almost 20 operators working successfully in the market, this technological glitch doesn’t seem to have slowed business down too much. For most operators, the focus is now on marketing and raising brand awareness, and this infrastructural step-up opens the path for affiliates to legally start working in Colombia now as well.

Local operators certainly have an appetite for learning more about what value affiliate partnerships could bring to their businesses, and international operators are looking for partnerships promising maximum brand exposure and customer acquisition in the quickest possible time.

Whether they achieve this through the acquisition of smaller, local operators, partnerships with more consolidated local businesses, or sponsorships of well-known sports teams is a strategic question individual to each company.

One of the first operators to obtain an online licence in Colombia, BetPlay, has certainly made a success out of sponsoring the Colombian national football team.

Brazil beckoning
Building connections with the sporting world would also appear to be a winning tactic for operators in Brazil, whose government recently approved legislation for online sports betting in the country.

After years of back and forth on which verticals would be legalised and when, in December 2018, exiting president Michel Temer approved a bill to legalise online sports betting and gave the Ministry of Finance two years to draft regulation.

With no fixed guidelines yet available to operators, it is much more difficult to draft a strategy for Brazil than for Colombia. Working with the information we do have though, what we can say is that with a population of approximately 2.12 million, when the Ministry of Finance gives the industry the green light, Brazil could be the second largest gambling market in the world.

The country’s GDP per capita of $10,889m (£8,421), combined with the net worth of the currently illegal lottery game jogo do bicho, indicates that enough Brazilians with some disposable income would be willing to have a flutter to make the market an incredibly profitable investment.

Immediately after the sports betting bill was approved, Paulo Azi from the Brazilian Chamber of Deputies submitted another bill (PL530/2019) proposing legalisation of the land-based casino industry in Brazil.

PL530/2019 advocates building up to 32 integrated resorts and designating 10% of each resort’s available space to casino gaming. Should the bill be approved and integrated resorts regulated, it would mean international operators such as Las Vegas Sands (LVS), which has long expressed an interest in Brazil, could stand to make an immense profit not only from local gamblers but also from tourists, of which Brazil has no shortage.

Small steps forward
In a similar way to Brazil covering all its bases with online sports betting and land-based casino gaming, a couple of Argentinian provinces are beginning to expand their regulation as well. In November 2018 the Province of Buenos Aires and the City of Buenos Aires agreed on rules for the legalisation of certain types of online gambling across the capital city and province.

This year, the Lottery of the City of Buenos Aires will regulate online slots, roulette, poker, blackjack, sports betting, lottery and baccarat, with bingo, esports and virtual betting on the list for a later date.

In combination with the already legal land-based casinos, slots and horse race betting, Buenos Aires is arguably an attractive prospect for both local and international operators.

Zooming out, however, the country as a whole is still troublesome for investors. Divided into 23 provinces, each of which regulates on its own terms, Argentina is a challenge in terms of staying up-to-date with developments and calculating the return on different levels of investment and verticals.

Aside from Buenos Aires, the only other province known to be working on online gambling regulation is Mendoza. The city plans to legalise the online versions of verticals already on offer in the land-based space, which are lottery and casino games.

Mendoza’s land-based offering, like Brazil’s proposed bill, comes in the form of integrated resorts, with the regulator’s ultimate goal being to encourage tourism to the region. Whether or not this opportunity will be of more interest to international giants such as LVS, or local operators that know their demographic well, is difficult to predict.

In fact, unpredictability can often be the name of the game in Latin America, with some of the smallest, and seemingly unlikeliest, countries, such as Costa Rica, running alongside giants Brazil and Colombia in planning to regulate online lottery this year.

The only clear trend in the region, and arguably the most important one, is a widespread forward movement towards full and sustainable regulation, which both local and international operators need to be ready for at any time.

This year’s Juegos Miami event, exploring opportunities in Latin American and Caribbean gaming, will be held from May 29 to May 31. See the full agenda here.