In a World Cup year, betting sites capitalize and await regulation
- June 14, 2022
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In the year of the World Cup, sports betting platforms have already started heating up and are capitalized for the biggest football event on earth. In a field where competition is not lacking, startups such as Hit, GreenRun and Rei do Pitaco, which accept bids from football fans, have recently raised investment rounds to get the ball rolling in Brazil. While the government tries to circumvent impasses to regulate and tax the market, most operate in the country as an offshore company.
Financial betting platforms complement the fantasy games segment, led by Cartola, where users can line up teams and predict outcomes for fun. According to Grand View Research, the market was worth US$59.6 billion worldwide in 2020 and has been growing by 10% annually. The expectation is that in the next five years, the turnover will reach US$ 127 billion.
No wonder these platforms have attracted capital. Rei do Pitaco, which follows Cartola’s business model, with a lineup of teams, raised a series A of R$ 180 million at the beginning of the year. The round led by D1 Capital Partners was accompanied by Globo Ventures and the American Left Lane Capital. GreenRun, which also caters to basketball and football fans, debuted in March in the country, supported by a $4.2 million seed round from Vice Ventura.
But it’s not just venture capital firms that have entered this field. Sports personalities also want to play. With a model that replicates the famous “pool”, Hit raised R$ 3 million with goalkeeper Marcos and Argentine Sorín. The initial check will help the platform, which went into operation at the beginning of the year, to reach 2.5 million users by the end of the year — counting on the Cup for that.
“I knew that this market was heating up all over the world. What attracted me to Hit, specifically, was the team, very concerned about security, and the simplicity of the game. It’s not a fantasy game in which you need to be an expert, study to decide your guess, it’s something more popular”, said Marcos Reis, the former goalkeeper idol of the Palmeiras fans, to Pipeline. “I’m an old-timer, I play pool from time to time. Now, online.”
Hit works as a social network, in which groups organize themselves autonomously to place a bet. The platform already has more than 70 tournaments and, with the end of the Champions League, it has registered users in around 40 countries. The company is in the jurisdiction of Malta and Curaçao, as are several competitors.
Today, there are about 450 sports betting sites operating in Brazil. A study by Ibope Monitor states that the 10 biggest invested almost US$ 12 million in advertising in the first half of 2020. They are competitors like Bet365, Betway, Sportsbet, Apostas.net, FezBet and Betano, which invests heavily to put its brand in football clubs. The list keeps growing.
Also for this reason, the sector is expected to undergo regulatory scrutiny soon. An MP that determined that sports betting platforms open CNPJ in the country, so that they could be taxed, would be signed last week by President Jair Bolsonaro. A stalemate in Congress, however, derailed the play. Columnist Lauro Jardim, from O Globo, reported last week that the president gave up signing the MP because Marco Feliciano is against bringing gambling to national territory — the evangelical bench rejects gambling.
“The current political environment, due to the elections, may hinder the progress of the MP a little. We are in favor of regulation, being done in a way that promotes the market, without creating oligopolies”, says Thiago Martins Machado, founder and CEO of HIT. “The bet can be made in a safe and healthy way. Of course, there is always the percentage of heavy users, but you can control that too.”
Source: Value Pipeline