Aviv Sher, the CEO of the Nasdaq-listed company Codere Online, has consistently advocated for a cautious strategy when entering new markets. This approach has proven beneficial, especially with the recent changes in Brazil's licensed gaming sector, which have helped Codere avoid significant financial repercussions.
The anticipation surrounding Brazil's regulated market, set to launch in early 2025, was immense. A country with over 200 million sports enthusiasts appeared poised to embrace licensed online gambling. Major international operators such as Flutter, Entain, and Betano began establishing their presence. Notably, Flutter gained a significant foothold by acquiring a 56% stake in NSX Group, the parent company of Betnacional, for over $350 million.
While many global companies eagerly entered the Brazilian market, Sher and Codere Online took a more measured stance, wary of the financial risks and potential for regulatory instability. This strategy seems wise, given Brazil's recent development. In late September, President Luiz Inácio Lula da Silva announced a ban on the licensed sector, shutting down a market projected to contribute up to BRL16 billion ($3.18 billion) in taxes by 2026.
Sher believes that Codere’s caution was justified. He expressed concerns regarding the abrupt changes affecting operators who had heavily invested in hopes of stable and predictable regulatory conditions. "We dodged the bullet," Sher remarked. He lamented that the government broke its promises to licensed brands, which had sunk hundreds of millions into Brazil with expectations of returns through sponsorships and marketing.
"I think our conservative approach here towards this market and the conservative approach that we’re constantly taking to protect our investors paid off in this case," he stated.
Despite Codere Online's absence from the Brazilian market prior to its shutdown, Sher is closely monitoring potential broader impacts on other Latin American markets. "When such a large market in LatAm undergoes significant regulatory change, you may see some effects across the region," he said. Observing other regulators will be crucial as they assess the situation’s implications.
As Codere Online evaluates its future in Latin America, Sher has turned his attention to other markets, particularly Chile, Peru, and Uruguay, while maintaining its current bases of Mexico, Colombia, Panama, and Argentina. He indicated, "I don’t think 2027 will be a boring year."
Peru, as another market of interest, has attracted several international companies, including Betsson and Bet365. However, Codere Online remains cautious. "Peru is of interest, but not at the moment," Sher explained, emphasizing the need to observe how the market evolves before committing resources. He noted that, unlike Brazil, Peru's regulatory landscape is more organized, with transparency and stability gaining ground.
In contrast, Codere is growing frustrated with the slow progress of online gambling regulations in Chile. Despite initial plans launched in 2021, the online gambling bill remains stagnant. "I met people that were involved in the Chilean regulation and they promised me by the end of last year that it will be out," he revealed. He expressed hope that the situation would improve, noting the loss of tax revenue due to the ongoing operation of grey markets.
Codere Online is also assessing opportunities for a broader future in Buenos Aires. The company is currently licensed in the city but aims to secure a provincial license that encompasses the entire province of Buenos Aires, home to roughly 40% of Argentina's populace. The challenge lies in the limited distribution of licenses, with only seven available. Recently, a new 2% levy on online slot winnings has further complicated their plans. Sher remarked, "The regulator over there in the province wants to introduce new taxes that will almost kill the business."
Despite these hurdles, Buenos Aires remains a focal point for Codere Online, with hopes to secure a provincial license under changing conditions.
