Aviv Sher, CEO of Codere Online, a Nasdaq-listed gaming operator, has consistently advocated for a cautious approach to market entry. Following the recent shutdown of Brazil’s licensed sector, Sher reflects on how this strategy spared his company from incurring significant losses.
The expected launch of Brazil’s regulated market in early 2025 was anticipated as a transformative event for the nation, home to over 200 million sports enthusiasts eager for online gambling options. Major international gaming companies, such as Flutter, Entain, and Betano, moved swiftly to establish licensed operations in Brazil. Flutter even made headlines by acquiring a 56% stake in NSX Group, the parent company of Betnacional, in a deal exceeding $350 million.
While many global operators enthusiastically entered the Brazilian market, Codere Online took a more reserved stance. Sher noted that while they recognized the potential of the market, the hefty investment costs coupled with the uncertain regulatory climate led them to refrain from participation.
This prudent decision appears to have been advantageous. In late September, Brazilian President Luiz Inácio Lula da Silva announced a ban on the existing licensed sector, closing a market that had been projected to generate up to BRL16 billion (approximately $3.18 billion) in tax revenue by 2026.
According to Sher, Codere Online's choice to refrain from Brazil was informed by concerns over regulatory instability. He emphasized that operators who heavily invested in the market in anticipation of a stable regulatory landscape are now facing considerable setbacks. "We dodged the bullet," Sher remarked.
Sher was explicit about the consequences of the ban, stating, "The worst thing is that the government broke an agreement with the regulated brands that invested hundreds of millions into the country with expectations to see returns over the coming years, whether from sponsorship or marketing deals. A lot of operator money flowed into the market, and there will be no return."
He believes that the firm’s cautious approach to the Brazilian market further validated his strategy to protect investors. Despite Codere Online's absence from Brazil, Sher remains watchful of developments, as he anticipates potential repercussions for the broader LATAM region. "I think when such a large market in LATAM undergoes a significant regulatory change, you may see some effects across the region. Other regulators are watching closely to understand the impact and the response. It’s something the industry will continue to monitor," he explained.
Looking beyond Brazil, Sher expressed a keen interest in expanding into other territories in Latin America, specifically Chile, Peru, and Uruguay. Codere Online currently operates in Mexico, Colombia, Panama, and Argentina. "I don’t think 2027 will be a boring year," he stated, hinting at the company's future growth plans in the region.
He acknowledged that Peru presents potential, with top brands such as Betsson and Bet365 already securing licenses. However, Codere Online is opting to observe for now. "Peru is of interest, but not at the moment. Many competitors invested heavily. We’re going to sit back for a while, see how the market evolves, and later make decisions based on the developments in customer acquisition costs and lifetime value," he noted.
Unlike Brazil, Sher praised Peru for its organized regulatory environment where satisfaction among operators is more common, aiding transparency in the market.
In contrast, both Chile and Uruguay are currently waiting for necessary online gambling regulations before Codere Online can make any advances. With its legislative development moving slowly, Chile's online gambling bill has met delays since its initiation in 2021. "I met people involved in the Chilean regulation who promised me it would materialize by the end of last year. Now we are already a year after, so they are moving slowly forward, but not fast enough,” Sher expressed frustration over the stagnation.
Despite the challenges in Chile, Sher remains optimistic about the eventual implementation of a regulatory framework that will benefit both the government and operators due to increased tax revenues, while also calling attention to the ongoing grey market activities.
Codere Online is already licensed in the City of Buenos Aires but is now exploring opportunities to expand its operations to cover the broader province. This province represents about 40% of Argentina's population. However, the legal landscape presents limitations, with a cap of seven licenses currently allocated to companies like Betano, Betsson, Bet365, and Stake.
Sher pointed out recent taxation measures, specifically a proposed 2% tax on online slot winnings, which he believes could severely impact profitability in the region, potentially offering Codere Online a chance to make gains through other avenues. "We are waiting to see what’s going on in Argentina. It’s still a focus market for us. If we can obtain the provincial license, we will strive to secure it. ”
