Aviv Sher, CEO of Codere Online, has consistently advocated for a cautious approach to entering new markets. This strategy has proven beneficial as the Brazilian licensed market has now been shut down, allowing his company to avoid costly mistakes in a volatile environment.
The anticipation surrounding Brazil’s regulated market launch in early 2025 was immense, particularly as the country, home to over 200 million sports fans, seemed poised to welcome licensed online gambling.
Several international firms like Flutter, Entain, and Betano ventured in, with Flutter acquiring a significant 56% share in NSX Group, owner of Betnacional, in a deal valued at over $350 million. However, Codere Online opted for restraint, expressing interest in the opportunity but apprehension regarding the financial implications and potential regulatory setbacks.
This decision has been validated in light of Brazil's recent developments. At the end of September, President Luiz Inácio Lula da Silva officially banned the licensed sector, closing a market anticipated to generate as much as BRL16 billion ($3.18 billion) in taxation by 2026.
Sher believes their choice to stay clear of Brazil was prudent, given the market's regulatory unpredictability and tax concerns. He emphasized that the upheaval faced by operators who invested heavily illustrates the wisdom of their strategy: "We dodged the bullet," he remarked, highlighting the unfortunate plight of companies that sunk substantial resources into Brazil based on prior agreements.
Describing the situation, he stated, "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 in sponsorship deals or marketing deals."
Sher underscored the significance of their conservative posture, crediting it with safeguarding their investors. Although Codere Online remains uninvolved in the Brazilian market, Sher is keeping a close watch on how this regulatory upheaval might affect other Latin American countries.
"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 commented.
Looking to the future, Sher expressed interest in exploring expansion into Chile, Peru, and Uruguay, while Codere Online currently operates in Mexico, Colombia, Panama, and Argentina. He remarked, "I don’t think 2027 will be a boring year."
Peru, while currently attracting international attention from firms like Betsson and Bet365, is not an immediate focus for Codere Online. Sher acknowledged the intense competition, stating, "Peru is of interest, but not at the moment. I think many competitors came and put in money. So again, I think in the short term we will sit a little bit on the fence, see how the market evolves, CPAs and LTVs, and things like that, and we will be able to take maybe a decision later."
He highlighted that unlike Brazil, Peru has a well-structured regulatory framework earning positive remarks from stakeholders, which indicates a promising future despite the current caution.
As for Chile, Codere Online is experiencing delays in the country's legislative process regarding online gambling, first initiated in 2021. Sher expressed his frustration, noting, "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. Now we are already a year after, so I think they are moving slowly forward, [but] not fast enough."
He also mentioned that while the proposed framework might be somewhat costly, the delay is missing opportunities for tax revenue in a market that is currently operating in the grey area.
In Argentina, Codere Online has already secured authorization to operate in Buenos Aires but is looking to expand to the entire province, which constitutes about 40% of the national population. However, the provincial government permits only a limited number of licenses, with existing ones held by Betano, Betsson, Bet365, and Stake.
Sher pointed out that a recent introduction of a 2% levy on online slot winnings could diminish profitability: "The regulator over there in the province wants to introduce new taxes that will almost kill the business [and] will cut around two-thirds of the profit of all the operators over there."
Yet, he also believes this environment could create fresh opportunities and asserted, "If we will be able to get the Province [of Buenos Aires], I think we will still try to get it somehow."
