Aviv Sher, the CEO of Codere Online, a Nasdaq-listed gaming operator, has consistently advocated for a cautious expansion strategy into new markets. Now, with Brazil’s legalized gambling sector abruptly closing, he reflects on how this prudent approach spared the company from potential losses.
The anticipation surrounding Brazil’s regulated gambling market, set to launch at the beginning of 2025, was immense, especially given the country’s population of over 200 million and its enthusiasm for sports betting. Major international operators such as Flutter, Entain, and Betano scrambled to secure licenses, with Flutter notably acquiring a 56% stake in NSX Group, the owner of Betnacional, through an investment exceeding $350 million.
However, Codere Online took a different route. Rather than jumping into the Brazilian market, Sher and his team expressed reservations about the hefty financial investments and the looming threat of regulatory instability. This decision has proven advantageous in light of Brazil’s recent moves.
In late September, President Luiz Inácio Lula da Silva enacted a ban on the licensed gambling sector, marking a significant shift that is expected to deprive the government of an estimated BRL16 billion ($3.18 billion) in tax revenues by the end of 2026. Sher argues that this instability justified Codere Online's decision to remain cautious.
"We dodged the bullet," he remarked, pointing out that many operators who invested heavily in Brazil are now left with no returns on their sponsorships and marketing agreements that assumed a stable regulatory environment.
Sher elaborated on the situation, criticizing the government for breaching agreements with companies that had already committed vast sums to the market. He maintained that Codere’s conservative strategy is essential for protecting investors’ interests.
Although Codere Online was not engaged in Brazil's market prior to its closure, Sher is closely watching for developments that could have ramifications throughout the Latin American region. He believes that substantial regulatory changes in Brazil will likely influence other markets, with regulators across Latin America observing the fallout with keen interest.
Sher is also eyeing potential expansion opportunities in Chile, Peru, and Uruguay, despite the current focus on maintaining presence in established markets like Mexico, Colombia, Panama, and Argentina. "I don’t think 2027 will be a boring year," he stated.
Peru has seen a surge of international interest, with operators like Betsson, Bet365, and Stake securing licenses. However, Sher indicated that Codere Online is not ready to invest there yet, citing the influx of competitors and the need to monitor the evolving market dynamics.
He noted, "Peru is of interest, but not at the moment. Many competitors have come in and invested money, so we will take a cautious stance for now."
In contrast to Brazil, Sher expressed optimism about the regulated framework in Peru, highlighting that its transparent regulatory environment is stabilizing, making it a market to watch for future entry.
Codere Online is awaiting the implementation of regulations in Chile and Uruguay before considering expansion. The delay in Chile’s gambling legislation has been particularly frustrating for Sher. He recounted conversations with regulators who had promised progress by the end of the previous year, emphasizing the slow pace of development since then.
"They are losing tax revenues while people continue to operate in the grey market," he cautioned, hoping that formal regulations will allow Codere Online to participate in the future.
Regarding Argentina, Codere Online currently operates in Buenos Aires but is also aiming for provincial licensing. The province represents a significant portion of Argentina’s population, yet limits the number of online gambling licenses to seven, already held by competitors like Betano and Betsson.
The company is also contending with a newly proposed 2% tax on online slot winnings that could drastically impact profits. Sher expressed concern about the additional tax burden, suggesting it could diminish business viability in the province, yet remains hopeful about opportunities for engagement in the Argentine market.
Codere Online continues to prioritize a careful evaluation of regulatory conditions and market opportunities across Latin America as sector dynamics evolve.
