Aviv Sher, the CEO of the Nasdaq-listed operator Codere Online, has consistently advocated for a cautious approach when considering expansion into new markets. Following the recent closure of Brazil's licensed gambling sector, he discusses how this prudent strategy has helped the company evade potentially costly mistakes.
The anticipated launch of Brazil’s regulated market in early 2025 was initially viewed as a monumental occasion, given the country’s reputation as a sports-loving nation with a population exceeding 200 million. Major global operators expressed keen interest in entering this new arena. Notably, Flutter acquired a 56% stake in the NSX Group, which owns Betnacional, in a transaction valued at over $350 million, alongside move-ins from Entain and Betano.
While other international companies rushed to Brazil, Codere Online maintained its distance. Sher emphasized that while the opportunity was appealing, the financial risks and the potential for regulatory instability led the company to hold off.
This decision has proven beneficial for Codere Online. In late September, Brazilian President Luiz Inácio Lula da Silva imposed a ban on the licensed gambling sector, shutting down a marketplace expected to generate up to BRL16 billion ($3.18 billion) in tax revenue by 2026.
Sher believes their decision to refrain from entering Brazil was wise, pointing to the regulatory upheaval that followed the investments of other operators who had anticipated a stable environment. He remarked, “We dodged the bullet,” expressing concern for those who invested substantial sums expecting returns through sponsorship and marketing deals. Sher articulated, “A lot of money from the operator side flowed into the market, and there will be no return.” He noted that the firm's cautious strategy helped safeguard its investors.
Though Codere Online did not have a presence in Brazil prior to its market closure, Sher remains attentive to whether the fallout could influence other Latin American markets. He stated, “When such a large market in LatAm undergoes a significant regulatory change, you may see some effects across the region,” indicating that other regulators will observe closely the outcomes of Brazil's shifts.
Despite hesitations regarding Brazil, Sher remains committed to exploring LatAm expansion beyond Codere Online’s existing markets in Mexico, Colombia, Panama, and Argentina. He noted, “I don’t think 2027 will be a boring year,” highlighting that the company is evaluating potential entry into Chile, Peru, and Uruguay, with decisions in these areas contingent upon various factors.
Sher acknowledged Peru as an attractive opportunity, although he indicated the company would adopt a cautious stance due to the influx of competitors. Sher stated, “Peru is of interest, but not at the moment,” adding that they would observe the market's developments regarding costs and performance before making any moves. He noted the regulatory climate in Peru is more organized than in Brazil, leading him to consider future expansion.
Both Chile and Uruguay remain on Codere Online’s radar, but the firm is awaiting the establishment of regulatory frameworks in these regions beforehand. Chile is facing significant delays in its online gambling legislation, which has been in limbo since initial plans were introduced in 2021. Sher recounted conversations with individuals involved in Chile's regulation who had promised movement by the end of the previous year, admitting frustration with the pace of progress, stating, “For me, it’s always a mistake because they are losing tax monies.” He pointed out that illegal operators continued to engage in the grey market, underscoring the missed revenue opportunities for the government.
In Argentina, Codere Online currently operates in Buenos Aires and is seeking a license to cover the province. Buenos Aires represents about 40% of Argentina’s population, yet the legal structure limits the number of online gambling licenses to seven, already held by known entities like Betano and Betsson. A recent 2% tax on online slot winnings adds complexity to Codere Online's ambitions, with Sher expressing concern that such levies could significantly reduce operator profits. Despite these challenges, he affirmed that Argentina remains a focus market, as they plan to pursue the provincial license despite recent setbacks.
