Aviv Sher, the CEO of Nasdaq-listed Codere Online, has consistently advocated for a cautious approach when expanding into new markets. With Brazil's licensed online gambling sector now closed, he highlighted to iGB how this measured strategy has helped his company avoid potential pitfalls.
The regulated market in Brazil was set to launch in early 2025, a significant development for a country of over 200 million sports enthusiasts eager to participate in licensed online gambling. Many international operators, including Flutter, Entain, and Betano, sought to enter this market. Notably, Flutter acquired a 56% stake in Brazil's Betnacional owner NSX Group in a deal exceeding $350 million.
However, while numerous global players rushed to Brazil, Codere Online remained cautious, emphasizing that despite their interest, the substantial financial commitment and potential for regulatory instability meant they preferred to keep their distance from the market. This decision has proven wise for the company. In late September, Brazilian President Luiz Inácio Lula da Silva issued a ban on the licensed sector, shutting down a market that was expected to yield as much as BRL16 billion ($3.18 billion) in taxes by the end of 2026.
Sher believes Codere Online’s strategy to avoid Brazil was validated by the ensuing regulatory chaos, arguing that the unpredictable nature of the market jeopardized those who had invested significantly with hopes of a stable regulatory environment. He remarked, “We dodged the bullet.” Sher criticized the government for breaking agreements with companies that had made substantial investments in anticipation of returns through sponsorships and marketing.
He acknowledged that a considerable influx of capital from operators would now result in no returns due to the abrupt market closure, reinforcing his belief that Codere Online's conservative market strategy was indeed protective for investors.
Even though Codere Online did not enter Brazil before the market's collapse, Sher is monitoring the situation closely, as significant regulatory shifts in such a major Latin American market could have wider implications for the region. "When a large market in LatAm undergoes a regulatory transformation, there could be ripple effects elsewhere," he said, indicating that other regulators were likely observing Brazil's situation to understand its impacts on wider industry practices.
Looking beyond Brazil, Sher expressed interest in expansion opportunities across Latin America, specifically targeting Chile, Peru, and Uruguay, while being mindful of the unique conditions of each market.
Peru has attracted attention from companies like Betsson, Bet365, and Stake, all of which have secured licenses to operate there. However, Sher noted, "While Peru is of interest, not right now. Many competitors have already invested, so we think it’s best to remain cautious and observe how the market evolves regarding key metrics like customer acquisition costs and lifetime values."
He acknowledged that unlike Brazil, Peru maintains a well-organized regulatory environment which has stabilized over time, making it a promising future market worthy of ongoing observation.
In contrast, efforts in Chile and Uruguay are contingent on legislative developments regarding online gambling. Sher expressed frustration over Chile’s online gambling bill, which has stagnated politically since initial discussions began in 2021. "I met stakeholders who assured me it would be finalized by the end of last year. Now, a year has passed without progress. They are moving forward but not quickly enough. They are missing out on tax revenues that can still be captured from operators in the grey market."
In Argentina, where Codere Online holds a license to operate in Buenos Aires, the company is now seeking a broader license covering the entire province, which represents about 40% of the country's population. However, the legal framework limits the total number of licenses to seven, currently held by established operators like Betano, Betsson, Bet365, and Stake.
Sher pointed out that a newly imposed 2% tax on online slot winnings could severely impact profitability for operators, suggesting the new tax could reduce total profits by roughly two-thirds. While this presents challenges, he remains optimistic about future opportunities in Argentina. “We will continue to watch what happens in the province,” he stated, “It's still a focus market for us. If we can secure the full province license, we plan to pursue it.”
