Is it worth it launching operations in LatAm?
Updated: Jan 22
Considering the current status of the regulations in Latin America, is it worth it launching gambling operations in LatAm?
Of course it´s worth it launching in regulated markets such as Colombia or Mexico, but what we will analyse in this post are the cases of markets like Perú, Chile and Brazil.
Let´s start with where these countries are in terms of gambling regulation:
The Peruvian Regulator (Mincetur) published the "gambling law" in July 2022.
In November, they published the draft of the regulation, giving all interested parties 21 days to give their feedback.
So, the status of the regulation, as of January 2023, is that at any given moment, the Regulator will launch the final regulation, and initiate the period where operators can request their licenses and testing labs and other providers can also register as "certified" providers.
So, with all this, it´s very likely that the first licensed operators can start operating during this year, 2023.
It was very recently announced by the specialised media in the sector that Chile´s regulator intends to publish the Law before the end of March.
If they follow the same process as Perú (which is the normal thing to do), they will then, a few months later, launch the "draft of the regulation", giving time for feedbacks.
Months after that, it will be published the final regulation and that´s when operators can apply for their licenses.
So this is very unlikely to happen soon, but it´s very likely that at any time during the year, or in 2024, the gambling regulation in Chile will be a reality.
What to say about Brazil?
With the recent change of President in the country and with Bolsonaro not signing the final part of the law back in December 2022, the truth is that it´s impossible to guess what´s going to happen with the online gambling regulation in this country.
Investment to launch operations in a new market
It depends whether the operator is being created from scratch to operate in these markets, or if it is operating already in other markets.
A new (recently created) operator would need a minimum of 500k euros to be ready to launch its operations, but it´s advisable that the initial investment is closer to 750k or 1 million euros. This investment would include all the setups for the company, license, agreements and some money for marketing.
In the case of an operator that already operates in other markets, the investment to launch in new markets will be much less.
Either way, if you launch in a new market, you need some kind of investment in marketing (programmatic, PPC, FB ads, sponsorship, a celebrity to help you with brand recognition...), plus don´t forget that you will have very high bonus costs that will affect your P&L...
So, my question is, is it worth it investing all this in Perú, when in a matter of months the market will be regulated?
I guess that it depends on whether you want to apply for a license or not. But if that´s the case, wouldn´t it be better to wait and start from scratch with your license?
If you don´t intend to request a license, or if you don´t get your license approved, will you keep operating illegally?
Otherwise you will lose the investment that you´ve done in the last months, and waste it with players that can not play anymore on your site.
Think twice before rushing launching operations in LatAm, don´t have FOMO and analyse the situation and your company´s long term strategy.
I would advise any operator not to launch in Perú, unless it´s a strategy to get players and start creating brand awareness before requesting for the license.
Regarding Chile and Brazil, more of the same. If you are sure that you will request a license, then I think it would be interesting launching now, test the market, test the different marketing channels and start acquiring players.
What do you think about this? Do you agree with me? Feel free to comment your thoughts, or contact us if you want to discuss about it, we´ll be happy to have a quick call and comment with you.