SBC Americas round table: navigating the US and Latin America

In recent times, the attention of the sports betting community has turned across the Atlantic, as both North America and Latin America offer huge opportunities for those who can get it right. However, for a variety of reasons, there’s less in the way of companies trying to dominate both sides of the Panama Canal.

We talk to Eddie Morales, LatAm Sales Director, BetGames.TV; Alex Leese, CEO Pronet Gaming; and Chris Nikolopoulos, Chief Commercial Officer, Betby to understand the opportunities that the Americas have, but also why it’s such a challenge to smoothly enter all markets.

Eddie Morales

The repeal of PASPA and the opening up of legalized sports betting in Latin America has attracted international operators and suppliers alike, but rarely both at the same time. What are the reasons behind this trend?

It’s no secret that Latin Americans love sport, and love to place bets on all manner of sports as well. Up to fairly recently, though, the market has been largely ignored by major online gambling companies due to a lack of regulation across its various markets. So, in order to service the demand for sports betting and activate LatAm bettors, the regulation of the region’s major market is key. Starting off with Brazil, others will follow, and once this is done with clarity and reason, both operators and suppliers will surely find huge commercial opportunities starting to present themselves.

Does rushing into one region come with the trade-off of losing early mover advantage in another?

Not necessarily. It depends how a ‘new player’ to a region goes about refining and executing their go-to-market strategy within the region, considering their capacity at that time. In my opinion, the best approach to LatAm entry is multi-country but with localized content, marketing and operations within each, in order to best diversify risk and investment.

In order to create a dominant position in one country and succeed from an ROI perspective, a large market share is required, and this is arguably only achievable by a select few industry giants or very dominant local brands that are executing a successful and mid to long term multichannel strategy. At present, the general choice is between a pre-regulated, multi-country approach, or staying within the regulated markets of Mexico, Colombia and some Argentinian provinces.

With Colombia heralded as a leading light in regulation in Latin America, could neighboring territories and indeed US states follow its lead with progressive, innovator-friendly frameworks?

We hope so. Undoubtedly though, the political and socio-economic situation of each state or country will determine its own, potentially very different, version of what ‘progressive’ means. How they choose to deal with player protection when balancing against business requirements will also likely differ, and then regulators will also have to consider the need for retail protection after struggling with this ongoing pandemic.

Some will likely follow Colombia’s progressive lead, with some Argentinian provinces already moving forward, and hopefully Brazil will lock a similar route down in the next couple of years.

Alex Leese

The repeal of PASPA and the opening up of legalized sports betting in Latin America has attracted international operators and suppliers alike, but rarely both at the same time. What are the reasons behind this trend?

The US presents an enormous opportunity for operators. This has been demonstrated by brands like William Hill and GVC, who have taken an early advantage by focusing their tech development on the market and forming the right partnerships.

At the same time, the fragmented regulatory landscape presents a huge challenge. Only the biggest operators with the most agile tech stacks can focus on multiple states in the US at the same time as different countries in South America. Given that joint ventures are often a necessity too, targeting both regions would stretch even the best-resourced teams.

Delays to regulation in Latin America may have provided some breathing space for operators with global ambitions, however. They can focus on the US for now, whilst keeping license applications warm down south and gaining more time to properly assess the tech roll out.

For technology and content suppliers, the choice is somewhat starker. Ultimately, they need to be ready to service operators from day one, requiring an upfront investment in technological capability with payback having to wait until deals are signed.

Does rushing into one region come with the trade-off of losing early mover advantage in another?

Given the cost and complexity of fighting on multiple fronts, it is clear that every operator and supplier must prioritize. But I also think that an element of compromise might help companies do more in more markets.

Opting to outsource their platforms to third-party providers might be a tough decision for the bigger operators who are used to their own proprietary technology in other markets, but it might be the pragmatic one. It is certainly an easier move for a smaller operator who could gain speed to market through this approach.

A pragmatic tech strategy will always allow operators to keep a few more plates spinning, whilst working with local partners can remove barriers too. For suppliers, it is more a case of one or other in terms of where to invest in tech and hence some of the recent M&A trends have pointed towards a more defined split of whether a provider can serve both continents.

With Colombia heralded as a leading light in regulation in Latin America, could neighboring territories and indeed US states follow its lead with progressive, innovator-friendly frameworks?

I think it is very unlikely that US states will be influenced by Colombia’s approach in any way. Or by any other market in LatAm or Europe, for that matter. It would be easier for the industry if they did, but the political and socio-economic levers are completely different.

The regulation of sports betting in North America is unlike other frameworks in the industry. Each state’s legislators have their own ideas. Latin American countries have tended to look to European-style regulation, however, particularly that adopted in Spain and Italy. As a result, many of the law firms and leading providers in those countries are proving influential on the continent and in Colombia in particular.

Chris Nikolopoulos

The repeal of PASPA and the opening up of legalized sports betting in Latin America has attracted international operators and suppliers alike, but rarely both at the same time. What are the reasons behind this trend?

The US and Latin America may both be in the Americas, but nevertheless we are talking about quite different markets both in terms of product and legal requirements, as well as revenue projections and opportunity.

As of now, the US looks interesting to bigger corporations, but this is not necessarily the case for smaller companies. LatAm, on the other hand includes several countries which can be widely characterized by having large, sports-mad populations and are definitely a prime target for sportsbooks operators and providers. The interest is already there. Taking markets with interest and adding business-friendly frameworks is key for sports betting to take off.

Does rushing into one region come with the trade-off of losing early mover advantage in another?

Entering a new market is not panacea – this is something that all experienced operators and providers know. There is a lot of work to be done behind the scenes before companies are ready to take such steps and usually it involves different requirements from a legal, product and human resources perspective. I like to believe that all companies are taking those issues seriously rather than rushing into a market with a non-localized product. In other words, it’s a question of roadmap and resources.

If entering a new market means losing early mover advantage in another, then so be it. We like to be fast but never on the expense of quality.

With America’s patchwork quilt of regulated states and unregulated states, does navigating the legislative demands drive companies south of the border?

As of now, we see that the complexity around the US online gambling market is certainly bigger compared to what we have to face south of the Panama Canal. Each state has their own laws and regulation, and we still have to wait and see what may happen with some of the bigger states which can act as ‘game-changers’. On the other hand, in LatAm we have to deal with emerging markets which are receptive to new technologies and innovation while they also offer, in most cases, a more friendly legal framework for business.

With Colombia heralded as a leading light in regulation in Latin America, could neighboring territories and indeed US states follow its lead with progressive, innovator-friendly frameworks?

Yes, definitely. Colombia has established a regulated online gambling market that continues to grow at an impressive rate and is a great example for all neighboring territories. Establishing a friendly legal framework is a winwin situation for both the end-users and of course, governments themselves, which are currently missing out on a revenue stream from the unregulated activity that is occurring. We hope that we will soon be talking about exciting regulatory advancements in Brazil, Peru, Argentina and others as the region continues to develop.

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