Tom Waterhouse’s March update reveals Brazil’s burgeoning gambling sector, which has transitioned to a regulated market as of January 2025. Waterhouse VC has reported a total return of +3,550% since its inception. With a projected revenue of $6.3 billion by 2038, competitive opportunities and substantial tax revenue await, as the sector previously operated largely underground.
In the March update from Waterhouse VC, Tom Waterhouse reviews Brazil’s advancing gambling sector. Since its establishment in August 2019, Waterhouse VC has recorded a remarkable gross total return of +3,550%, annualized at 91%. The newsletter emphasizes the significance of Brazil’s new regulatory framework, which officially commenced on January 1, 2025, providing a solid foundation for a burgeoning betting economy, projected to yield revenues of $6.3 billion by 2038.
Historically, Brazil’s gambling scene has been defined by prohibition, beginning in 1946 when President Eurico Gaspar Dutra outlawed casinos. Despite this, underground gambling methods, such as cruise ship casinos and the shadow economy of Jogo do Bicho, thrived. This culture of gambling persisted with the growth of online poker, particularly during the COVID-19 pandemic, which propelled poker participation and the prominence of brands like PokerStars.
Brazilian football dominates the gambling landscape, accounting for over 80% of wagers. The digital shift, complemented by mobile technology and the Pix payment system, allowed for a significant increase in online betting. However, prior to the implementation of regulations, significant revenues were lost to unregulated offshore sportsbooks.
The transition to a regulated market began in 2023 but gained traction in 2024 with increased restrictions on payment methods for betting. By 2025, Brazil officially launched a formalized market, adopting a zero-tolerance policy towards illicit operators and aiming to shield its economy from offshore gambling activities. Centralized control through Pix offers an advantage in regulating transactions effectively.
The competitive landscape presents significant barriers with extensive licensing requirements, including high operating costs of US$6 million and mandates for local partnerships. The taxation structure, which includes a 12% gross gaming revenue tax, is favorable yet intensifies market contention. Major clubs are now negotiating lucrative sponsorships with betting firms, fueling the transformation of sports funding in Brazil.
Success in Brazil’s betting market will likely be limited to a select few operators that can navigate its complexities and integrate deeply into the local culture. With increasing consolidation predicted due to high customer acquisition costs, mergers and acquisitions activity in the sector is anticipated to rise. Suppliers to the gambling industry also stand to benefit from Brazil’s liberalized market, with unique products and services becoming increasingly necessary as operators strive for differentiation.
The Waterhouse VC update highlights the transformative changes in Brazil’s betting landscape, characterized by a newly established regulatory framework that promises significant economic opportunities. With the gambling sector undergoing a shift from underground operations to a regulated economy, major potential revenue streams and partnerships emerge. Competition will intensify as well-capitalized operators with local expertise adapt to market demands, while suppliers can find extensive opportunities in diversified betting products and services. The strategic direction for success hinges on understanding the unique cultural dynamics and regulatory landscape.
Original Source: next.io
