Brazil licence holders KTO and Stake on licensing challenges

As leaders in the newly legalized online betting sector in Brazil, KTO and Stake recently shared their insights with iGB regarding the intricacies of the licensing process and how their early market entry can elevate consumer trust and brand authority.

Following years of anticipation, Brazil officially opened its legal betting landscape on January 1st. This development presents unmatched opportunities for operators positioning themselves in what is set to become one of the top three global markets for online gambling. The first-mover advantage is particularly beneficial for companies that have successfully navigated the licensing process, allowing them to establish their brand ahead of competitors.

The initial launch saw 14 operators receiving full licenses, supplemented by 52 others granted provisional authorization. This phased approach aims to accommodate companies still completing the necessary certification processes while managing the substantial volume of applications submitted to the Secretariat of Prizes and Bets (SPA).

Provisional licenses enable these companies to operate for an initial period of 30 days, extendable for another 30 days pending support from certifying entities, which can verify the need for additional time to finalize certification.

Stake is among those holding a provisional license and has strategically set its sights on regulated markets like Brazil, following its recent expansions into neighboring Latin American countries such as Colombia and Peru. In November 2024, Stake appointed Thomas Carvalhaes as its country manager for Brazil, indicating its commitment to establishing a robust presence. Although currently operating under provisional authorization, Carvalhaes anticipates securing full licensing imminently.

“Regarding the provisional license, we’re currently addressing a few pending documents, primarily certifications,” Carvalhaes explained to iGB. “It’s essentially a matter of time. I am confident that we should have our final license confirmed within the month.”

Capitalizing on First-Mover Advantage in Brazil

With a population exceeding 200 million and a profound passion for sports, Brazil’s legalization of online gambling has historically attracted international operators eager to seize market opportunities. However, increased interest from various operators translates to intense competition, underscoring the importance of formalizing operations and localizing offerings to align with Brazilian consumer preferences.

Being among the early entrants presents a crucial opportunity for operators like Stake, and Carvalhaes recognizes the necessity of swift action to leverage this advantageous position. “I believe this is vital; the market dynamics have drastically shifted. It’s no coincidence that major operators are now here, investing heavily,” he stated. “Securing a license ahead of competitors significantly enhances our market position.”

KTO: Licensing as a Mark of Credibility

In contrast, KTO stands out having received one of the full licenses on January 1, enabling the company to launch alongside reputable brands like BetMGM and Rei do Pitaco. With aspirations for a 10% market share in Brazil, KTO’s licensing achievement serves as a testament to its operational discipline, as highlighted by founder and CEO Andreas Bardun.

“Receiving one of the first licenses acts as a considerable endorsement of our organizational rigor,” Bardun explained. “This enhances customer trust and demonstrates that KTO is a serious contender focused on setting benchmarks. We entered the Brazilian market with a long-term vision, and our licensing status reinforces our commitment to becoming a pivotal player in the Brazilian iGaming landscape.”

The Challenges of Brazil’s Licensing Process

The path to establishing a regulatory framework for gambling in Brazil has been complex. It took five years from the initial approval of online betting legislation by the national congress in November 2018 until the chamber of deputies provided the final regulatory green light in December 2023. This lengthy process also presented challenges for operators navigating the licensing procedure.

Bardun has noted issues in communication with the SPA and challenges with the gambling application portal, acknowledging the regulatory body’s ongoing adjustments. “The application process was quite stressful for multiple reasons,” he recounted. “As the regulator was also new to this domain, modifications to requirements were common. Just when we thought we had all regulations met, new demands emerged at the last minute, which made planning difficult.”

Building Trust in Regulatory Frameworks

Carvalhaes also empathizes with the SPA, emphasizing that the agency drew inspiration from well-established markets such as the UK to integrate best practices. “The licensing process became a mutual learning experience,” he stated. “No regulatory framework is perfect from the outset; even seasoned jurisdictions face challenges. It’s crucial for operators to work collaboratively with regulators to share insights and educate about industry standards.”

“In my view, Brazil is forming a fair and well-regulated market for both operators and consumers,” Carvalhaes asserted.

KTO’s Ambitions for Market Leadership

With KTO fully licensed and Stake advancing rapidly, both companies are keenly focused on capitalizing on the expansive opportunities within Brazil’s lucrative gaming sector. Competitors like Betano are already making strides with unique sponsorship strategies, while established international brands such as Bet365 heighten market competition further.

Bardun, undeterred by the competitive atmosphere, is resolute about KTO’s goal to establish itself among the industry giants. “I firmly believe that KTO will emerge as a significant player in Brazil,” he stated. “Our target is to secure a position among the top three brands in the market.”

Stake’s Vision for Market Growth

Stake aims for substantial market penetration, with Carvalhaes asserting the need for a strong initial performance to achieve ambitious growth targets. “For this year, we aspire to rank among the top 10 operators,” he said. “We possess the product strengths, expertise, and resources necessary to position ourselves within the top five.”

“Looking forward five years, provided we continue making strategic decisions regarding sponsorships and responsible gambling practices while remaining compliant, I am confident in our potential to become the leading operator in Brazil. Such ambition is warranted,” he concluded.

The launch of Brazil’s legal betting market stands as perhaps the most compelling narrative in the gambling industry today, capturing the attention of many operators as they strive for market leadership. Bardun asserts that “the race is on,” and for early licensees like KTO and Stake, the focus is clear: to sprint ahead and establish performance standards for others in what promises to be an intensely competitive market.