How Rei do Pitaco is following the US DFS to sports betting model
Rei do Pitaco has emerged as a pioneering force in Brazil’s newly regulated sports betting market, becoming one of the first to obtain a full operating license. As the company gears up to compete with an influx of international betting giants, CEO Kiko Augusto shares insights into how Rei do Pitaco’s evolution from daily fantasy sports (DFS) to comprehensive sports betting offers a unique competitive advantage.
Established in 2019, Rei do Pitaco launched its DFS platform with foresight, anticipating the legalization of sports betting in Brazil, which came to fruition on January 1st. The company set strategic milestones, partnering with Kambi to create an online sportsbook, solidifying its transition from DFS to a fully-fledged sports betting operator by extending this partnership in October 2022.
This strategic pivot mirrors the trajectories of major players in the U.S. market, such as FanDuel and DraftKings, which have successfully transformed from DFS to expansive sports betting and iGaming entities, collectively generating $10.6 billion (£8.2 billion/€9.6 billion) in revenue for FY2024. Both companies adeptly converted their substantial DFS customer bases into thriving sports betting communities.
However, Augusto is keen to highlight that Rei do Pitaco’s strategy is more than a replication of the U.S. playbook. “We studied FanDuel and DraftKings extensively, but merely copying their model would not suffice here,” he explains. “Understanding the nuances of Brazilian bettors led us to craft a product that resonates with our local audience.”
While acknowledging that the advantage enjoyed by U.S. competitors was profound post-PASPA legalization in 2018, Augusto asserts that Rei do Pitaco’s accumulated user base from its DFS days offers a significant head start in Brazil’s freshly regulated landscape. “It’s true that the launch window wasn’t as favorable for us,” he notes. “Nonetheless, we still acquired a robust customer base that positions us well for growth.”
Emphasizing Product and Localization
Localization is a cornerstone of Rei do Pitaco’s competitive strategy, underpinned by Augusto’s data-driven approach. His mantra of “product, product, product” aims to establish the platform as the go-to resource for Brazilian sports betting enthusiasts, positioning it as a second screen for viewers during sporting events.
“If we can deliver the best product in the market, capturing market share becomes a natural outcome,” Augusto asserts. Rei do Pitaco’s origins in DFS provide invaluable insights into the preferences of Brazilian sports bettors, ensuring that while iGaming remains a contender, the emphasis will be on enhancing its sports betting offerings.
“For us, sports betting is paramount; it’s where we allocate our most significant resources,” he states. “We thrive on building complex products. The challenge of developing a superior sports betting experience excites us.”
Strategic Wisdom: Outsmart, Not Outspend
Enter the Brazilian sports betting sphere as a homegrown contender amidst well-heeled international competitors like Betsson and MGM, Rei do Pitaco is acutely aware of its fiscal landscape. “We recognize that outspending these industry giants is not feasible for us,” Augusto admits. “Our strategy is rooted in innovation and strategic differentiation.”
Chief Legal Officer Rafael Marchetti Marcondes echoes this sentiment, emphasizing the importance of a data-centric marketing strategy that can drive substantial growth even with constrained resources. “Our mantra is crucial,” he comments. “With limited budgets compared to multinational corporations, we must adopt creative approaches to identify untapped opportunities.”
“Every expenditure is meticulously measured; we analyze the return on investment rigorously. Our operations are grounded in metrics and data, which empowers us to thrive despite financial limitations.”
A Clean Approach: No Fear of Back Taxes
This methodical outlook has also informed Rei do Pitaco’s decision to abstain from operating in the grey market before regulation. This strategic choice not only facilitated a smoother licensing process but also averted the complications faced by competitors concerning potential retrospective taxes on prior operations.
Regarding fiscal concerns, he adds, “We are not troubled by back taxes, as we’ve been compliant with Brazilian tax obligations since our outset in 2019. For others, this represents a significant hurdle; for us, it is not an issue.”
Building for a Sustainable Future
The early indicators for Rei do Pitaco’s market entry signal positive momentum, aligning with company expectations. “Our numbers are rising significantly, especially in comparison to the fantasy market,” Marchetti Marcondes reports. “We are engaging with a vastly broader audience now, and the outlook appears promising.”
While the company draws inspiration from U.S. giants, its tailored approach to the Brazilian market aims to amplify its operational capabilities amid a competitive milieu. Rei do Pitaco’s robust user base from its DFS initiative, coupled with Augusto’s dedication to product excellence and its guiding philosophy of strategic agility, poise the company as a formidable contender in Brazil’s dynamic sports betting landscape.
