With Brazil apparently set to fully legalize sports gambling in the next few weeks, reports indicate that the country is attracting a flood of companies eager to secure a slice of the country’s digital gambling market.

Buoyed by recent legalization in the United States, global sports betting has exploded over the past few years and is projected to grow into a $140 billion market by 2028. With a population of 212 million people, Brazil could soon become the largest sports betting market in the world. 

“Brazil is a sleeping giant,” said James Kilsby, vice president of the Americas division of gambling intelligence firm Vixio. 

The imminent opening of Brazil’s gambling market has already drawn interest from the British Bet365, which entered the market in 2019, and the local media giant Globo, which recently partnered with the U.S. gambling company FanDuel. Among the heavy hitters, a Brazilian daily fantasy app called Rei do Pitaco is gearing up to compete. With around 1.6 million registered users and fresh off a $32 million series A, Rei do Pitaco is, observers say, well positioned to gain a significant market share, once sports gambling is legalized.

After the 2018 World Cup, the National Congress passed a law in the same year to legalize sports gambling and provide regulators four years to establish guidelines. 

In the meantime, companies like Bet365 were allowed to enter the country, as long as their servers were abroad and they did not have physical operations in Brazil. Since then, the Brazilian gambling market has grown to be worth more than $1.2 billion, although with massive potential to grow after official regulation.  

After years of making everyone wait, the Ministry of Economy is expected to release the decree in March that will legalize all forms of sports gambling in preparation for the next World Cup in November. 

The startup Rei do Pitaco has an early advantage against the incumbents. Rei do Pitaco is modeled after U.S. firms FanDuel and DraftKings, where users compete against each other by creating lineups of professional athletes and squaring off with their real-life, real-time stats. 

Rei do Pitaco

The two companies offered daily fantasy at a time when sports gambling was still illegal across much of the U.S. Then, after a 2018 U.S. Supreme Court ruling struck down a federal law banning sports betting, FanDuel and DraftKings wielded their massive user bases to dominate the newly opened industry. Nigel Eccles, the founder of FanDuel who joined Rei do Pitaco’s board, estimates that FanDuel and DraftKings together own from 70% to 80% of the U.S. sports betting market, an industry that now brings in an estimated $165 billion annually. 

With the help of Eccles, the Brazilian startup followed a game plan similar to FanDuel’s and convinced regulators that fantasy gaming should be considered a game of skill, rather than luck. Now, armed with 1.6 million users in Brazil, Rei do Pitaco is ready to move into traditional sports gambling when it becomes fully regulated. 

“Rei do Pitaco have been able to build such a huge lead in daily fantasy sports,” Eccles told Rest of World. “They have made it very hard for somebody else to try and commit to the market.” 

Rei do Pitaco will face off against Bet365, which reported revenue of almost $4 billion in 2019/2020 and claims to have over 63 million users across the world. Bet365 did not respond to requests for comment from Rest of World. Then there’s Globo, which signed a multiyear partnership with FanDuel in November 2021, runs a fantasy game called Cartola FC, and is planning on launching a daily fantasy game, Cartola Express, currently in beta testing. A representative from Cartola said it will launch in Brazil ahead of the start of the Brazilian football season in April. 

Kilsby, the gambling analyst, said that fantasy sports are big in Brazil, giving companies like Rei do Pitaco and Cartola an edge. “This is one of the things I’d be watching for in the marketplace,” he told Rest of World

Even so, when sports gambling was legalized in the United States, DraftKings and FanDuel had the advantage that betting companies could not previously operate and therefore did not have any clients. In Brazil, gambling companies like Bet365 have been operating for several years, albeit in an unregulated capacity. “They’re going to hit the ground running because they have existing businesses,” Kilsby said.