In Q3 a number of operators experienced slower-than-expected growth in Brazil’s first year of legal betting. Among those was Kambi, whose CEO Werner Becher said that the company’s Q3 earnings growth in Brazil was not what it had “hoped for”.
At the time, others lamented slow iGaming growth due to a slow game authentication process, which meant fewer games were available to players than operators would have liked.
Speaking to iGB at ICE last week, Becher said three factors had impacted the progress of its operator partners in Brazil. Notably, he said bettors in the market had proved much more sophisticated than the sector had expected.
“An interesting learning for us is the number of casual punters is much lower in Brazil than [the rest of] South America and the number of very aggressive [bettors] is higher, meaning operators have more pressure on their margin,” Becher said.
“Player profiling and risk management are more important than in Europe. You’ve more guys [in Brazil] wanting to make money with betting.”
Additionally, he said estimates on the potential size of Brazil’s betting market were overstated, and channelisation remains lower than expected, which has also hindered progression in the market for legal operators.
South America makes up approximately 20% of Kambi’s business today, and despite a slower-than-expected start in Brazil, Becher is bullish on further growth in LatAm more broadly.
“But the strongest growing market [for us today] is South America, with our customers in Colombia, Peru, Argentina, Brazil,” he added.
Asia next big opportunity for Kambi and wider sector
Taking a longer-term perspective, Kambi is eyeing Asia as the sector’s next big growth opportunity. Although Becher insists Kambi is solely focused on regulated markets, he expects a number of new opportunities to open up in Southeast and East Asia, particularly Thailand, Vietnam and Japan.
“I’m very bullish about Asia as the next big thing to come in our industry. Probably not in the next three years. There is more growth coming in South America. We had some steps back in India a few months ago, but sooner or later, these guys will start moving to regulate their markets, and stop accepting black markets any longer,” he said.
“We are focused on Japan, India, also Thailand and Vietnam now. But we are fully focused on regulated markets. We are there to build connections and do some business developments, but we will not go into these markets until they are regulated.”
Becher believes there are more opportunities for North American growth in the mid-term, including the opening up of California and Texas to legal sports betting. Today, North America accounts for almost 40% of Kambi’s business.
Kambi to return to top-line growth
Kambi has faced a number of quarters of continued revenue decline due to multiple factors, including long-standing clients moving off its platform. In Q3 revenue was €37.4 million ($43 million), a decrease of 13.1% year-on-year.
Becher told iGB the supplier would return to top-line growth in the next couple of years.
“We will continue to face near-term headwinds such as LeoVegas and Kindred moving onto their in-house sportsbooks. However, we are very optimistic when it comes to our top line that we’re in a good position moving forward to start delivering some pretty nice top-line growth once again,” he added.