Q&A: R. Franco Group on the potential of the Latam markets
R. Franco Digital CMO Rubén Loeches chats to EGR Compliance about whether the Latam region can become a new Eldorado for operators looking to escape from overregulated markets in Europe
2019 is proving to be a watershed year for Latin American egaming, with new markets including Brazil and Buenos Aires starting down the road towards regulation and licensing. In addition to these successes, the Colombian market has also continued to go from strength to strength, with 17 fully licensed and regulated operators including Rush Street, Sportium, Codere and Luckia all catering for Colombian players.
With these new markets set to grow over the next couple of years, the potential for operators is self-evident. R. Franco Group CMO Rubén Loeches discusses the future for the Latam market.
EGR Compliance: Which of the Latam markets presents the biggest opportunity for operators in your opinion?
Rubén Loeches (RL): At this point in time it would no doubt be Colombia. Currently it is the only Latam jurisdiction which can classify itself as a significant, regulated egaming market on a national scale. Since pledging to block illegal gambling websites in November 2015, Colombian regulator Coljuegos has introduced a robust regulatory framework and has laid the groundwork for a very hospitable operating environment.
EGR Compliance: What are your experiences of working with the Colombian regulator Coljuegos?
RL: Coljuegos has been a pioneer in the regulation of online gambling in Latam – especially in that they’ve been able to take advantage of other regulations while applying more scope, which has proven to be very smart. Buenos Aires would do well to follow their lead. The Juegalab initiative, for example, set up as a platform for discussion between the regulator and operators to discuss needs and opinions of the sector has been a particularly good idea – and very popular with our partners in the market.
EGR Compliance: Are other Latin American regulators keen to work with international operators?
RL: They certainly should be. Currently, around four-fifths of egaming revenues in Latin America are offshore and unlicensed. As national and regional governments begin to enact regulatory frameworks to allow international operators to enter, they’re going to experience a real windfall in revenue which will no doubt greatly benefit local economies. We’re already seeing this happen in real time, with regulators taking an increasingly open-minded approach to egaming within Latin America over recent years, operators and suppliers alike have flocked to the region to take advantage of the huge untapped potential it offers.
EGR Compliance: What are the biggest regulatory adjustments you make when operating in Latam?
RL: The Latam market is a dynamic and complex region where regulatory changes depend on political decisions which are sometimes subordinated to economic circumstances – many of which are outside of the industry’s control.
EGR Compliance: On balance, would you say regulatory environments in Latam are more or less restrictive?
RL: From our experience – we would not say more restrictive. Colombia has proven to be an excellent success for the region since its launch. Coljeugos’ open minded approach has allowed the country’s market to flourish – and has certainly provided an excellent example for the region to follow. In the case of Buenos Aires, the jury is still out until the regulator gives more detail in regard to the terms of participation in the tender process for international operators – which will no doubt have an impact on the way the market develops.
EGR Compliance: Will you look to enter the Buenos Aires market when it opens to operators?
RL: In theory yes, but we have no plans in place to do so just yet. As we are still in early days and the full tender process for international operators is yet to be finalised. I think the market will also be slower to develop than Colombia, as the 41.5% tax rate for operator income at a federal level will certainly be a rather high barrier to entry.
EGR Compliance: Does R. Franco anticipate entering the Brazilian market when it opens?
RL: Again, there would be no reason why not. Our aim for Latam is to provide operators with the tools they need to operate in such a diverse and dynamic region, which Brazil is part of. The new law passed in December 2018 is a sure sign regulation is not far away so once the terms of the regime are drawn up by the country’s Ministry of Finance, we, and our operator partners, will start to have a better idea of how the market will look.