The data is brutal: more than R$1 billion (US$177m) per month still circulates in the illegal betting field in Brazil, according to the Brazilian Institute of Responsible Gaming. This represents 60% of the sector. But perhaps the most disturbing data is not even this, but rather why the regulated market has not yet managed to become more desirable.
One hypothesis is that it has not yet been able to become competitive enough. Not in its legal structure, nor in its regulatory intent, but in its execution as a product, service and experience.
Informality has always been skilled at this. It does not need to convince anyone that it is attractive, because it is already close, accessible and familiar. The legalized segment is still looking for its place.
It is not that the regulated market should become more flexible to the point of losing its integrity. Quite the opposite, the sector needs to compete in quality, design and experience. It needs to be better in everything and thus become desirable.
And what is more: it needs to be vocal. We need to stop talking only among the entities and companies involved. While 60% of revenue continues to flow silently through illicit channels, there is a risk of normalizing what should be an urgent problem.
The sector needs to stop being reactive and start occupying more space in public opinion. It needs to disturb, provoke and propose. The comfortable silence of those who are doing their homework does not build a market. Building one requires vision, narrative, consistency, courage and (a lot of) communication.
The regulation in January was a milestone, but it alone will not transform the sector. What will bring about significant changes is the regulated sector's ability to position itself as a legitimate, efficient and ired industry. If the informal sector is still leading, it is a sign that formalization is not being sufficient as a value proposition. It is time to raise the bar.
As long as we only see illegality as an external problem, we will continue to make mistakes in our strategy. The challenge is not to curb what is wrong. It is to make what is right indisputably better and more attractive.
Roger Amarante
Co-founder and CFO of S8 Capital
