Brazil should be prepared to encounter a number of hurdles during its regulatory development phase and beyond, however, Platipus CBDO Vladyslav Garanko stresses that the “perfect system” can be uncovered should stakeholder and player needs be carefully considered.
During a wide ranging conversation on the showfloor of the recent SBC Summit Rio, Garanko picked up where he left off in London earlier in the year in dissecting a market previously described as a lifetime opportunity for many across the industry.
In the first of a two-part CasinoBeats special, Garanko delves into how the white market can prove to be a fruitful playing ground compared to that of its illegal counterpart, potential struggles for smaller igaming studios and complications that could lie down the road for Brazil.
Vanquishing the black market
Black market obstacles continue to be a bane in the side of the industry across numerous jurisdictions, with Brazil certainly proving to be no stranger to this. With this in mind, how can stakeholders best cooperate to ensure white market success?
This, Garanko began, is the biggest question that all the governmental structures ask themselves. However, the simple answer when it comes to the black market is that “you can’t eliminate it entirely”.
He continued: “What you can do is suppress it by making it seem that the white market is much better, and actually making the white market better.
“The point of the white market is that it has trust and credibility, which the black market lacks. If the open market banks on that, then it can push the black market down.
“But, if the white market is heavily oppressed by regulations or heavily taxed, the companies don’t have much of an incentive to advance that credibility.”
These current legislative moves represent the “perfect opportunity” to meet the needs of the industry, however, should this aforementioned incentivisation to enter the legal domain not be met, the illegal shadow cast across the country could swell further still, the Plaitpus CBDO cautioned.
This, it was added, would comprise truly hearing the voice of the industry, understanding any concerns and gaining an understanding of what kind of investment is ready to be made before proceeding with policy creation.
“It would be a very bad idea to simply copy and paste policies from Europe. The policies in Europe are not perfect, and adopting them without careful consideration could lead to a disaster,” Garanko commented
“Several excellent operators I know were forced to operate in the grey areas due to the domination of a few large companies in the market. Effectively oligopoly is not always a solution although most European regulators appear to be thinking that it is.
“Moreover, with lacklustre or absence of competition, the players are not always able to receive the best gaming experience. Ironically this is where the black market starts to dominate, offsetting the lack of credibility with being able to offer players much smoother experience.”
Overcrowding
A congested online gaming ecosystem is not a prospect that would be unique to the Latin American nation, however, Garanko noted that seeing it with your own eyes is “very different” from any educated guesses made beforehand.
However, Platipus is relying on its current reputation that is born from being “an established player in the majority of jurisdictions” to squeeze into the market.
“A lot of our partners are already operating in Latin America, and other countries,” he stated, with additional pick-up potentially coming from competing operational entities witnessing the success of titles elsewhere.
“So, for us, it’s easier,” Garanko said. “Smaller game studios may face problems due to lack of reputation, experience, game quality and other issues.”
The equation of legalisation
Looking further down the line, and taking a slightly presumptuous stance that the path to legalisation will be one that is lightly trodden, Garanko was quizzed on any significant challenges with regards to the legalised marketplace.
Acknowledging that the development of a legitimate ecosystem is “a heavy process”, a belief was stressed that a lot of obstacles will be faced as “the industry will push back regardless”.
Finding a natural middle ground is stipulated as the key aspect of the challenge, with regulation that is either too loose or too tight not going to be welcome.
“So it’s actually in the middle ground, and it’s tough to control. Find it and achieve it. Is it possible? Absolutely,” he said.
Adding: “Can the Brazilian market create something that has already been created but doesn’t exist yet? Yes, they can. So in the vacuum, there is a perfect system.”
Honing in on potential sticking points post launch, whenever that date may be, an initial obstacle highlighted by Garanko concerns that of “rampant corruption”, which is underscored as “not a case unique for developing nations”.
“There were cases where government authorities were so corrupt that the entire legislative process became a farce,” he explained.
“That is the first large question. Given Brazil’s average wage, it’s going to be very hard to find people who won’t be tempted to engage in corruption.”
A further potential sticking point is stipulated as “not that many people outside of the gambling industry understand how the industry works”, with the amount of expenditure required utilised as a way of backing up this second point.
“It’s a question of whether the regulator can set reasonable entrance barriers, a minimum amount of investment to protect the market without making it excessive, to ward off fraudulent companies from the real deals” he explained
“To put it plainly, fraudulent companies always use the same, hit and run tactics. If they short term profit that they can reap will be greater than the cost of entry, you can be sure they will charge in, consequences be damned. ”
A final issue concerns the unity of land-based gaming and its digital counterpart. Primarily, Garanko pondered whether balance will be achieved across each of the aforementioned segments, or if they will be split.
“We already have cases where land-based regulations and online regulations are entirely different and they are not even reflecting each other. And that causes a problem in itself,” he stated.
Concluding: “Governments oftentime still see land-based casinos as the main source of revenue for the industry. And for them, it makes sense. It is something tangible. Something they can control, or at least think that they can.
“But the truth is, the world has already shifted to digital long ago. It is much harder to track, and neigh impossible to control in its entirety.
!If the regulations are up to speed with reality, and take into account all the best practices as well as all lessons learned from the bad regulations, the market in Latin America can truly become a great example for the whole world. It’s a tightrope walking, but it can be achieved.”
In part-two, to be published on April 4, 2024, Garanko will look into a lack of Spanish speaking content and moves made by Platipus to rectify this, favoured themes, mechanics and features by Brazilian players and how, and where, the studio will deepen its footprint across the wider LatAm region
