Rei do Pitaco is one of the first companies to obtain a comprehensive license in the newly regulated Brazilian betting market, aiming to compete with a wave of international players.
The CEO, Kiko Augusto, has followed in the footsteps of successful American cases to some extent, explaining what makes the company's strategy different and how the foundation of Rei do Pitaco's Daily Fantasy Sports (DFS) has laid the groundwork for its success.
Rei do Pitaco launched its DFS product in 2019, focusing on the Brazilian sports betting market that was about to be regulated, which officially started on January 1.
In 2022, the company first signed an online sports betting partnership agreement with Kambi and extended this agreement in October last year, preparing to transition from a DFS operator to a mature sports betting site.
This strategy has been hugely successful in the United States, with FanDuel and DraftKings being the two market leaders. Both companies have evolved from focusing on DFS to sports betting and igaming, with total revenues reaching $10.6 billion (8.2 billion pounds/9.6 billion euros) in the fiscal year 2024.
The two have successfully leveraged their large customer bases accumulated during their tenure in DFS, bringing customers into the sports betting realm.
However, Augusto stated that although Rei do Pitaco follows most of the strategies of DraftKings and FanDuel, it is not simply a matter of "copy-pasting" the DFS model into the Brazilian sports betting model.
"We carefully studied FanDuel and DraftKings," Augusto told iGB. "Other companies have also tried to emulate FanDuel and DraftKings in Brazil, but they all failed.
"Therefore, we understood the behavior of fantasy fans and decided to create a product based on Brazilians from scratch."
Augusto warned that Rei do Pitaco's advantage is not as significant as that of FanDuel and DraftKings, which transitioned to a new legal market after the PASPA restrictions were lifted in 2018. Brazil remained a grey market from 2018 until January 1.
"The advantage of DraftKings and FanDuel in the United States is very huge," Augusto continued. "For us, the advantage is not that big. But we still gained a large number of customers, and a huge user base gives us a significant advantage in the regulated market."
Product and Localization are Key
Rei do Pitaco focuses on localized differentiation, adapting to the data-driven approach led by Augusto.
Augusto hopes that through the "product, product, product" strategy, Rei do Pitaco will become the second screen for Brazilian bettors watching sports events, helping the company achieve its goals.
"If we really have the best product on the market, I think market share is just a matter of time," Augusto explained. "That's our focus."
The DFS origins of Rei do Pitaco mean it has already mastered the preferences of Brazilian sports betting players, and although igaming remains an option, sports will ultimately drive its future growth.
"For us, sports betting is the most important," Augusto said. "It's the product we put the most energy into. It's the product we invest the most resources in.
"In terms of sports betting, it's a much more complex product to build. And that's what we like, right? We like building complex things."
Win Smart, Not Spend More
As a local hero company, Rei do Pitaco is entering the sports betting market alongside international giants like Betsson and MGM.
Rei do Pitaco is still far from competing financially with these giants, although understanding this fact is one of the sources of the company's slogan.
"One thing we always say internally is that we want to outsmart our competitors, not outspend them," Augusto said. "Companies like MGM are joining Brazil and investing millions of dollars. We humbly say that we will never outspend those guys."
Rei do Pitaco's Chief Legal Officer, Rafael Marchetti Marcondes, agrees with Augusto's view and believes that thanks to the data-centric marketing approach, the company can still achieve impressive growth despite limited resources.
"This is a fairly important creed for us," Marchetti Marcondes added. "Because our budget is different from large international companies, we must think outside the box to discover opportunities that others have not found."
"Every penny we spend is monitored. We analyze returns. Everything is based on metrics and data, this is our way of working, and we truly believe that even with fewer financial resources, we can expand our business."
No Worries About Back Taxes
This cautious approach extends to Rei do Pitaco's decision not to operate in the grey market before regulation.
This means that the company's licensing process was very smooth, while also avoiding the concerns that other companies might still have to pay retrospective taxes for their activities in the grey market.
"We were the third company to apply, but I believe we were the first to complete all the documents," Augusto said. "So for us, we were ready for this moment."
When talking about avoiding back taxes, Augusto replied, "We are not worried about this issue at all, because since the company was established in 2019, we have been paying taxes in Brazil.
"For other companies, this is a big deal. But for us, we're fine."
Looking to the Future
Marchetti Marcondes revealed that the early signs for Rei do Pitaco are positive, with preliminary data meeting the company's expectations.
"The growth in numbers is quite good, especially compared to the fantasy market," Marchetti Marcondes said. "We are now serving a larger market. So I think, for us, the expectations and numbers are quite good."
Although Rei do Pitaco has drawn inspiration from the success of FanDuel and DraftKings, the company believes that its customized approach for the Brazilian market will further strengthen its position, despite strong competitors.
Since the DFS era, Rei do Pitaco has had a strong user base, Augusto's focus on products, and the company's slogan of "win smart" rather than "spend money," all make Rei do Pitaco a strong entrant in the Brazilian betting market.
