In 2021, Codere underwent a significant transformation, separating its digital business into a standalone entity through a merger with the special purpose acquisition company (SPAC) DD3 Acquisition Corp.
This strategic move led to Codere Online’s listing on the Nasdaq, marking a new chapter in its existence.
Initially, Codere Online’s focus in the regulated Latin American igaming market was limited. Apart from Colombia, where it faced stiff competition, opportunities were scarce.
Prospects for sports betting regulation in Brazil were dwindling, Argentina’s province-by-province model was progressing slowly, and Peru and Chile were still discussing regulation plans.
However, the landscape has since changed dramatically. Brazil is considering adding igaming to online sports betting, and regulations in Peru and Chile are drawing nearer.
This shift leaves Spain and Mexico as key markets for Codere Online. In Spain, stringent advertising restrictions presented challenges for marketing, but Codere had established a foothold with prior investments and brand-building efforts, such as sponsoring Real Madrid.
Codere’s retail operations in Spain also contributed to its brand visibility.
This comfort in the Spanish market has allowed Codere Online to redirect its investments toward Mexico, a younger market that is yielding rapid returns.
Aviv Sher, the CEO of Codere, draws parallels between their experiences in Spain and Mexico, emphasizing the need for early investments before major competitors enter the scene.
Mexico has become Codere Online’s largest single territory, generating 49% of the group’s total revenue in Q3.
Sher highlights that this shift towards Mexico is not just a short-term trend but a long-term strategy due to the advertising ban in Spain, which reinforced their decision to invest in Mexico.
As other Latin American countries like Peru, Chile, and Brazil regulate igaming, Codere Online expects to face increased competition.
Sher acknowledges that his business is effectively a startup and prioritizes cost discipline. They only operate in fully regulated markets to ensure legal certainty and manage costs effectively.
While Codere Online currently has no plans to enter the Brazilian market due to cultural differences and strong competition, they are open to exploring it in the future, likely through a joint venture or separate financing.
Codere Online’s profitability remains essential, with Q3, 2023 being its first EBITDA-positive quarter.
Sher emphasizes the importance of positive earnings to attract further investment.
In the long term, Codere Online envisions expanding into the Spanish-speaking US population, focusing on Florida, where they are closely monitoring developments with Hard Rock Bet.
Texas, California, New Jersey, and New York also present opportunities, but new investments will be required to realize these ambitions.
For now, Codere Online’s immediate focus remains on Spanish-speaking markets to achieve sustainable and efficient growth, with the potential to increase the company’s valuation.
As the regulatory landscape evolves in Latin America, Codere Online is poised to establish itself as a prominent player in the igaming industry.