Episode Transcript
[00:00:15] Speaker A: Hello, everybody. Welcome Back to episode 14 of Right to the Source. My name, as ever, is Robin Harrison and I'm here with the Mulder to my Scully, Mr. Ed Birkin from H2 Gambling Capital. Ed, how are you today?
[00:00:30] Speaker B: Good, thank you. Trying to work out if that's an insult or not. I never watched the X Files.
[00:00:35] Speaker A: It was very good.
[00:00:37] Speaker B: But Californication, fantastic program that has the dude, David Coffney in.
[00:00:43] Speaker A: All right. Okay. Right. So I was. I was wondering the connection. I thought you were just.
[00:00:47] Speaker B: No, it wasn't just naming random TV programs, albeit I could understand why people may think that would be the tangent we go down.
[00:00:54] Speaker A: Yeah.
[00:00:54] Speaker B: And Gillian Anderson was in.
Was on Fall. She was.
[00:00:59] Speaker A: Yeah, she was. That was very good.
[00:01:03] Speaker B: And sex education, she's given that.
[00:01:05] Speaker A: Yeah, that was. That was okay for the first few series and I think it just got very weird.
[00:01:11] Speaker B: Yeah.
[00:01:11] Speaker A: Yeah. Very worthy. And. And also, how did everyone have such nice houses?
[00:01:16] Speaker B: Yeah. And, you know, smartphones weren't around in the time it was set and all that, but we'll forget about all that stuff. Yeah.
But no. Yes, Okay. I am your Scully.
[00:01:25] Speaker A: No, you're Mulder.
[00:01:27] Speaker B: I'm Mulder.
[00:01:28] Speaker A: Mulder was a slightly out there weird one.
[00:01:30] Speaker B: So you're Mulder.
[00:01:31] Speaker A: No, no, you're Scully.
You're Mulder.
[00:01:34] Speaker B: Okay.
[00:01:34] Speaker A: Scully was the cool, rational one and Mulder was the one who had all the weird ideas and the picture of a UFO in his office.
[00:01:42] Speaker B: Okay, cool. Right. So, gambling podcast.
[00:01:45] Speaker A: Yes, yes. Gambling. Gambling. The X Files we haven't even got going and we've shot off a tangent. But in our new.
What are we talking about? Well, in our new. A commitment to structure and order.
As promised last week, we're going to talk about the Albanian gambling market.
We're also going to do story of the week. Going to do start of the week. And I. I think you're quite keen to rant about Brazil.
[00:02:17] Speaker B: I'm quite keen to rant about everything today.
[00:02:19] Speaker A: Excellent.
Excellent.
[00:02:22] Speaker B: Annoyed me.
[00:02:23] Speaker A: Okay.
[00:02:23] Speaker B: That I feel, you know, we shouldn't just paper over and be nicey nicey. If you want to realize.
We'll just. Just say how it is.
[00:02:32] Speaker A: Say it how it is. Okay. Okay. Right. So trepidation is building. So let's. Let's see how angry we can get you by delaying the rant as long as possible.
So first of all, let me talk about some story of the week or stories of the week. There's been a few things that we've done over the past few days I think have been quite interesting. So one of them was the continuing coverage that Jess Marquez, based in the US Is doing on the New York downstate casino process. I think his piece on, for example, in Resorts World, on Jay Z and Caesars and Times Square, on mgm, all really good, but in particular, I mean, partial bias, because, you know, I follow the Mets. But on Steve Cohen's presentation for his Queen's Casino, I think that did a really good job of knitting together all the lobbying that's going on.
And, you know, basically what this kind of facility would actually look like someone else from a US Team. Matt Raibaltowski said last night, based on going by the Mets current form, if that's any indicator, Cohen has no chance.
It's not going well at the moment. But I thought that was very interesting.
Then there's a really good piece with. I think it was Leo Vegas, Chief Product Officer, talking about the typical platform migration. And that really gave a kind of like a good kind of under the hood look at the kind of process behind this and the strategic rationale. And then just because I always really enjoy the column and I don't think I've shouts it out in the podcast before, Frank Legato does one for GGB magazine, available on ggbmagazine.com called Frankly Speaking. It's always really Funny. It kind of really kind of showcases Frank's dry sense of humor. And this month's edition is about Uno on the casino floor.
[00:04:33] Speaker B: Okay.
[00:04:34] Speaker A: Yes.
[00:04:34] Speaker B: Are there any other children's games that you're gonna write about?
[00:04:38] Speaker A: No, this is in the context of gambling because the Palms is opening Uno Room. So I'm not sure if this is an appeal to kind of new demographics or a sort of clubhouse for nostalgia. So.
[00:04:55] Speaker B: Yeah.
[00:04:56] Speaker A: So it's just. It's always quite funny. It's quite jokey.
[00:05:00] Speaker B: Uno room. Are you any good at uno?
[00:05:02] Speaker A: I don't think I've ever played Uno.
[00:05:04] Speaker B: What's the Scottish equivalent? Or do they not really make up north? Just go straight into poker now we just.
[00:05:09] Speaker A: We just go out and hang out in bus shelters after a certain age.
That's our board games. You know, the bus shelters of Glasgow.
[00:05:17] Speaker B: Do you know? So I was doing this in. I was playing one of the New York Times Game center games.
[00:05:23] Speaker A: Okay.
[00:05:24] Speaker B: Mini crossword, actually. And the clue was the kind of opposite of snakes.
[00:05:28] Speaker A: We talked about this last week. I'm not sure we actually recorded it, but it would be in the US which, as I told you at the time, is a shoot.
[00:05:37] Speaker B: Yeah. Shoots. Not ladders.
[00:05:39] Speaker A: Yeah. Which actually makes more sense.
I mean, because you go down the.
[00:05:45] Speaker B: Shoot, so go down ladder. No. What? Yeah, but you. No, it doesn't make sense because you don't climb the snake. It's no opposite of ladders, shoots and ladders, isn't it? Not, not snakes and shoots. Yeah, yeah, yeah, but you, yeah, whatever. Let's stick with the original.
[00:06:03] Speaker A: All right, all right. Hey, don't get too pretentious.
[00:06:07] Speaker B: You're right. Right, yes.
[00:06:11] Speaker A: Start of the week, what you got?
[00:06:12] Speaker B: 81.4. Well, it's the non stat of the week and it's not really this week. $81.4 billion through crypto casinos, a figure we talked about a few months ago that I still see being referenced in LinkedIn posts in articles. And it is complete bollocks. Like it has already been disproven.
The thing about blockchain crypto, yes, crypto is anonymous, but it's also highly trackable. So you don't know where it's from, who it's used. But because the blockchain, you can see how much is being used. And so this figure has no, has no basis.
Well, there must be some basis that the people who came up with it are claiming. But when you can actually track crypto transactions through blockchain verified, this figure is just, just, just completely preposterous. And I think it's important to look at kind of crypto what's going through crypto casinos and what's going through actual cryptocurrency. So the best way of looking at it, the one that I found when we looked into it, is this company called Tanzanite. Tanzanite XYZ sounds like xyz if you want to look it up. And they track the main crypto casinos and the main currencies cryptocurrencies to see the transaction volume. Right, all of this is verified. It is all actual data on the blockchain. You cannot argue with it. There is no finger in the air bullshit. And they do the main casinos and stake has about 55 share or something. But let's assume there's a long tail. So let's use a Pareto principle 80, 20, you know, increase it a bit.
So if you do that and say then Maybe there's another 20% of the tail, the stake maybe has like 45% share. So what they worked out is they said stake reported GGR of 4.7 billion in 2024 grossed that up. So based on the ones they cover, it gets to about 8 billion. So they're saying the market size is probably around 10, 11 billion, including long tail, which is fine now I actually think, which is obviously you can probably do the maths, about an eighth of this ridiculous number that's put out there.
I can't even express how stupid the figure is. Okay.
But actually what then came out is that 70%, over 70% of transactions stakes transactions are fiat currency. So cash, debit card, etc. Non crypto.
So crypto is only 30% of it. So it's not. So if you're looking in crypto transactions, which is what you should be really looking at, and I appreciate it's difficult because someone made deposit in crypto and take out in cash. So there could be something around.
But in crypto transactions that puts the market, the crypto gambling market, you know, and sports at around three and a half billion was actually a bit less 3.1. But then we've looked at it in 2025 so far. So including 2025 data, about three and a half billion dollars in crypto transactions. Now you could gross up and say, well, we talked about crypto casinos and therefore you staked total amount. I again would disagree with that because most and I don't have evidence of this, but in my view stake is going to have a much higher share of fiat currency of fiat transactions than others because it's regulated in certain markets we know like crypto. When you're looking at BC Game Rebate, you'd imagine that way more than 30% of their business is through crypto. So even if you're looking at crypto casinos figure probably still isn't. It may be let's say half of their business is. Is it. So you're looking at maybe $8 billion through crypto casinos, but through cryptocurrency. And this is where I'm going get on this in Brazil where people say, oh, the illegal market's so big because loads of people are using crypto. Like you can only have if you look to what every market is claiming is crypto on the illegal market, you're just going to get a. You know, you probably would get to 80 billion, but it's not. We know the numbers nowhere near that. So I just wish people would stop using using stuff that they read. There's actually if they look deeper has been disproven by people who are crypto specialists like tanzanite.
And actually if you look even deeper and you see what stakes and you fiat the crypto market in terms of cryptocurrency itself is worth about three and a half billion. The Final thing I'd say on this, if someone looks at tanzanite, says, oh, it doesn't track Bitcoin, it tracks lots of other ones, is it doesn't matter because it tracks a lot of the main currencies. So whatever other crypto casinos are doing on other cryptocurrencies, stake is going to be doing the same. So as long as it tracks the same crypto casinos on the same crypto blockchains, then you're still getting the total number. Because we're not saying that stakes revenue is coming just from the blockchains it tracks, we're saying that is its total crypto revenue. So it doesn't matter if it doesn't track every single blockchain.
So with a small margin of error that you can have, it's about three and a half billion, not the 1011 we talked about, which you could argue is maybe the whole crypto casino rather than cryptocurrency. But again, I think it's less than that. And so I ran over, it's definitely nowhere near 18 million billion. Sorry. And so if you're writing an article, anyone out there on crypto casinos, do not quote this absurd number because it's just preposterous and shows you have done zero analysis.
[00:11:08] Speaker A: Right, so that's the non. That's your non. Start of the week. So what's your start of the week, then?
[00:11:14] Speaker B: Zero minutes is how long the friendly was between Sheffield Wednesday and Burnley after Sheffield Wednesday players refused to play the friendly, having been paid late for. For four of the past five months.
[00:11:24] Speaker A: How many players do you have at the moment?
[00:11:26] Speaker B: Not enough to make a squad.
[00:11:27] Speaker A: Well, good luck for the rest of the season. Oh, Albania.
[00:11:31] Speaker B: Yeah.
[00:11:31] Speaker A: So we promised we'd talk about Albania and my God, we are going to deliver Albania.
Population. What do you think the population size is?
[00:11:40] Speaker B: It was about I'm turning the tables, wasn't it?
[00:11:43] Speaker A: What's that?
[00:11:44] Speaker B: Population?
So toast is 2.9. I said 2.2. Is that what we've got for the adult population?
Adult population, yeah.
2.2 million.
[00:11:57] Speaker A: 2.2 million. Well done. Yeah.
[00:11:59] Speaker B: What's the national dish?
[00:12:00] Speaker A: The national dish is Tavi Kursi.
Yeah, yeah.
[00:12:05] Speaker B: Lamb and rice.
[00:12:06] Speaker A: Lamb and rice, yes. We're getting good at this.
[00:12:08] Speaker B: Yeah.
[00:12:09] Speaker A: Retaining facts.
[00:12:11] Speaker B: Anything about gambling?
[00:12:13] Speaker A: Oh, not sure about that.
Well, it's actually quite an interesting one because it was the start of last year, I think they essentially rescinded a ban on sports betting and set out a system where it was, I think, maximum of 10 licenses.
I mean, just. Just to be clear, it had been banned since 2018. Maximum of 10 sports betting licenses.
It had a lottery. I'm not sure it still does. I think it was Austrian lotteries and think that kind of ended.
[00:12:48] Speaker B: So there's obviously support by out by then Novomatic.
But yeah, it was loss making and closed down.
[00:12:55] Speaker A: Yeah. So that was closed down. Only one a government sanctioned casino which was Casino Regency I think in Tirana, which is the capital.
[00:13:06] Speaker B: Yes. But then there were also at the time. So when the bank came in. Yeah, passed in 2018, came in 1st of January 2019. That was actually the sole operator. There are now other casinos which then launched. You allow casinos in five star hotels. So there are a number of other casinos now along with that. But yes, that was the effectively became a de facto monopoly which was also open during COVID and they did booming trade as people just treat it as a party area continue.
[00:13:31] Speaker A: Well that's a good use of the venue.
So with that market with these kind of restrictions and I think the tax rate is quite chunky as well. What does that mean for gross gaming revenue from Albania and how does it break down across these different products?
[00:13:49] Speaker B: Well, did we talk about the number of betting shops last week when we discussed Albania briefly?
[00:13:54] Speaker A: I don't think we did.
[00:13:55] Speaker B: So there were 4300 roughly betting shops when the law came in and it closed, which made it one for. I think it's about made it one for every 700 or so people but one for every 520 adults which was the highest density of betting shops per any country in Europe when it closed down.
[00:14:14] Speaker A: Wow.
[00:14:14] Speaker B: There were 50 casinos which effectively slot halls.
[00:14:17] Speaker A: Yeah.
[00:14:17] Speaker B: 10 operators they went. So now there are seven casinos in hotels tax. So we reckon GGR in 2023 came in at about 14.5 billion.
Let's talk in yours about 130 million euros which is just under half of what it generated in 2018. So we believe that. And we'll. We'll go out to 2028 because obviously it's going to take time for the launch and everything. So like a full run rate. What do we have GGR of about 10 billion local currency. So 95 million. This is for the online for the onshore. 95 million euros. So 130 million euros at the moment with the land based casinos we are looking at 95 million for the online.
But we still think that at the moment there's no one shot I gaming. So the offshore market will be.
Will be significantly higher. So 70% of the online betting market will be onshore by 2028, but just 40% of the total combined betting and iGaming market.
[00:15:27] Speaker A: Once again, prohibition doesn't work.
[00:15:29] Speaker B: No, they tried it, they shut it down and now they realize they're bringing it back and they need it.
[00:15:34] Speaker A: Well, the thing about rescinding, you know, kind of prohibiting them rescinding just, it just exacerbates all the problems you're dealing with before. Essentially.
Imagine the original kind of reasoning was over consumption, kind of like fear of addiction, things like that. So they effectively took off the safety belt and drove the car off a cliff. But that's essentially what prohibition does.
[00:16:04] Speaker B: I mean, the question is, I suppose if there was a betting shop for every 520 adults, you assume that people open these betting shops because they were popular making money. They didn't say, oh, it's not very busy, I'll open another four.
So there was a pretty high propensity to bet on Sports. On 31st December 2018, do you think on 1st January 2019, everyone went, oh, my betting shop's closed. I won't bother betting on sports anymore.
[00:16:27] Speaker A: I'm going to go and play UNO.
[00:16:28] Speaker B: In the Regency Casino.
[00:16:30] Speaker A: Yes.
And the new dedicated UNO hall.
[00:16:34] Speaker B: So, I mean, let's be honest, obviously there was a proportion of them. Yes. Who stopped or didn't do it as much, but there's probably a reasonable proportion of them who went, I've got this, this phone thing in my hand that allows me to bet still. I quite enjoy betting. Why didn't I do that? And funny enough, you have an offshore market. Shocking news anyway. But then how many people are going to come, you know, if you are cleaning up in the offshore market at the moment and you are only allowed to do sports and not iGaming by moving onshore and you're paying a high tax rate.
I don't think tax rate is actually that high. But anyway, you're paying tax.
What are you going to do? Are you going to turn off all of your I casino revenue and then pay tax on a smaller part of your business by going onshore? It doesn't look the most attractive.
[00:17:26] Speaker A: No, it doesn't really, does it?
And I think the other thing is for the kind of larger licensed operators, that's going to make the market less attractive for them because they're going to look at it and think, well, you know, it's like we've got a limited product and we've got too much offshore competition. And I think that's.
[00:17:49] Speaker B: Yeah. And if you're a crypto Casino who doesn't really have much sport. Some have sport but doesn't have much support. Again, you're still going to continue to target that market because you've got like $78 billion of GGR that you're meant to have that you haven't got yet that you need to make up. So, you know, go for Albania, which would be hard given their GDP in US dollars.
[00:18:11] Speaker A: GDP in US dollars, I wouldn't even hazard a guess.
[00:18:15] Speaker B: 28 billion. So it's not really going to.
Yeah, it's gonna. It's gonna make it difficult to generate more than that in gtr, isn't it?
[00:18:28] Speaker A: Should we move on to Brazil A for your rant?
[00:18:31] Speaker B: No, it's less for rant. Again, it's just.
It's just frustrating. Again, this just rhetoric versus actual data.
[00:18:39] Speaker A: Okay.
[00:18:40] Speaker B: I actually think this is so. So I'll throw stuff out there, I'll make a claim and I've been right on some of them. So okay, yeah, bet 365 currently doing well in the U.S. you know, I said that they're the ones that watch in the us I've set up some time, you can even look back over a podcast to see it. I've also said stuff that's turned out to be complete rubbish properly.
I'm sure people could point that out.
[00:19:02] Speaker A: Yeah. But let's just start by setting the context in Brazil. So this is obviously in the wake of the tax numbers for the first six months of legal sports betting. So the total tax take is 3.8 billion reaish, which equates to about 687.5 million USD tax taken June, I think was 764 million riyash. So that's down from 814 in May. And that is essentially the context. These are the first.
I mean obviously there's been figures in the market before. Understand there's a company that positions itself as the most trusted data intelligence in the global gambling industry.
But these are the first kind of government figures on the performance of that market.
[00:20:02] Speaker B: I disagree with you.
[00:20:04] Speaker A: Would you.
[00:20:04] Speaker B: I'd say the figures that you're quoting are largely.
Are not that relevant in terms of helping the market because there's so much tax that is non GGR related. So there have been DAF payments. So the GGR tax which has gone from. Is it 12 going up to 18. Yep, that's done through the DAF payments and that gets released. We've had data on that each month actually up until June. And the June data isn't actually on the June ggr. So the June tax is based on May ggr. So again when people talk tax for the first six months, it's only five months worth of tax. And not many people pick up on this. The first tax, despite the fact that the market launched in January and the first tax got released in February.
[00:20:41] Speaker A: Yeah.
[00:20:42] Speaker B: Oh, just what they seem. They just didn't pay tax on record in January.
So we have data for the first five months of operations and actually it's the DAF data which is the one that you can use to track things.
[00:20:52] Speaker A: So they just say what's that acronym you're using?
[00:20:56] Speaker B: Daf? Yeah, that is. It's a code kind of stands for. But it's a code. There's lots of. I think the, the one for gambling's like I should know this. 5862 or something. 4805 anyway. Is it 5862? Quickly check that. But that effectively is the code that it's not just for gambling. It's used for a lot of different tax payment and it just knows where to allocate the tax.
[00:21:19] Speaker A: Right, okay. I think we're about to get you a pronouncing something in Portuguese, aren't we?
[00:21:24] Speaker B: I don't think. What does daft stand for anyway? You can go back this. Look, that's a non data question. You can sort that out.
But effectively because of that it means we actually have the, the implied revenue figures for the first five months of the year GGR for the online, the onshore market and what we've seen. So actually top down April, we then have. We've got an estimate for June because based on web traffic, etc. So for the first six months. So including our June estimate since I believe then we get out a 19 billion reaish which is 3.5 billion US dollars.
[00:22:02] Speaker A: 3.5 billion for GGR.
[00:22:05] Speaker B: Sorry? Yes, 3.5 billion US dollars. Okay. For GGR that peaked in April.
700. Well, 4 billion rareish. So 730 million US dollars which is a big number. Yeah, yeah, it's a big country. What's interesting. So the, the work that was done, all the kind of rhetoric now around the, the illegal market. So I'm just gonna speak army.
So it all came about in January. Okay. Yeah. So first of all January, it was a bit of a tough time, you know, with all the facial ideas, all of that kyc. Then a lot of players stayed with the. Or slow to kind of transition to the onshore market and the onshore operators were doing well.
So there's all this huge illegal market. Okay, now if we look at data that we had in January and we look, let's say the peak in April, the market, the onshore market has almost doubled in size. I mean, is up 84%. 2.2 to 4 billion.
[00:23:02] Speaker A: Right. Well, I mean, you'd naturally expect that. I mean, it's something that only existed in a gray form before. When it comes online, more brands will come into the market. The existing brands will obviously change, and there is going to be a bit of a kind of lag as players get used to that and then, you know, and then kind of like shift to engaging with that legal proposition. So it makes sense that that online, you know, kind of like online onshore portion is growing markedly.
[00:23:30] Speaker B: Yeah, it does. But then three things can happen. You have the onshores growing. Okay, yeah, that for a fact. So either the offshore, some of the offshore activity has moved onshore to help fuel that growth, or so the offshore percent goes down substantially because the onshore's going up and the offshore's going down, or the offshore just stays the same, in which case the offshore percent still goes down because the onshore's grown and the offshore stayed the same, or the offshore also increases. And the problem is the rhetoric now. So the numbers that are out there, there's an IBGL study that said 40 to 60%.
And by the way, difference between 40 and 60%. It may not seem much in terms of what that means for the offshore.
[00:24:05] Speaker A: That's pretty chunky.
[00:24:07] Speaker B: It's huge. Okay, let's put into context. So three and a half billion. Yeah.
So if you're saying that, that is.
If you're saying that the offshore market is, is 40%.
Right.
[00:24:21] Speaker A: So the offshore market is 40% of the total.
[00:24:25] Speaker B: Then that puts the total market 5.8. So that says the offshore market is worth. That says the offshore market in the first six months a year is worth 2 billion. If you're saying it's 60%, you're saying it's worth. Or 2.3, you're saying it's worth 5.25, 5.3 billion. So more than double in size. So you may go, oh, it's only, you know, 40 to 60. I mean, we're talking a huge amount there of, of what the difference is in size of the offshore market. So one, it's just far too wider thing. But let's say, and most people talk about the top end, 60, 70%.
Now, as at IGB Live, I have heard A conversation that I think and someone saying, I've heard the. Heard the online market in Brazil is like 70% offshore. And then I heard someone else respond from who is an operator in Brazil said, oh yeah, it's much higher than that. And I'm just thinking, are you insane? I know there's numbers out there, 40 to 60%, but this is ridiculous. Let's just assume we keep these numbers. Let's say, let's say there's 40 to 60% in Q1's right. Which I disagree with entirely. And we're actually doing an IGB exec webinar on this, I think next month where I'll lay out all the data transactions from the central bank data, cryptocurrency share, credit card share, all of that, every single figure. But if the onshore market has grown.
[00:25:32] Speaker A: Yeah.
[00:25:33] Speaker B: By 85% since that initial estimate was done. Or even, even if we're looking at, let's say Q2 versus Q1, so. Or April, May data is up 75% January. But if it's grown by this much, then for you to still say the offshore market is 60% of revenues, you're saying the offshore market has also grown by 85% since January. Do people honestly think the offshore market has almost doubled in size since January?
It just doesn't make sense. Let's look at. Forget January, which was a bit of a disastrous month. So February, March, and we'll compare to April and May because we don't have June's data. We've estimating Junes. So we have the actual onshore GGR from February and March. Get about the January one. April and May. Okay.
[00:26:15] Speaker A: Yeah.
[00:26:15] Speaker B: Average revenue over those two months versus two months onshore revenue is up 25%.
That is factual data can't be argued. Onshore web traffic that we measure is up 31%.
So, you know, that actually makes sense. You're getting a few more recreational players. But again, it shows it's a decent proxy. Decent proxy offshore traffic over that period is down 29%.
So total traffic is actually still grown like 26% because it's higher onshore than offshore. We have. I mean, we just don't see where all this offshore traffic apparently comes from.
It's offshore ggr, but so we have the offshore that we track that is visible that we track. So onshore's gone up by the same amount. Ish Than the revenue. And the offshore has gone down by 29%.
Yet people are still saying that 40, 50, 60, 70% of the market's Offshore. Now why is this an issue? I mean one, it's frustrating that people just seem to ignore data and just go for rhetoric.
[00:27:11] Speaker A: Well, surely it's a massive issue because essentially that is undermining the success of the regulated market. Because this is saying that the regulated model has done nothing to, you know, kind of divert players away from offshore competition, which in turn, when you think about, you know, tax hikes, restrictions and advertising, it's, they become a sort of, well, it's not working anyway type, you know, kind of like view.
[00:27:40] Speaker B: Yeah. But also if we take the current run rate and this is where I think if the industry keeps going down this route and actually some of the smaller or worse performance bombing operators who may be perpetuating this more than some of the larger ones, because speaking to a couple of the larger ones in their internal models, they're saying we assume like 15 to 30% is illegal because they didn't pretty well. And some smaller ones, easier to blame the illegal market for not performing as well. But if we take the kind of most recent run rate and assume 60% is offshore, so 40% onshore, most recent run rate, last couple of months, times it by six to get to a 12 month thing, divide by 0.4, 40% onshore, 60% offshore, that implies a $20 billion US market in GGR. Now one, that's like 1% of GDP. One, that number just does not make sense. And two, and this is where I think the industry and this is what bothers me more than people just not bothering about data led analysis.
I could see if the industry keeps going down, it's a big haul and I'll probably criticize. But get one, if the industry keeps going down this route, they could effectively end up Brazil online market could end up like the Netherlands.
So I'm not an expert in Brazil politics and the position of the evangelicals and anti gambling lobbyists. But I've spoken to a lot of people who have been in there and I think I've got a basic understanding of it. And just my opinion, if you're going out there and claiming that it's a $20 billion market, given all the issues like in Brazil and economic issues and they think people are spending too much, suddenly you've gone from like 2024 was maybe a, a $5 billion market, this is now $20 billion market, then what are the evangelicals and politicians going to do? They're going to go, well, why are we still advertising this? Why are we allowing people to do this? You know, why aren't we taxing them more, why aren't we making it harder? And that will just punish the legal market because they don't care. They don't listen to the argument of if you tax us more, more is going to go offshore. From what I've heard, no one in government cares about that argument. They don't care about the idea that you need to advertise to show people that you're an onshore operator. They will just see massive market isn't actually true, but huge market you're claiming and lots of advertising. Okay, so what do we do? We don't like gambling anyway. Let's just stop advertising. Yeah, that makes it harder for the onshore and that actually grows the offshore. So if, if you, if you want the offshore market to be bigger than the onshore market, then keep going with the rhetoric because that is what you will get.
[00:30:01] Speaker A: That's a good.
[00:30:02] Speaker B: If you actually want to have a data LED thing and say actually yes, the onshore market was terrible at the starts, all the stuff. Guess what? We've overcome things pretty well. We've managed to sign people up. We've grown the onshore market by 85% compared to what we had in January. We've grown it by 25% in the last couple of months versus what we did in February. We're doing well. Some of that's come from the offshore. Actually. The offshore channelization, you know, is now it's around 20, 25, 30%.
About 30% rather than 40, 60. And that's a big difference. You know, we still need to continue the battle against the offshore. But hey, we're doing okay. Just make sure you don't keep punishing us. But the market isn't 20 billion, so that's my run. So I just think that actually this, this rhetoric is going to end up hurting the industry. And, and if it does, then quite frankly, it's the industry's own fault because they're the ones perpetuating this.
[00:30:53] Speaker A: No, you make a good point. And I think it goes back to what we've discussed before about that narrative around regulation and the benefits of it, you know, and really it's not about, it's not about increasing the overall market size. It's by taking more of the total addressable market into the legal realm. And that's kind of, you know, and that it really kind of goes back to how the industry kind of leverages and actually crafts that narrative because I think that's true across multiple markets currently.
[00:31:24] Speaker B: Yeah, central bank data and some say, oh, central bank maybe don't have a clue on the total pix transactions, but they can have a better idea than anyone. They need ones who empty at all even at the top end in Q1 of that 30 billion of transactions per month that would again we'll get to all the analysis in the webinar from operator Data that shows 28% of stuff through Pix was illegal in Q1. You can increase that. We're adding credit cards, crypto, we actually get about 33% of the market then in Q1 overall obviously it was higher in January. If you do that to Q2 the those numbers go down to 22% of picks transactions and 27% respectively. That's what we think. 27% of the market in Q2 is offshore. And if when people are talking about crypto, going back to the rant about crypto and the size of the market before and how we've translated that as well as from survey player survey data we've done on on people's deposit methods, we have 0.7% of transactions through crypto. And before people say that's too low because you also have credit cards prior to regulation 86% from this data from payment processes, over 96% of transactions were from PIX.
Just under 4%, let's say 3 and a half percent were non picks transactions. We estimate that's Double to around 7%. Yeah, but there's still 93% of overall transactions and almost 100% for regulated off through pigs. So this idea that. Oh, you've got the illegal. Okay, well we won't question your pix truck data because actually assuming that the picnic the total picked market from the central bank is remotely correct, then you can't. It's just, it's maths.
Oh, it's all other stuff. Well, we've surveyed people to see what they spend it on and we've got the. The crypto data from the blockchains and then web traffic, geographically split, etc. Crypto is not a big part of the market in Brazil.
[00:33:07] Speaker A: And in that bombshell, I think we are definitely running out of time. So we better wrap things up.
[00:33:14] Speaker B: We need a. Yeah, well, I told you I was going to rant.
[00:33:17] Speaker A: You did.
[00:33:18] Speaker B: Random country generator.
[00:33:19] Speaker A: Excellent. Yes, yes, we've kept the structure yet again. We've gone long, but we've kept the structure. So two countries for next week. We only did one last week to save time for the Brazil rant. But what are we doing next week?
[00:33:34] Speaker B: So.
Well, the first one was Brunei, so I Kind of skipped that.
So Canada.
[00:33:40] Speaker A: Canada.
[00:33:40] Speaker B: Or Canadia, as some people call it.
Capital.
[00:33:44] Speaker A: Capital Ottawa.
[00:33:46] Speaker B: Oh, well done.
[00:33:47] Speaker A: Yeah.
[00:33:49] Speaker B: National dish.
[00:33:50] Speaker A: A poutine.
[00:33:51] Speaker B: Excellent. Have you ever had poutine?
[00:33:53] Speaker A: I have, actually.
[00:33:55] Speaker B: Wasn't a fan.
[00:33:56] Speaker A: No, it's. It's not great. I think we've just offended all of Canada. Sorry. Canada.
[00:34:01] Speaker B: Probably any of the French speaking bit. And South Korea.
[00:34:05] Speaker A: South Korea. Okay, that's an interesting one.
[00:34:09] Speaker B: Capital seal and national dish.
[00:34:11] Speaker A: This is really bad because I really like Korean food, and my wife absolutely loves Korean food, and we are going to a Korean restaurant at the weekend for her birthday.
So this is it. I was thinking maybe bulgogi, maybe bimbap. Probably kimchi. Kimchi, yeah, kimchi.
[00:34:29] Speaker B: There you go.
Population of South Korea?
[00:34:32] Speaker A: I have no idea, actually. I mean, like, rough. 40 million.
[00:34:37] Speaker B: About 51 million.
We'll go with adult population of 40. Ish. Okay, so south Korea. Canada. Less ranting, shorter episode, better stat of the week. Try not to talk about Sheffield Wednesday unless John Texter announces a takeover between now and then.
[00:34:52] Speaker A: Well, it will be the first game of your season, so I think we might have to just check in and see how they're getting on.
[00:34:59] Speaker B: All right, well, good luck with the editing today, Robin.
[00:35:02] Speaker A: It's going to be an interesting one. But yes, everyone, as ever, thank you for bearing with us. We hope you're enjoying the new structure.
You can comment on our YouTube, you can send emails to us complaining about the lack of chaos, or you can just keep listening. We'll see you in the next one.
