While many operators have gone full steam ahead on LatAm by aggressively expanding into new markets, Codere Online has taken a more patient and measured approach. The Madrid-headquartered player has grown at record levels in recent months, despite facing uncertainties across its LatAm portfolio, including a tax hike in its primary market of Mexico.
Codere Online posted record NGR in its FY25 results in February, marking a 6% year-on-year increase to €224.1 million. Mexico has become a key focus for the business and continues to be the company’s core growth driver, with NGR there increasing 12% year-on-year in 2025.
While Mexico has been a profitable market for Codere Online, it and many other operators are trying to navigate recent changes to the gambling tax regime, with the rate rising from 30% to 50% earlier this year.
The tax rise is even more frustrating when considering Mexico’s severely outdated regulatory framework, with much of it based on laws nearly 80 years old. Group CEO Aviv Sher believes Codere Online will be able to mitigate most of the tax hike, but he is one of many pushing for an updated regulatory framework in Mexico.
“Right now, we are working based on a framework of laws which you cannot even call regulation, from 1947,” Sher says. “So it’s very hard to work long-term and to give long-term commitments. While the future is unclear in terms of regulation, we saw what happened in other countries in LatAm when they changed the regulation every other month.
“In Mexico, I think we are stable, we know how to deal with this market. Of course, we will be very happy if in the future, a proper regulatory framework will be introduced and not the way that we are working right now.”
Spain steadying following regulatory turbulence
Mexico has overtaken Codere Online’s home nation of Spain as its biggest market. But the business continues to make strides on its home turf, with Spain revenue growing 3% year-on-year in Codere Online’s FY25 to €90.5 million.
The market hasn’t been without its own difficulties, however, with restrictions around advertising enforcing a ban on welcome bonuses and celebrity endorsements implemented in November 2020, before a handful of the rules were overturned in April 2024.
Adapting and pivoting its approach to acquisition and retention took Codere Online some time, but Sher says the company is now back on the right track to continue growing its business in Spain. “We already reported nice growth in Spain and I think we will continue,” Sher declares.
But the CEO is sceptical that restrictions could return amid Europe’s wider over-regulation struggles. “The more [rules] they apply, the less we are able to operate and grow our margin and market share,” Sher continues. “We see what’s happening in the UK. I think it’s a delicate balance that you have to [maintain] in order for the ecosystem to continue to live and to prosper. The regulator here has a very important role to keep the balance.”
Europe stifling the sector
Sher is one of many in the industry voicing concerns that overly restrictive regulation will stifle iGaming and continue to impact channelisation. “Sometimes with over-regulating, we see [many players pivot] to the black market where there are no restrictions,” he says.
“And it’s not that the country’s GGR is disappearing, right? It’s just shifting to places that you cannot track it, and you cannot earn tax money from it, and you cannot regulate and keep the players safe, and so on.
“The GGR never goes down. It’s always going up as the population grows. And as long as you are trying to restrain it and try to block as much as you can, the money will go to the black market and out of the regulated market.”
Localisation reigns
For Sher, it is Codere Online’s localised approach that has been perhaps the most important strategic decision for its Mexico growth. The operator has a strong history in Spain where it understands players well, from a cultural perspective. Over time, this has translated to its other core Spanish-speaking markets across the Atlantic.
“We were able to prove over the past few years that building a strategy around localisation really helped us to build a brand [in Mexico],” Sher explains. “Taking the local hero approach and trying to localise the platform as much as possible with local payment methods, signing deals with local teams such as Rayados and trying to strengthen our local brand on expense of the global brand, I think this is a strong contributor to our success over there, and one of the reasons that we succeed.”
Sher touches on Codere Online’s sponsorship of Monterrey Rayados Football Club, a strategy that has aided the operator’s localised approach in LatAm. The wider Codere group is also the official betting partner of football giant Real Madrid. When announcing an extension of that partnership, which first began in 2016, Codere Group said it was “expanding the territorial scope” of the deal to over 20 countries in LatAm.
As a former digital subsidiary of Codere Group, Codere Online has also benefitted from its historic retail footprint and well-known brand across Spanish-speaking regions. “We are using our Real Madrid sponsorship across LatAm, so Real Madrid is a key element into creating this global brand and global partnership with this strong brand across LatAm,” Sher explains.
“And then locally, we have Rayados in Mexico, we used to have River Plate in Argentina, in Colombia we used to work with [Carlos] Valderrama. So we tried to do local endeavours and one global brand partnership that helps us support our local brand better.”
Brazil absolutely not in Codere Online’s future expansion plans
In March, Codere Online CFO Marcus Arildsson told iGB the company would only expand into new markets with the “right ingredients”. Expanding on this, Sher says continuing to grow in markets that Codere already operates in is more attractive than making new entries at this time.
Sher highlights Uruguay as a potential target in the future, provided an online regulatory framework is implemented soon. But one market that Sher has sworn off is Brazil.
The company’s director of investor relations and communications, Guillermo Lancha, previously said Brazil presented challenges that did not fit with the operator’s overall expansion strategy, including the language and size of investment needed.
“At the beginning, with all the changes to the tax and so on, Brazil was very hard for us to evaluate how to enter and operate there. So we took a step back and said we are waiting to see how it’s developed. It’s already stable I think for a few months already, with high taxes, but stable. [But] we don’t have enough money to penetrate Brazil, so we are not taking it over,” admits Sher.
“If we wanted to operate there, we would have to raise more capital or debt or something like that, and then enter the market with a significant amount of money in order to at least take some kind of market share.”
New five-year plan
Codere Online met its FY25 NGR guidance of between €220 million and €230 million, as well as an adjusted EBITDA of €10-€15 million. Its FY25 achievements led to the business increasing its guidance for this financial year, with the company expecting an NGR of €235-€245 million with an adjusted EBITDA of €15-€20 million.
Arildsson previously voiced his confidence that Codere Online’s strong growth in its core markets of Mexico and Spain will see it meet future targets. Sher concurs, suggesting the business could even exceed those objectives. “I would be happy to grow faster and stronger,” Sher notes. “I think we have the ability. I think when things in the future will be a little bit more clear to us, we will be able to make some moves that we didn’t make so far.
“But the base scenario, and I think a good scenario, is to continue and grow our EBITDA, get to 2027 with the EBITDA that we promised to our investors, and I think we can meet this target.”
Sher points to the upcoming World Cup, which will be co-hosted by Mexico, as an event to capitalise on as a customer acquisition opportunity. “I think after 2027, we will create a new five-year plan to continue our growth, still being strong as much as possible in Mexico and Spain, [but for now] we’ll capitalise on the World Cup that is coming,” Sher continues.
“I know it will be a big event, Mexico is hosting, all our five markets are playing, so it should be nice for our customers as well. It’s going to be fun, and hopefully will give us some benefits toward the end of the year and some new customers.”
Core markets remain Codere Online’s priority
What’s clear is that Sher and Codere Online will continue to employ the measured approach that has brought it so much success. For all the noise around expansion in LatAm, Codere Online will continue to double down on what is already working.
“I’ve said it many times, and I still stand behind it, Spain and Mexico, the next dollar I have, I still would invest in those two core markets,” Sher concludes. “We see very strong ROI over there, so I still have a lot of space to make the investments in markets where I know, and I have a presence, and the ROI that my money buys is very good before taking another adventure.”
While competitors are chasing the Brazilian opportunity, Codere Online is further entrenching itself in the markets in which it maintains an edge in terms of strong brand recognition and a proven route to ROI. For now, Codere Online’s story will continue to centre less on where it goes next, and more on how far it can expand in the markets in which it is already succeeding.
Kyle Goldsmith
Kyle has been with Clarion since December 2023, joining from the world of sports journalism, subsequently becoming a LatAm-facing senior reporter with iGB.
Original article: https://igamingbusiness.com/strategy/can-codere-online-navigate-choppy-waters-mexico-re-regulation-looms/
