To increase its presence in Brazil, Flutter Entertainment (NYSE: FLUT) announced that it has paid $350 million in cash to purchase a 56% share in the NSX Group.

The Betnacional brand is owned by NSX. NSX is the fourth-largest online sportsbook and iGaming provider in Brazil, including Betnacional. Flutter finds it significant that the goal is already lucrative. According to Flutter, NSX anticipates making $256 million in revenue on $34 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2024.

Dublin-based Flutter said that it will merge its Betfair operation in Brazil with its 56% stake in NSX. Flutter and NSX have "reciprocal put/call arrangements" under the terms of the agreement, which allow Flutter to expand its stake in the Brazilian gaming firm five and ten years after the original purchase is completed.

The $350 million deal is expected to finalize by the second quarter of 2025, as stated last Friday.

NSX Purchase Might Be Flutter's Wise Decision

Given that Brazil is expected to completely regulate its online sports betting and iGaming industry at some point in the upcoming year, Flutter's decision to invest in NSX may show to have been prophetic.

It is anticipated that this will allow foreign operators to bid on licenses in the nation. Although Flutter has an advantage due to its established presence in Brazil, collaborating with a local business like NSX may be seen favorably by regulators, and several competitors have hinted that they will also pursue this strategy.

Brazil has tremendous appeal for gaming companies. More than 200 million people call this nation home, and it has the biggest economy in Latin America. Statistics show that the betting business is expanding quickly as well, which draws in foreign gaming organizations.

“Strong demand for sports betting and iGaming products with compound annual gross gaming revenue (GGR) growth in the unregulated market of 38% since 2018, to almost $3 billion in 2023,” according to a statement issued by Flutter.

Brazil's Gaming Market Is Exploding

While it is true that Flutter is the parent business of FanDuel, the biggest online sportsbook operator in the US, many investors in the US believe otherwise. However, Flutter has a wide worldwide reach, having exposure to markets in Australia, Europe, and Latin America.

With the purchase of the NSX interest, Flutter has added market share in other nations across the globe through a string of astute acquisitions. According to Flutter, NSX joined the Brazilian market in 2021 and has since grown to hold a 9% market share in online gaming overall and a 12% stake in sports betting. The Irish business further stated that Betfair Brazil might generate $70 million in sales by 2024.

“Flutter Brazil will be exceptionally well positioned to take full advantage of the significant growth opportunity in the newly regulating Brazilian market,” concluded Flutter in the statement. “In line with our successful strategy in other newly regulated markets such as the US, we expect to drive market share growth and embed future profitability through disciplined customer investment. This is expected to result in a Flutter Brazil adjusted EBITDA loss of approximately $90 million to $100 million in 2025.”