“Regulation of sport betting is the tip of the iceberg for opening other verticals in Brazil”

In yet another cycle of interviews at the GMB One-On-One, Gildo Mazza receives Hugo Baungartner, Commercial Director of Caleta Gaming and COO of RCT Gaming. With a 25-year trajectory in the gaming sector, he talks about the expectation of the regulation of sports betting and believes that it is the first step for the approval of other verticals. Responsible for the development of ‘Halloween’, the most famous machine in Brazil, he says that Caleta will launch a family of games based on this international “business card”.

Hugo Baungartner directs the operations of RCT Mexico, and this year also took over the Commercial Directorship of the Brazilian company Caleta Gaming, a game developer that has increasingly expanded its operations in the international market, with games available on the main platforms worldwide.

Check below the main excerpts of the interview.

GMB – With a long and consolidated trajectory in the gaming world, I would like you to tell us what led you to this industry and what have been your great achievements in these more than 25 years in the sector.
Hugo Baungartner – It is nothing new for anyone, I have been in the market for 25 years and I have been following in my father’s footsteps since 1994 accompanying him at RCT. It’s been 25 years, 10 of them in Mexico following our operation. It is a long journey. I’m not that old, because I started early, but it’s been 25 years in the Latin American market, having started in Brazil in the ’90s.

It all started with bingos…
We started with bingos. At that time, we were born out of nowhere making games for the Brazilian market. We were one of the first to install equipment in Rio de Janeiro and the history is well known since we had to expand to Latin America.

The great game providers and developers in Brazil ended up being expelled from the market and from Brazil and today they are successful all over the world.
Exactly. We go to fairs and meet with our competitors, but more than anything, friends, because we ended up in this business having many more friends than competitors, because each one has its market, and we are all out of Brazil, unfortunately.

In addition to being the COO of RCT Gaming, today you are the commercial director of Caleta Gaming. What led you to this position?
I already knew Fabíola Jaeger and Paulo Nova for some time in the market. In 2018/2019, chatting with a mutual friend who connected us again, they asked me why not launch my online games with Caleta. They explained that it was a competent Brazilian company that could launch my games already established in the land-based world in the online segment. So, in 2019 we closed this partnership with five games, which were launched in 2020. It was a success and ‘Halloween’ today is one of the most played games in Latin America in the numbers of Caleta, which has an extensive portfolio of slots, keno, bingo, and loto. But ‘Halloween’ is a success. At that time we made this partnership and I, somehow having partners from these games, started to strengthen the relationship, and this year I was invited to help them in the commercial part of Caleta. I was very happy with that, as the company has excellent games and a vast and successful portfolio. They are very interesting games not only in Latin America but also in Asia.

What is the importance of the Latin market for Caleta Gaming?
It’s a common conversation I have with Fabíola. Caleta’s DNA is Latin, Brazilian, which stands out for its bingos. So, I tell her that the Latin market loves bingo and number games. It is a very important market and has grown a lot since last year. We are entering the main operators and the main platforms in Latin America. Here in Mexico, for all operators to whom I present the games, they are readily accepted. New partners are arriving and soon we will be not only in Mexico, but in Colombia and other countries in Latin and Central America.

And how is Asia going to Caleta?
It’s a project I took to Fabíola. In my work travels over these 25 years, I have been to the Philippines several times. It is a very interesting market, especially in the area of ​​video bingo. We are in negotiations so that we can put Caleta’s bingo games on the online market in the Philippines.

You just talked about the game ‘Halloween’. You were responsible for its development, a machine that made and still makes history in Brazil and now in the world, online. What does this mean for you, as the child’s father?
I’ll be honest. I am not the child’s father. My uncle is the real father. We are a family business, and my uncle was fortunate to do this game in the early 2000s. It was an absolute success, and it is an absolute success in Brazil until today. Unfortunately, in unregulated markets. But in any case, we were very happy and nowadays it opens a lot of doors for us. ‘Halloween’ is a game known not only in Latin America but also in Europe. When I say that we have ‘Halloween’ in Caleta’s portfolio, everyone asks if it is the original game, it generates business, because they know they need these games already consolidated in the Latin market to enter Latin America.

Is it a business card?
Exactly. It’s a business card. When we say that we were the ones who developed the official ‘Halloween’ everyone is impressed and asks if it was not so-and-so. We replied that it was us, but unfortunately, others came who copied us.

You comment that the machine is in a gray, unregulated market. Can you estimate how many ‘Halloween’ machines are in operation today in Brazil?
My father and I, in conversations with my uncles, always talk and estimate that there are 500,000 illegal machines in Brazil, or maybe 300,000. I can’t tell you the number, but I think at least half of the machines are ‘Halloween’ and the other half are bingo games.

It became a symbol of the Brazilian machinery market.
True, it became a symbol. Today you can easily find social gaming games on Facebook that copied ‘Halloween’. You find in Asia copies of ‘Halloween’ and even not only ‘Halloween’, but with its influence in the making of games that come in the same theme line. There are other manufacturers that, knowing that the ‘Halloween’ theme works well in Brazil, ended up making games in this line.

The development of this machine continues. What can you tell us about the launch of the new ‘Halloween’ family?
This was an idea that came out of a conversation with Fabíola, who is always very kind and listens to me a lot. I, she, and Paulo have a lot of conversations and we talk about making a ‘Halloween’ slot and other games with the same theme. She thought it was very interesting, and we are about to launch the first ‘Halloween’ product next week. It will not be a slot machine, but another ‘Halloween’ product. But a family will come. We are thinking about scratch cards, lotto games and even a video bingo will come out.

About game development, how do you understand the player’s taste in order to offer a unique experience that keeps him on a gaming site?
It is an interesting question. We have to remember, more than anything, that this is entertainment and that people have to spend time in the same way that they go to a restaurant, a cinema or other entertainment. For the one that enjoys this, you need to have the ability to get his attention and that stays for a while, having fun. In these 25 years, we have been fine-tuning this, so that a game would be attractive, not boring, or even not interesting. It has to be fun that keeps the person coming back the next day so that they can continue to have fun.

Returning to the market issue. We are talking about the Latin market, the presence there and the search of the Asian market. I would like to go back to Brazil now, which is a case apart, since we still don’t have a gaming regulation, and everyone says it is the last major frontier to be explored. How do you assess the potential of the Brazilian market?
Gildo, in these 25 years, from the moment we had to leave Brazil, 16 years ago, when I say that I am from Brazil and that I started my trajectory in the country, everyone always asks when Brazil is going to open. There was a time when we were absolutely sure it was going to open and that didn’t happen. With the recent passage of the sports betting law, which is still unregulated, I think regulation will soon come. I think it is an interesting way for this to be approved and have a legal way.

In other words, do you believe that the regulation of sports betting is the tip of the iceberg for the opening of other verticals, such as urban casinos, bingos, online casinos, jogo do Bicho and casinos in integrated resorts?
I think so. The generations have changed. In the 2005 generation, when there was a general closure, the mentality is changing. Another great advantage is that the world today is smaller. People know what exists outside Brazil and that is absolutely professional. So, answering your question, yes, I think. Of course, I don’t know at what time, as it is very complicated, but I believe it is the tip of the iceberg. With the approval of sports betting in Brazil, I believe that the other side will also come. I don’t know which model, but it will certainly be approved soon.

I wanted to ask you just that. Do you believe in immediate approval and regulation of games other than just sports betting?
I think so. I will cite a simple and very quick example. In Mexico there are no notaries on the machines, and everything is done online in real time. This gives you absolute control over who is betting, where they are betting and how they are betting. The Mexican government has this online. So, people who say that there are no ways to control it, it’s because they don’t know this solution. There are solutions where you can identify the player, who is betting, the values ​​and in a very secure way. Come to Mexico and see how this has been done here for over ten years.

In the future advance of the activity in Brazil, what do you expect from the point of view of solving the taxes issue?
It is complicated to talk about taxes. Brazil has a different, heavier tax burden, but I think that somehow it will have to be adapted, because otherwise this operation will not have to close. For all taxes to be paid and for everyone to win, some taxes will need to be reviewed.

What you see today, in lotteries, the only type approved and in operation in Brazil, is that a deputy appears asking to take 2% of the lottery for one thing, another 1% for another, to apply for some position. Soon we will have a lottery with no prize!
Unfortunately, the lottery in Brazil has one of the lowest payouts out there. There’s always someone taking 0.5%, 1%. The lottery or the games, in general, need to have attractive prizes. There is no point in thinking that by lowering the prizes, the games will continue. Prizes must be attractive across all segments and verticals.

In this sense, what is your message to the Brazilian authorities for the approval of a legal framework for gaming that can effectively contribute to the recovery of the economy and to the post-pandemic?
As I said about Mexico. It is a country where I live, and it needs to be known. It is an example. It is a Latin country, smaller than Brazil, but with a gaming regulation, which is perhaps not the most ideal in the sense of a regulatory framework, but it works. As I mentioned before, you can control online inreal time. In these 25 years, the biggest fear I always see from the authorities is money laundering and the failure to pay the relevant taxes. There are ways to control this. I think the authorities already know, but it is worth reminding them that there are such markets and solutions, too.

You mentioned Mexico. We have another example, Colombia, which has consolidated the gaming sector, implemented sports betting and online gambling. And they have the “Quiniela”, a game identical to our game jogo do bicho in Brazil. Why not follow good examples?
In fact, they did it in a very short amount of time. They saw the opportunity to identify that they needed to regulate these activities. Even during the pandemic, Colombia authorized other modalities to supply the demand. There is this demand [in Brazil] and it needs to be met.

Speaking of Colombia, how is Caleta Gaming’s presence in this market?
We recently had our GLI approval, required by the Colombian market. We are closing the first contract to enter Colombia so that local players will be able to meet and play Caleta games.

May Brazil also get to know the games of Caleta and other providers.
Will take. There are foreign companies quite interested in the market and with a great appetite to invest in the Brazilian market. It will really be a very important help for the government to supply the areas where they are needed in Brazil.
 It will really be a very important help for the government to supply the areas that are necessary in Brazil.

There are already so many operators working on the Brazilian market from outside the country!

Exactly. There is no point in covering the sun with the sieve. It’s already there. Just regulate sports betting and then meet the demand of other markets that exist in Brazil.

Source: Exclusive GMB