Gentoo Media suffers Q1 losses due to Brazilian gambling regulations
Gentoo Media reported âŹ24.8 million in revenue for Q1 2025, marking an 11% decrease from âŹ28.0 million in Q1 2024. This led to a net loss of âŹ2.7 million, a significant downturn from a âŹ9.7 million profit in Q1 2024.Â
Earnings before interest, taxes, depreciation, and amortization (EBITDA) before special items fell to âŹ8.2 million, down from âŹ13.5 million the previous year, reducing the EBITDA margin from 48% to 33%.
The sharp drop came as Brazil regulated online sports betting and casinos, which had a huge impact on Gentooâs presence in the country. CEO Jonas Warrer noted:
In some areas, we lost 90% of the player base.
Under the new regulations, customers had to reactivate betting accounts, which led to the players no longer generating income for Gentoo. In response to the decline, the company has reduced staff and its portfolio of websites. The global staff of 500 has been reduced by 10% while the company has narrowed its active website group to 70 high-potential domains.
Commenting on the staff reductions, a spokesperson said, âWe are deeply grateful to the colleagues who have moved on. Their contributions have helped shape Gentoo Media, and weâve done our best to support them during this time.â
The cost-reducing exercises aim to save the company âŹ8 â 10 million per year.Â
Tough quarter for gambling affiliates
In addition to the losses suffered by Gentoo, gambling affiliate and media group Raketech also reported net losses, despite turning a profit last year. The declines point to the challenges of keeping up with constant changes in regulations and SEO practices. Raketech has similarly cut costs while also moving away from an SEO-heavy strategy.
Mike Eckhardt, Audience Strategist for One Strategic Cat commented:
NFL Betting search for new users (the type that most Affiliates are paid for) in 2024 was predictably 20-30% softer for mature brands YoY. Coupled with reliance on branded search patterns that were increasingly chaotic and less predictable, the surface area and revenue opportunities for search-driven affiliates were reduced by as much as 60 or 70% overall.
The overall gambling affiliate industry remains a high-growth industry. It is currently valued at $17 billion and is projected to grow to over $27 billion by 2027. This is in line with growth in the global online gambling industry, which is projected to grow from $103 billion in 2025 to $169.22 billion by 2030.
Much of the growth is fueled by online casinos, which account for $85 billion of the market.
Change in direction for Gentoo
Gentoo will now focus on âhigher-value markets at the cost of overall player volumeâ, following a 24% fall in first-time depositors (FTDs). This quarter saw 95,000 FTDs compared to 125,000 last year.
CEO Warrer expects growth later in the year with the change in strategy and cost reductions. Warrer stated:
While Q1 reflects short-term disruption, especially in Brazil, we are already executing on a leaner, more focused strategy. The strategic shifts taken were deliberate and essential. We expect improved margins and growth to resume in the second half of 2025. Our vision is to lead with execution, innovation, and sustainable growth.
Sweepstakes casinos an opportunity
As Brazil implemented regulations, many US states have also been proposing band on sweepstakes casinos. Warrer believes the unregulated gaming sites still offer an opportunity for the company, however.
CEO Jonas Warrer noted:
I think itâs a very attractive opportunity in the next few years, I think it wouldnât be an area where I would invest all of my money, but I think thereâs a window of opportunity there that Gentoo Media should definitely exploit or leverage,â he said. However we are not going to go all-in and become a sweepstakes affiliate.
Despite managementâs optimism that profits will increase later this year, investors reacted negatively. Gentooâs shares are trading nearly 20% lower following the Q1 results announcement. The stock has fallen 57% over the last 12 months, with 45% of that coming in the last six months.
