Codere raises guidance on heels of World Cup

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2025/08/05: Sportradar posts ‘solid’ second quarter, Jefferies analyst says 2025/11/17: Codere Online delivers ultimatum to Colombia on tax 2026/05/07: Codere Online upbeat on first-quarter earnings 2026/02/26: Mexico is a growth engine and a tax challenge for Codere Online

The Backstory

World Cup lift followed a year of tighter choices

Codere Online’s improved 2026 guidance did not come out of a vacuum. The company entered the World Cup year with a narrower geographic focus, a stronger balance sheet and a management message that was increasingly disciplined: spend where tax, regulation and player economics justify it, and pull back where they do not.

The World Cup then gave that strategy a stress test. Codere’s latest quarter showed sharp gains in Spain and Mexico, its two core markets, while management credited the tournament with bringing in new customers and materially increasing betting volumes. The company’s decision to raise full-year revenue and cash flow guidance reflected not only event-driven demand but also the accumulated effect of customer acquisition, product changes and market selection decisions made over the prior several quarters.

The contrast with earlier periods is notable. Through 2025, Codere was still managing currency pressure in Mexico, uneven results outside its main markets and questions about whether Latin American tax policy would undercut growth. By mid-2026, the company was still facing those risks, but it had more evidence that Mexico and Spain could carry the business even when Colombia and other smaller markets were constrained.

Mexico became the engine, and the policy risk

Mexico has been central to Codere’s investment case. In the fourth quarter of 2025, management described the country as the company’s principal source of momentum, with Finance Chief Marcus Arildsson saying Mexico was the “growth engine” after revenue there rose sharply on an underlying basis. That view was reinforced by lower acquisition costs, comparable player value and a return profile that made Mexico more attractive than new-market expansion.

But the same market also became a tax challenge. In Codere’s discussion of Mexico’s tax environment, executives said the government was moving toward a higher gambling tax rather than a broader digital gaming framework. The planned increase from 30% to 50% raised questions about margins, investment levels and the willingness of new competitors to enter the market.

Codere’s response was pragmatic rather than alarmist. Chief Executive Aviv Sher said the higher tax was not a threat to revenue generation, while Arildsson pointed to operational efficiency as a way to absorb some of the impact. Management also suggested that a tougher tax regime could deter weaker operators or late entrants, potentially leaving established companies with a more stable competitive landscape.

The World Cup amplified that logic. Mexico’s role as a major soccer market gave Codere an opportunity to acquire and reactivate users at scale, while a more difficult regulatory backdrop may have made it harder for rivals to match that spending. The latest quarter’s Mexican revenue growth suggests Codere’s market position was strong enough to withstand looming tax pressure, at least in the near term.

Spain supplied stability as Latin America diverged

Spain has played a different role in the Codere story. It is a mature market, less explosive than Mexico but important as a source of recurring revenue, brand familiarity and operating discipline. Earlier this year, management said Spain was no longer simply plateauing, pointing to consecutive quarters of growth and an effort to acquire higher-value customers rather than rely on promotions.

That shift mattered because Codere’s other Latin American markets were not moving in tandem. In the company’s fourth-quarter 2024 results, Spain generated €22.8 million in net gaming revenue, up 10%, while Mexico was roughly flat in reported terms because of peso weakness. Other territories, including Colombia, Panama and Buenos Aires, remained small contributors.

The pattern continued into 2025. Third-quarter Spanish gains were offset by pressure elsewhere, including currency effects in Mexico and a steep decline in other jurisdictions. Still, active player growth in Mexico and steady expansion in Spain gave Codere a two-market foundation while management worked through weaker spots.

By the first quarter of 2026, the company was more explicit about its priorities. In Codere’s first-quarter earnings update, executives said Mexico represented 53% of the business and Spain 41%. That left little doubt about where capital would be deployed. Spain’s contribution to the latest quarter shows why that balance mattered: Mexico delivered growth, but Spain provided another large base from which World Cup demand could be monetized.

Colombia became a test of investment discipline

Colombia has been the clearest example of Codere’s willingness to withhold capital when unit economics deteriorate. The company has repeatedly criticized taxes on player deposits, arguing they undermine marketing investment and make growth unattractive even if the market remains operationally viable.

Management’s tone hardened as the issue persisted. In Codere’s warning over Colombia’s deposit tax, executives said the company would make no further investments in the country if the value-added tax on deposits was renewed. The message was not that Codere would immediately abandon Colombia, but that it would not fund growth where a tax structure made customer acquisition uneconomic.

That stance had already been foreshadowed earlier in 2026. Sher said the emergency levy allowed Codere to serve its existing customer base but did not support fresh marketing. Executives tied any renewed investment to political and regulatory change, signaling that Colombia would remain a maintenance market unless the tax burden eased.

The Colombia position helps explain the latest guidance increase. Codere was not raising expectations because it had resumed broad-based expansion across all markets. It was doing so because its concentrated bets were working. Spain and Mexico, not Colombia, drove the quarter. The lesson for investors is that Codere’s growth is becoming more selective, with upside dependent on markets where regulation, taxation and customer value align.

Balance sheet strength gave management room

Codere’s balance sheet has also shaped the current moment. Earlier reports showed the company narrowing losses, extending a share repurchase program and maintaining substantial cash. In the third quarter of 2025, Codere ended with €48.3 million on hand while standing by full-year revenue guidance. By the latest quarter, cash had increased and the company reported no debt, giving management more flexibility as it faces tax changes and competition.

That flexibility does not mean a rush into new markets. Executives have consistently downplayed expansion for its own sake, even when asked about opportunities tied to the World Cup. The company has said its capital is needed for working capital, existing-market investment and selective buybacks. That approach reflects a broader industry reality: regulated online gambling markets can be attractive, but licensing, marketing and tax costs can quickly dilute returns.

The World Cup strengthened Codere’s case that existing-market depth can be more valuable than geographic breadth. The tournament created customer acquisition opportunities without requiring a new country launch. It also allowed Codere to test its product, marketing and retention capabilities at high volume, especially in soccer-driven markets where it already had brand recognition.

The stakes now turn to retention and margin. Event-driven customers can be expensive to acquire and difficult to keep. Taxes in Mexico could pressure profitability even as revenue rises. Colombia could remain sidelined. Spain may keep growing, but likely at a more measured pace than emerging Latin American markets. Codere’s raised guidance signals confidence that the World Cup delivered more than a temporary betting spike. The next test is whether those users convert into durable revenue after the tournament calendar normalizes.