Evolution CEO Martin Carlesund expressed his dismay over Brazil’s sudden ban on licensed betting, calling it a "total negative" for the industry while the company seeks clarity on the matter’s future.
In September, President Luiz Inácio Lula da Silva announced a gambling ban in Brazil, less than two years after the regulated online market launched. In response, Evolution has temporarily shut down its São Paulo studio, which began operations just last year.
During Evolution's Q3 earnings call, Carlesund shared how troubling this uncertainty is, given the recent establishment of the licensed market. "I think that everyone is flabbergasted about the situation in Brazil," he remarked to analysts. "It’s a total negative for anyone in this business, that it happens in this way."
He continued, "It’s highly unfortunate that a populist agenda can overthrow a regulatory framework that has only been in place for a year and a half."
Currently, Brazil’s betting industry awaits a ruling from the Supreme Federal Court regarding the constitutionality of Lula's ban. Carlesund noted that should the ban be lifted, the shuttered studio could reopen quickly and that Evolution is "ready to accelerate" operations in Brazil.
When asked about the potential impact on Brazil's revenue if the ban remains, Carlesund stated, "The country as such is not ring-fenced, and we will see what will happen with the players.
“The only comment I had is that we have to monitor the situation in Brazil. No one really knows what will happen. It could be reopened again.”
Despite the turbulence, Evolution maintains its full-year margin guidance. Addressing an analyst’s inquiry regarding profitability targets if Brazil generated no revenue in Q4, Carlesund affirmed that the company’s outlook remains steady. He reported that Evolution's Latin American operations saw a 23.1% year-on-year growth in Q3, a figure not impacted by Brazil's recently implemented suspension.
Looking at the broader picture, Evolution’s Q3 net revenue increased by 3.7% year-on-year, reaching €526.1 million ($585.2 million). Adjusted EBITDA rose by 2.7% to €345.9 million. This marks the first three-month period since 2024 in which all of Evolution's regions showed quarter-on-quarter growth.
Although Latin America experienced significant growth, the European sector only grew by 0.4% quarter-on-quarter and faced a 4.7% annual decline. Carlesund described this performance as "not exciting," asserting that the company "should do better" in Europe.
He added, "No matter the regulatory situation or low channelisation rates, we should do better." Carlesund pointed out that regulatory changes and taxation in European markets are detracting from the company’s focus. "I think that you will see, if we can just have a couple of stable quarters in Europe where we focus on actually working with our customers and get back from all of these external parameters and regulatory changes and taxes going here or there, we will do better," he stated.
Carlesund also addressed ongoing cybercrime challenges within Asia, which have troubled Evolution since last year. He noted, "Someone is stealing our products," and despite a slight quarter-on-quarter increase of 0.8% and a 1.6% annual growth in Asia, Carlesund admitted that the cybercrime issues persist.
He stated, "There is no quick solution to these cybercrime issues that we continue to see," adding that the company is implementing long-term measures to protect its products. "I think that we have traction exactly on these technical endeavors, and I’m happy with them. Although there may be volatility as we go forward, I am confident that it will pay off."
Regarding Evolution's ongoing legal dispute with Playtech, which has been marked by allegations from Playtech that Evolution provided games in prohibited markets, Carlesund confirmed the company is pursuing legal action. "We are in a full lawsuit with them, and that will continue as we go forward. We’re doing everything we can, and now there are new steps taken every day," he concluded.
