Martin Carlesund, the CEO of Evolution, expressed significant disappointment regarding Brazil’s sudden ban on licensed betting, terming it a “total negative” for the entire industry. The company is now awaiting further clarity on the situation.
The ban was announced by President Luiz Inácio Lula da Silva in late September, just under two years after the regulated online gambling market had been established. Consequently, Evolution has temporarily shuttered its studio in São Paulo, which was initiated last year.
During Evolution’s post-Q3 earnings call, Carlesund voiced concerns over the uncertainty stemming from the Brazilian market, especially given the short duration since regulatory operations began. “I think that everyone is flabbergasted about the situation in Brazil. It’s a total negative for anyone in this business that it happens in this way,” he stated. He added, “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.”
The Brazilian betting industry is currently anticipating a ruling from the Supreme Federal Court regarding the constitutionality of Lula’s ban. Carlesund indicated that the closed studio in Brazil could resume operations rapidly, with Evolution “ready to accelerate” its activities if the ban were lifted.
When questioned about the potential for Evolution’s revenue from Brazil to plummet to zero under the ban, Carlesund mentioned, “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 this uncertainty, Evolution has retained its margin guidance for the full year.
Addressing analyst inquiries about meeting profitability targets without Brazilian revenue in Q4, he maintained that the company’s outlook remained unchanged. Evolution’s operations in Latin America reported a year-on-year growth of 23.1% for Q3, which did not account for the impacts of Brazil’s recent suspension that took effect in early October.
In contrast to its performance in Latin America, where the sector grew 23.1%, and in regions like Africa (23.7%) and North America (13.6%), Evolution’s growth in Europe was lackluster at just 0.4% quarter-on-quarter, with a year-on-year decline of 4.7%. Carlesund labeled the European results as “not exciting,” asserting that the company “should do better” in this market.
“No matter the regulatory situation or low channelisation rates, we should do better,” he declared. He suggested that ongoing regulatory changes and tax issues across European markets have diverted focus from core business operations. “I think that you will see that 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 and whatever, even with the situation we have, if it would be stable, we will see that we will do better,” he said.
In Asia, Evolution continues to grapple with cybercrime challenges that have plagued its distribution. Carlesund noted that the situation remains unchanged following the Q3 results. “Asia increased by 0.8% quarter-on-quarter and by 1.6% year-on-year,” he reported. Although this represents a slight improvement compared to Q2, he acknowledged the complexity of resolving ongoing cybercrime issues.
The CEO affirmed that the company is committed to long-term strategies to protect its offerings, stating, “I think that we have traction exactly on these technical endeavours that we do, and I’m happy with them. Exactly how that plays out, there is probably volatility as we go forward, but we are happy where we are technically. We are playing the long game, and I am confident that it will pay off.”
On the legal front, Evolution remains embroiled in a protracted dispute with Playtech, which began when Playtech hired the intelligence firm Black Cube in 2020 to investigate Evolution. This investigation led to claims that Evolution had supplied games in prohibited and sanctioned markets, resulting in Evolution suing Black Cube and seeking accountability from Playtech for defamation. When asked about this situation, Carlesund replied, “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’s new steps taken every day.
