Martin Carlesund, CEO of Evolution, expressed his shock regarding Brazil’s recent decision to impose a ban on licensed betting in the country, calling it a "total negative" for the gambling industry. This comes just under two years since the regulated online market was launched.
In late September, Brazilian President Luiz Inácio Lula da Silva announced the ban, leading Evolution to temporarily shut down its studio in São Paulo, which it opened last year.
During Evolution's post-Q3 earnings call, Carlesund voiced his concerns about the uncertainty created by this sudden shift. "I think that everyone is flabbergasted about the situation in Brazil," he stated, underscoring the detrimental impact on businesses within the sector. 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."
As the Brazilian betting industry awaits a ruling from the Supreme Federal Court to determine if Lula’s ban is unconstitutional, Carlesund noted that Evolution's closed studio is poised to resume operations if the ban is lifted. He remarked, "We are ready to accelerate in Brazil if that happens."
When questioned about the implications of the ban for Evolution's revenue, Carlesund explained that the situation is fluid. "The country as such is not ring fenced," he said, indicating uncertainty about how local players would be affected. "We have to monitor the situation; no one really knows what will happen. It could be reopened again."
Despite this uncertainty in Brazil, Evolution has maintained its full-year margin guidance. Carlesund reassured analysts that the company's profitability outlook would remain steady even if Brazil's revenue fell to zero in the fourth quarter.
In fact, Evolution reported a year-on-year growth of 23.1% in its Latin America operations for Q3, a figure that notably did not account for Brazil's ban, which took effect in early October.
On a broader scale, Evolution's Q3 net revenue reached €526.1 million ($585.2 million), up 3.7% from the previous year, while adjusted EBITDA rose by 2.7% to €345.9 million. Q3 marked the first quarter since 2024 where all of Evolution's regions showed quarter-on-quarter growth. Nonetheless, Carlesund highlighted that European market performance was lackluster, with only a 0.4% quarter-on-quarter increase and a 4.7% year-on-year decline. He remarked that the company "should do better" in this region, emphasizing a need for stability to allow focus on customer engagement amid ongoing regulatory challenges.
In Asia, where Evolution has faced ongoing issues with cyberattacks, Carlesund acknowledged the challenges have not yet been resolved despite a modest growth of 0.8% quarter-on-quarter. He maintained that the company is committed to long-term solutions to counteract these cybercrime issues. "We are playing the long game, and I am confident that it will pay off," he stated.
On another front, Evolution is facing a prolonged legal dispute with Playtech, instigated by Playtech's decision to hire the intelligence firm Black Cube to investigate Evolution's practices in 2020. Carlesund confirmed that the legal proceedings are ongoing and that the situation is actively being addressed.
