Evolution CEO Martin Carlesund expressed strong disapproval over Brazil’s sudden ban on licensed betting, calling it a “total negative” for the industry and emphasizing the need for clarity on future developments.
In late September, President Luiz Inácio Lula da Silva declared an end to gambling in Brazil, just under two years after the regulated online market was established. This led Evolution to temporarily shut down its São Paulo studio, which opened last year.
During Evolution's post-Q3 earnings call, Carlesund shared that the uncertainty surrounding Brazil's gaming landscape is particularly troubling given how recently the market was legalized. He remarked, “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 also lamented, “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 awaits a decision from the Supreme Federal Court regarding the constitutionality of Lula’s ban. Carlesund indicated that the closed studio could resume operations quickly if the legal situation changes, noting that Evolution is “ready to accelerate” its presence in Brazil when the ban's status is resolved.
When pressed on whether Evolution's revenue from Brazil could drop to zero under the continued prohibition, Carlesund replied, “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 these uncertainties, Evolution has kept its full-year margin guidance intact. Addressing an inquiry about meeting profitability targets without any revenue from Brazil in Q4, Carlesund reiterated that the company's outlook remains unchanged. For the third quarter, Evolution's operations in Latin America reported a 23.1% increase compared to the previous year, a number that does not account for the impacts of Brazil's suspension, which began in early October.
Looking at broader performance, Evolution’s net revenue rose 3.7% year-on-year to €526.1 million ($585.2 million), while adjusted EBITDA saw a 2.7% increase to €345.9 million. This quarter represented the first period since 2024 where every region reported quarter-on-quarter growth.
However, despite notable growth rates in Latin America (23.1%), Africa (23.7%), and North America (13.6%), Europe saw only a 0.4% increase quarter-on-quarter and a decline of 4.7% year-on-year. Carlesund acknowledged Europe’s performance as “not exciting,” suggesting that they “should do better” in the region. He attributed some of the challenges to evolving regulations and taxes that distract from the company's core business. "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 to that that we will do better,” he stated.
In Asia, where the company has faced persistent cybercrime issues, Carlesund reported minimal growth, stating, “Asia increased by 0.8% quarter-on-quarter and by 1.6% year-on-year. It’s one small step forward compared to Q2, but you all know that there is no quick solution to these cybercrime issues that we continue to see.” He assured that Evolution is undertaking long-term measures to safeguard its products.
When asked about the ongoing legal dispute with Playtech, which stemmed from Playtech's commission of Black Cube to investigate Evolution’s operations in 2020, Carlesund stated, “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.”
