Evolution CEO Martin Carlesund expressed his astonishment at Brazil's sudden decision to ban licensed betting, calling it a "total negative" for the industry during a call discussing the company's third-quarter earnings.
In late September, President Luiz Inácio Lula da Silva declared a ban on gambling, just under two years after the regulated online betting market was established in Brazil. Consequently, Evolution has temporarily shuttered its São Paulo studio, which had been operational since last year.
During the earnings call, Carlesund articulated his concerns about the unexpected uncertainty surrounding the Brazilian market, remarking, "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 lamented the ability of a populist agenda to disrupt a regulatory framework that had only been enacted for a year and a half.
The Brazilian betting industry is now awaiting a decision from the Supreme Federal Court to determine whether Lula’s ban is unconstitutional. Carlesund indicated that the closed studio could reopen swiftly if the ruling is favorable, stating that Evolution is "ready to accelerate" operations in Brazil.
When questioned about the impact on revenues should the ban remain in effect, Carlesund explained, "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 ongoing uncertainty in Brazil, Evolution is maintaining its full-year margin guidance. In response to an analyst’s inquiry about meeting profitability targets without any revenue from Brazil during the fourth quarter, Carlesund reaffirmed that the company's outlook remains unchanged. He also noted that Evolution's Latin American operations experienced a 23.1% growth year-on-year in Q3, a number not reflective of the effects stemming from Brazil’s gambling suspension that took effect in early October.
In terms of overall performance, Evolution reported a 3.7% increase in net revenue, reaching €526.1 million ($585.2 million), while adjusted EBITDA rose by 2.7% to €345.9 million. This marks the first quarter since early 2024 in which all of Evolution's regions recorded growth from the previous quarter.
However, European operations lagged behind, with only a 0.4% growth quarter-on-quarter, and a year-on-year decline of 4.7%. Carlesund criticized the performance in Europe, stating that Evolution “should do better” there. He noted, "No matter the regulatory situation or low channelization rates, we should do better."
Carlesund attributed some of the struggles in Europe to regulatory changes and taxing issues that distract from core business operations. He expressed hope that, with some stable quarters ahead, Evolution could refocus on working with customers and improve performance, stating, "If it would be stable, we will see to that we will do better."
The company also continues to deal with cybercrime challenges affecting its distribution in Asia, an issue Carlesund mentioned previously. Despite a small quarter-on-quarter growth of 0.8% and a year-on-year increase of 1.6%, he acknowledged that there is no quick fix for these ongoing cyber threats.
Carlesund assured stakeholders that Evolution is committed to long-term technical measures to safeguard its products, expressing confidence that their efforts will yield positive results over time.
In a related update, when asked about an ongoing legal dispute with Playtech—stemming from a 2020 investigation commissioned by Playtech through Black Cube—Carlesund confirmed that the lawsuit is ongoing. "We are in a full lawsuit with them, and that will continue as we go forward," he stated, emphasizing the continuous steps being taken in this matter.
