On Friday, Brazilian President Lula enacted a sudden ban on the nation’s developing online betting sector, issuing a provisional measure just two days before the general election. Effective immediately, this decision prohibits the operation of all licensed online betting sites in Brazil.
Beginning October 6, these sites will be inaccessible, and bettors must withdraw their funds by the day prior. Should they not do so, the websites are mandated to transfer the remaining balances to users’ registered accounts between October 9 and 14.
Although this measure is provisional, it requires confirmation from Congress, which has a 120-day window to ratify or amend the decision. Reacting to the unexpected announcement, the burgeoning licensed betting industry, valued at approximately $5.7 billion in net revenues, is visibly shaken. Regulus Partners remarked, "An industry now worth about $5.7 billion in net revenue terms ($6.3 billion run-rate GGR Q1/26) is facing an immediate and total shut-down."
The uncertainty extends to employment and long-term contracts within the sector, as the implications for Brazil-facing staff remain unclear. In response, Betano, a major licensed operator in Brazil, is exploring legal avenues against the ban, asserting that it is "preparing legal action to protect its rights in Brazil in consideration of its five-year licence to operate," according to a statement from part-owner Allwyn.
There is potential for the courts to overturn the ban, particularly since it jeopardizes federal tax revenue streams. Historically, a total of BRL2.11 trillion ($411.2 million) in gambling taxes was submitted to the Brazilian Federal Revenue Service from January to August, reflecting a 12% increase from the previous year. Regulus points out that part of this revenue underpins essential services like education and healthcare, bolstering the argument that the ban could be unconstitutional.
However, the path to resolution may be lengthy. The industry has faced numerous legal challenges since its legalization in December 2024. A significant case arose in 2025 when a powerful labor union sought to declare the sector unconstitutional, later falling silent with no resolution. Additionally, a case against municipal lotteries offering digital sports betting raised concerns about the stability of the regulated market.
Up to last week, the outcry against the betting sector seemed to be mere noise, but Lula's recent vow to end it is closely tied to his re-election campaign. The likelihood of a sustained ban is estimated at only 5%, with a multi-month blackout deemed to have an 85% chance.
Analysts at Regulus caution that the repercussions of such a blackout could be substantial, warning that a Lula victory followed by a PM defeat might lead to more stringent regulations that inadvertently boost black market activities instead of safeguarding consumers.
Major operators, including Allwyn and Entain, are assessing the potential impacts of this provisional ban. While Allwyn has a 36.75% stake in Betano, it noted that its forecast for a 37% adjusted EBITDA margin for 2026 would likely be off the table under the new restrictions. It specified, "The exact impact would rely on various factors, including the timing and effectiveness of cost mitigation measures."
Betano, however, plans to move forward with pre-existing goals to expand into four new markets in early 2027. Conversely, Entain affirmed its fiscal guidance but anticipated that its projected outcomes might align more closely with the lower range due to the prohibition. The company expressed disappointment over the abruptness of the measure, highlighting a lack of industry consultation regarding its far-reaching effects.
Kambi's CEO, Werner Bercher, reflected disappointment as well, noting that Brazil contributed only a small fraction to Kambi’s revenue, so he expected a limited financial impact for the firm. Yet, many in the gaming industry had pinned significant hopes on opportunities in Brazil since it opened to licensed online betting.
Some businesses, like Playtech, were banking on substantial gains from the Brazilian market, having received a contract to provide technology to the state-run Caixa betting operations set to debut in 2027. However, Playtech declined to comment on the recent ban.
Entain's CFO has pointed out the challenges in the Brazilian market, emphasizing a cautious approach: "We are focused on maintaining proper contributions instead of merely seeking to drive top-line growth."
Flutter Entertainment, which invested considerably in Brazil by acquiring NSX for $350 million and aimed for an 11% market share, announced it would stop operations following the ban. The company estimated it could incur a loss of $70 million in revenue and a $20 million reduction in adjusted EBITDA if the ban persists through the year.
